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Penn maintains InfraCo allows Telstra to be part of NBN privatisation

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Image: Asha McLean/ZDNet

Telstra CEO Andy Penn has told the National Press Club on Wednesday that the establishment of InfraCo — the infrastructure arm of Telstra — will allow it to be a part of any National Broadband Network (NBN) sell off.

The plan with NBN since its creation was to eventually privatise it, even though the method is still left to debate, however any company involved in a potential transaction would need to not be a retailer.

Penn maintained on Wednesday that InfraCo was enough for Telstra be involved, and that Telstra, the ACCC, and the government were “very aligned on this point”.

“If Telstra were ever to play a role in that transaction, then we could only do so … via our infrastructure business being separated from our retail business, if I could describe it that way,” he said.

“What Telstra is doing is basically putting itself in a position that is, something that we have the capacity to be a party to or participate in, in the future, by establishing InfraCo in the way in which we are.”

Penn’s words contrast with those of Communications Minister Paul Fletcher, who earlier this month told ABC Radio that structural separation was not enough.

“Under the law as it stands, Telstra as the provider of retail broadband services would not be permitted to own the NBN,” he said.

“That’s actually a pretty uncontroversial proposition. There’s not much party political contention on that.”

Fletcher said his thoughts reflect the advice of economists and competition policy experts, and ensured the broadband network was not owned by a “monopoly player with market power”.

“That’s why the structure is have a single, national wholesale provider of fixed-line broadband services, and then all of the retail service providers are free to deliver services over it and they’ve got the relationship with the customer,” he said.

Telstra and NBN are currently pointing to each other as the source of high broadband wholesale prices in Australia.

On Tuesday, Penn said it was unprofitable for retailers to resell NBN at current prices.

“An industry where wholesale prices result in zero margins for the downstream retail providers is unsustainable,” Penn said.

“It will result in higher retail prices, reduced competition and retail providers looking for ways to bypass the NBN altogether — which is bad for customers and bad for the industry.”

NBN CEO Stephen Rue returned serve on Wednesday, describing the wholesale price debate as “the industry gnashing about NBN Co’s pricing model”.

“Let’s not forget that the sum of all NBN Co payments to Telstra was around AU$2 billion this year,” Rue said.

“Our Corporate Plan points to a continuing payment to Telstra for access to ducts, dark fibre and facilities of AU$1 billion annually from FY21, representing 20% of forecast revenues, and continuing for decades after the build is completed.

“This has an obvious impact on wholesale prices.”

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