Telstra admits company must accept some of the blame for the NBN

The Telstra chair, John Mullen, has admitted the company must accept part of the blame for the NBN due to its “recalcitrance” in helping the then Labor government’s NBN policy a decade ago.

Mullen told shareholders at the company’s annual general meeting in Melbourne on Tuesday he believes Australia would have access to better broadband than is available on the NBN today, at no cost to taxpayers, had the government not embarked on rolling out the NBN.

“It is always easier to comment with the benefit of hindsight, but it is my view that over the last 10 years private sector competition between strong players such as Telstra, Optus, TPG and others was always going to build 100 [megabit per second] broadband access and speed to the majority of the population of Australia in an ongoing competitive landscape and at no cost whatsoever to the taxpayer,” he said.

It would have then been up to governments to subsidise broadband in regional and rural areas where companies like Telstra deemed it unaffordable, he said.

“Instead, however, in the NBN we have created a state-owned monopoly that is going to cost the country more than $50bn.”

When the NBN was first mooted by Labor in 2007 and 2008, the original plan was for a fibre-to-the-node network, and structural separation of Telstra’s wholesale and retail businesses – something Telstra, under then CEO Sol Trujillo, opposed at the time. Labor in government put out a tender, for which Telstra submitted a short bid that didn’t meet the tender requirements, and Telstra was ultimately excluded from the tender.

Mullen told investors on Tuesday Telstra “must bear part of the blame” due to its “recalcitrance” to help the government at the time.

“Whether we like it or not, the NBN is here to stay.”

After Telstra was pushed out of the tender in 2009, Labor announced the 90% fibre-to-the-premises NBN, and proceeded with a plan that included structural separation of Telstra and billions of dollars in payments to the company to decommission the legacy copper network and for NBN to use the ducts and pipes Telstra owned. Telstra became less recalcitrant under new CEO David Thodey.

When the Coalition government came to power in 2013 and moved from majority fibre-to-the-premises to the controversial multi-technology mix, the copper network was reused for the fibre-to-the-node component of the mix.

Now that over half of people on the old Telstra fixed network have migrated onto the NBN, the company has blamed the NBN for costing the company $3bn per year in the future, once the rollout is completed next year.

These costs are part of the reason why Telstra has been agitating for NBN to lower its wholesale costs to make it cheaper for Telstra to buy services on the network.

Mullen said Telstra had been charged $20 per month as a wholesaler, but NBN Co is looking to charge up to at least $70 in total costs per user per month, making it unsustainable for many retailers.

Mullen said it was in Telstra’s interest for the NBN to be successful, but while NBN was allowed to “move outside its mandate” in going direct to business customers to provide services, and to offer deals to some retailers, Telstra wasn’t allowed to directly compete with NBN as a wholesale network operator.

“There is little doubt in my mind that were the NBN opened to competition, wholesale broadband prices in Australia would fall materially.”

He said this didn’t mean Telstra did want to compete with NBN, but he was advising NBN Co to stick to its original mandate.