Telstra and NBN are in the final throes of negotiations for a contract that will see the telco take charge of design and construction management for the majority of the National Broadband Network hybrid fibre coaxial (HFC) rollout.
The two parties have signed a memorandum of understanding (MoU) as they work to finalise a contract for engineering, procurement and construction management in the areas where Telstra’s HFC infrastructure will be used to connect premises to the National Broadband Network.
NBN will still maintain “strong oversight” of the network, the government-owned company said in a statement.
The contract is expected to be finalised early next year.
Under deals announced in December 2014, NBN is progressively taking ownership of the Telstra and Optus HFC networks as well as Telstra’s copper network.
HFC and FTTN are two of the key fixed line technologies being used for the ‘multi-technology mix’ (MTM) NBN backed by the Coalition government.
Under the original vision for the network, fibre-to-the-premises (FTTP) would have been used to connect most homes and businesses in Australia.
Under the MTM plan, FTTP will be used in greenfields areas, while most premises will be connected with FTTN and fibre-to-the-basement (FTTB), both of which rely on copper phonelines for connecting end users, and HFC.
HFC will be used to connect around 34 per cent of end users — some 4 million premises — according to NBN’s corporate plan
Read more: Western Sydney Uni to roll out 802.11ac Wi-Fi
Under NBN’s HFC rollout blueprint, in areas passed by both the Telstra and Optus HFC networks the Telstra network will be extended and the Optus network overbuilt.
An NBN document leaked earlier this year revealed the limitations of the Optus HFC infrastructure, including oversubscribed nodes.
That document estimated extending the Telstra HFC network will cost around $150 million.
NBN said today it was in ongoing discussions with Optus around managing the rollout for the HFC network in areas that aren’t also passed by the Telstra HFC network.
NBN said arrangements with Telstra and Optus to manage the HFC rollout would not impact its peak funding estimate (which it revised in its updated corporate plan).
Optus and Telstra managing the rollout within their existing HFC network footprints will simplify the changeover to the National Broadband Network and reduce potential risks, NBN said.
NBN in November begun its first end user HFC pilot. NBN FTTN services launched this year.
NBN unveils maintenance partners
NBN today also revealed it had awarded contracts to Telstra, Service Stream and BSA to operate and maintain FTTP, FTTN and HFC services.The ‘Operate and Maintain Master Agreements’ (OMMAs) relate to work in areas that have been declared ready for service (areas in which an end user can order an NBN service from a retail service provider).The four-year contracts relate to remedying faults and connecting new services to the National Broadband Network across FTTN, FTTP, FTTB and HFC.
Service Stream said it expects revenue from the four-year OMMA it signed with NBN to be worth around $40 million in the first year. Revenue from the contract is expected to increase as the rollout continues.
Telstra also announced a second, three-year contract under which will fix faults on the copper network and undertake a “small number” of new connections for services that are yet to transfer to the NBN, the telco said.
As the network rollout continues, the telco expects revenue from that contract to decrease.
In NBN’s updated corporate plan, released earlier this year, the government-owned company said there were significant uncertainties around the state of the copper network.
There had only been “limited opportunity” for the company to evaluate at scale the state of Telstra’s copper infrastructure, the plan stated.
A leaked NBN internal document revealed it expected to spend $26,115 for copper remediation for each node in the FTTN rollout, up from the $2685 estimated in the government-commissioned strategic review that endorsed switching to the MTM model.