NBN costs could be halved if Telstra link with the Government

An analyst has said that if key telcos were to co-operate and join the project it could halve the $43 billion it would cost to build the Federal Government’s National Broadband Network.

An internal committee that will hold talks with the government regarding its NBN plan has been set up by Telstra according to its latest reports, and that has been hailed by an industry expert as an indication that the relationship between Canberra and the telecoms giant are beginning to improve.

In the days preceding the recent announcement by Prime Minister, Kevin Rudd who said that a company would be set up by the Federal Government to build the NBN, a committee was set up that composed of Telstra directors and executives.

On the day of the NBN announcement by Mr Rudd the chief executive of Telstra, Sol Trujillo said in a memo to his staff that when it came to dealings between the company and government on the project he wanted to have continuity. Mr Trujillo is not a member of this new committee as he will be leaving Telstra on 30th June.

In the memo Trujillo said “We have established a joint board-management committee which is capable of conducting these negotiations and discussions over the extended period during which they will occur, over coming months and perhaps years.”

This move was seen as a move away from the relationship the telco giant had with the Government, which had previously been confrontational, according the Paul Budde, an independent analyst.

Mr Budde said “It is definitely good news. It is very important that Telstra joins this initiative. It makes the whole initiative suddenly also far more viable, because if Telstra participates, for example puts its infrastructure into the new company, than we have a head start.”

A company that would build an NBN consisting of a fibre-to-the-home network, which would reach 90 percent of the Australian population, was to be set up by the Federal Government.

An eight year total cost was estimated at $43 billion and a cap for private investment in the broadband company set at 49 percent.

Mr Budde advised that the cost for the final build of the NBN would be cut significantly if access to their existing cable network was decided on by Telstra and Optus.

He said “I think that if you have a co-operative industry, and you look at it effectively and efficiently, then I wouldn’t be surprised if you can build it for half the price.”