Telstra’s $1.2 billion NBN contract raises competition concerns

Australian telco Telstra has signed a new $1.2 billion (Aus$1.6 billion) contract with public fixed-line infrastructure outfit NBN, which has raised immediate concerns from Australian competition authorities.

Telstra started progressively selling its Hybrid Fibre-Coaxial (HFC) network to NBN in 2014 and this deal covers the upgrade and maintenance of this network over the next four years. “Telstra has a long and proud history in network construction and we believe we will bring great expertise to this important part of the NBN network,” said Telstra CEO Andrew Penn.

As the largest Australian Telco it was inevitable Telstra would have a role to play in the NBN process, but the Australian Competition and Consumer Commission (ACCC) is worried that this new ongoing relationship between the two might give Telstra an unfair advantage over its competitors regarding use of the network. Talks are already underway to address the ACCC’s concerns.

“We have raised several concerns with Telstra and NBN Co, including that Telstra may receive a competitive advantage if it has access to better information than other service providers or if it is able to use infrastructure built for the NBN network before that infrastructure becomes available to other retail service providers,” said ACCC Chairman Rod Sims.

“We are looking at the parties’ proposals carefully to consider to what extent these proposals address our concerns. It is important that Telstra doesn’t get a head-start selling retail services over the NBN just because its technical expertise is being used in the construction and maintenance of the NBN.”

Since the Australian tax payer is contributing billions of dollars to NBN it has been under heavy scrutiny since its creation in 2009, during which there has been no shortage of controversy. Aus$11 billion has already been handed over to Telstra for its copper and HFC networks, and there will be understandable concern that the two organisations are getting too cosy with this latest deal.