Telstra compensation changed original NBN plan

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Photo: Kainet/Flickr (Creative Commons)

A $15-$20 billion compensation payment to Telstra over its copper network appears to have drove the Labor government in building the current NBN plan in order to avoid such a payment.

The revelations are to come out via a documentary airing on ABC1’s Four Corner’s program tonight.

Kevin Rudd’s government planned to build a cheaper, fibre-to-the-node network. It would have connected fibre to the cabinets on street corners, and then use Telstra’s copper wire network to deliver the broadband to most Australians.

“The Government could spend $15 billion to build a fibre-to-the-node network, pay $15-20 billion to Telstra for compensation, and then Telstra could take that money and build a fibre-to-the-home network past you and strand 70 per cent of $15 billion on the side of the road,” Senator Stephen Conroy, telecommunications minister, told the program.

And that was what Telstra would have done, according to the program.

“Absolutely, that’s the way competition works. The only way it’ll be stopped is if they have laws that prevent it,” Phil Burgess, the former right hand man to Sol Trujillo, told Four Corners.

The current NBN sees, after a tender process, the Government taking full control of building out the entire network. The Government now has a better relationship with Telstra, after a deal was struck between the two parties that would allow NBN Co. to use the underground ducts.