NBN Co to deliver early Christmas present for Coalition

NBN Co's chief financial officer, Stephen Rue, has told the Senate's NBN committee that the company hopes to complete negotiations with Telstra over the telco's copper network within "the next couple of weeks".

The negotiations are one of the key hurdles to the company implementing the Coalition government's policy of switching away from a primarily fibre-to-the-premises rollout to a 'multi-technology mix' that incorporates fibre-to-the-node (FTTN) and hybrid fibre-coaxial (HFC).

The final 2014 hearing of the Senate Select Committee on the National Broadband Network was dominated by acerbic probing of Rue by Senator Stephen Conroy, the communications minister in the previous Labor government.

At one point during last night's hearing Conroy described NBN Co's head of strategy and transformation, JB Rousselot, "as the resident village idiot down at NBN Co" (Conroy withdrew the comment though later applied the epithet to some of his fellow committee members).

Rue was unable to deliver answers to most of the senator's questions, citing ongoing negotiations with Telstra.

Under the original agreement with NBN Co, Telstra had agreed to migrate its customers from the copper network then shut the network down. However, the use of FTTN will require access to Telstra's copper for the 'last mile' connection to homes.

The negotiations between Telstra and NBN Co have been more drawn out than Communications Minister Malcolm Turnbull has previously predicted.

Conroy quizzed the NBN Co CFO on whether the company was considering entering into any "cost plus 10 per cent" or "cost plus any per cent" agreements with Telstra "for maintenance, for whatever".

Rue said he could not comment.

"I think the committee would be very concerned — I think taxpayers would be horrified — if you were shovelling money out the door to Telstra with cost-plus contracts," Conroy said.

"That would be an extraordinary departure of practice by NBN Co if it was to enter into those sorts of agreements, Mr Rue."

"What I can assure you is, no-one — no-one — is more conscious than me of the need to manage tax payers' money properly," the CFO said.

Conroy asked Rue whether NBN Co would purchase Telstra's copper network in areas that are covered by existing HFC networks and won't be getting FTTN services under the NBN rollout plan. The CFO reiterated that the ongoing negotiations meant he was unable to answer questions relating to Telstra.

"I would consider it an extraordinary waste of taxpayers' money if you bought a copper network in the HFC footprint. It would be extraordinary. You're not planning on using it, why would you buy it?" Conroy said

"You can't comment on whether or not you would buy a copper network in a footprint of 3 million people that you have no intention of using?" the Senator said.

"Senator we're hoping to complete our negotiations in the next couple of weeks. Until then senator I can't comment on anything like this because it could be misconstrued," Rue responded

"Taxpayers deserve to know whether you're planning on buying a copper network in an area where you said you will not be rolling out FTTN, that you will absolutely be rolling out HFC [in]," Conroy retorted.

"I think taxpayers are entitled to an absolute guarantee from you that you wouldn't do that. What an earth justification could you have for purchasing a copper network in an area where you're deploying HFC only?"

"Taxpayers can be assured that the NBN ... executive directors have adequately discharged their duties to manage taxpayers' money appropriately," the CFO said.

If NBN Co purchased the copper network within the footprint of Optus' and Telstra's HFC networks it would "be a scandal" Conroy said.

"It would be one of the most extraordinary abuses of taxpayers' money that I would ever [have] witnessed in 20 years in public office if you bought a network that you have no intention of using."

NBN Co's CFO said he was also unable to answer the questions from the senator on what due diligence the government-owned company has performed in relation to the state of Telstra's copper network and how much of the copper network has been inspected by NBN Co.

Conroy said he believed that the Rue "was treating this committee with contempt" and that the exec was "hiding behind false arguments to not answer" the senator's question.

"If you want to purchase this pig in a poke and then try and put lipstick on it later, you can expect you will be held responsible by the people of Australia," Conroy said.

Follow Rohan on Twitter: @rohan_p


Copyright © 2014 IDG Communications, Inc.

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