NBN can be built without Telstra: report

(AAP) - Telstra has been given six weeks to strike a deal with the government on the National Broadband Network (NBN) after a study found it could be built within budget and without Australia's biggest telco.

The Rudd government on Thursday was given a boost after the release of a
long-awaited implementation study that gave the NBN - the centrepiece in Labor's
nation building agenda - the green light.
The $25 million study, by consultancy group McKinsey and KPMG, found the NBN would
virtually pay for itself within 15 years, and can be rolled out to more Australians
for less than its $43 billion price tag and without Telstra.
However, the government has been urged to strike a deal with the telco, with the
study arguing the NBN deployment would be more cost-effective if Telstra's existing
infrastructure was used.
It's understood Telstra would prefer to reach an agreement with the government, but
not to the detriment of its shareholders.
The company will consider competing head-to-head with the NBN if a deal, the chances
of which are believed to be 50/50, is not struck.
Telstra shares closed down five cents at $3.08 on Thursday.
Communications Minister Stephen Conroy said he had not given up on reaching an
agreement with Telstra, but warned a decision would have to be made sooner rather
than later.
"I wouldn't imagine that we could keep talking through to the end of the year, I
wouldn't imagine we could keep talking through to the end of June," Senator Conroy
said.
But reaching an agreement before the end of the June deadline would be extremely
difficult, he said.
"At this stage the complexities are enormous."
The executive director of the Competitive Carriers Coalition, David Forman, said the
government now had a significant advantage in the negotiations.
"Every metre of this network that gets rolled out strengthens the bargaining
position of the NBN and reduces the bargaining position of Telstra because every
metre they roll out on their own books is a metre that Telstra can't sell it," he
said.
The government will respond to the study's 84 recommendations by the middle of the
year.
Crucially, the study found that based on conservative estimates, the NBN could be
rolled out at a cost of between $38 billion and $43 billion, and to more people.
The government had planned to deploy fibre-to-the-premises (FTTP) internet services
to 90 per cent of homes.
But the report has recommended that the FTTP target be lifted to 93 per cent, with
the next four per cent covered by fixed wireless and the remainder by satellite.
The coalition's position that the price tag was too high was also dealt a blow after
the study showed the NBN would generate a return of $40 billion within the next 15
years, after an initial investment from the government of $26 billion.
Finance Minister Lindsay Tanner said the government was still finalising details of
bonds that will be sold to Australians to pay for that initial investment.
The study said entry level wholesale prices for basic broadband of 20 megabits per
second with voice service should be set between $30 and $35, which would drive
affordable prices and offer better value for money than what was currently
available.
Take-up rates are expected to be high because retailers of internet services will be
competing in "untapped markets".
The study also recommended the government retain full ownership of the NBN until the
rollout is complete.
Opposition communications spokesman Tony Smith said the study proved nothing.
"The study released today does not alter the federal coalition's view at all that
Labor's NBN is reckless, irresponsible and a risky Rudd adventure," he said.
However Optus spokesman Maha Krishnapillai said the study showed the NBN was viable
and was a major win for competition.