Discussions between NBN Co and Telstra over the 'last mile' continue. We have a better idea of where they are headed, but ithe outcome remains uncertain.

After Telstra released its financial results last week Telstra’s relationship with NBN Co, and said the two companies had agreed on a “non binding commercial framework around which revised agreements will be built.”

Now Communications Minister Malcolm Turnbull has expanded on these comments. “This means they’re not seeking any additional payment for the transfer of these assets,” he told the Australian Financial Review. “We always said it wouldn’t be the case because Telstra was shutting them down.

“The negotiations are very well advanced and that’s plain from Telstra’s comments.” Turnbull has long asserted that the taxpayer would not have to pay for NBN Co’s acquisition of any of Telstra’s ageing copper infrastructure, and on Telstra’s and his comments that would seem to be the case. But might not Turnbull be counting unhatched chickens?

A ‘non binding commercial framework’ is not the same as a definitive agreement, and we cannot be certain yet as to what it will mean in practice. Turnbull’s optimism may be premature – as we know from the NBN’s history, there are not many certainties.

CEO David Thodey and CFO Andy Penn were quizzed on the details at a meeting with analysts that followed the announcement of the results. We are still not much the wiser.

“We share the Government’s objective to finalise the agreements as soon as possible but no date has been set for completion,” said Thodey. “The current agreements are complex. Therefore the shift to a multi-technology model requires careful consideration as to how these agreements need to be modified.

“The teams are working to get the material commercial issues resolved. The renegotiations are progressing well and the parties are working constructively towards a common goal. This is important as we will be NBN Co’s largest customer and also one of their biggest suppliers. It’s in our mutual interest to achieve clarity on exactly how the transition to a multi-technology mode will occur.

“We are committed to acting in the best interests of our shareholders and we are focused on maintaining the value of the current agreements, achieving certainty of outcome as soon as reasonably possible, and also minimising any additional regulatory risk.”

Thodey’s ‘acting in the best interests of Telstra’s shareholders’ and Turnbull’s ‘the taxpayers will be no worse off’ are at odds with each other. Despite Turnbull’s optimism, there is no guarantee that NBN will not end up paying a significant amount to Telstra on top of the $11 billion already committed in the agreement negotiated with the previous government.

Commentator Stephen Bartholomeusz, writing in Technology Spectator, used a nice turn of phrase, referring to ‘the gift that keeps on giving’. In an incisive piece of analysis well worth the read, he points out that Telstra is not actually giving NBN Co the pieces of the copper network it will need to connect the last mile under Turnbull’s ‘multi-technology mix’.

“It will mean that it will have to take over responsibility for the maintenance of the copper, but any lease arrangement with Telstra would have reflected those costs in any event.”

It is obvious from Telstra’s comments that it has no intention of giving up any of the $11 billion it has already negotiated, and that it actually intends to get quite a bit more out of the NBN. Bartholomeusz says it is a sign of a new pragmatism, but that pragmatism is not likely to extend to any generosity on Telstra’s part.

Turnbull’s comments that the taxpayer will pay no more are much less credible that Thodey’s comments that Telstra’s shareholders will not be disadvantaged. It is a zero-sum game, and someone has to pay.

Thodey expanded on this at the analyst’s briefing. “In these renegotiations our objective is that we must be kept whole, and that means we should not be materially worse off under any renegotiated arrangements than under the current definitive agreements.

“The commercial framework within which the parties are negotiating acknowledges this objective, but final agreement is yet to be reached so there is no guarantee that this objective will be realised. The commercial framework anticipates a change in approach taken in respect of the copper and HFC network assets from staged decommission to NBN co-owning some or all of such assets. We remain committed to looking after our shareholders.”

So, ‘no guarantee’ that Telstra will not be worse off. But at the same time there is certainly ‘no guarantee’ that NBN Co – and the taxpayer – will be any better off.

Where do these latest shenanigans leave us? Little has changed, really. We know that NBN Co and Telstra are continuing to negotiate, we know that Telstra’s $11 billion is safe. And we know that there will have to be some arrangement covering the fact that with Fibre to the Home, some of what is currently Telstra copper will become NBN copper.

Who will pay for that, and how much they will pay, and who will pay for its maintenance, is as unclear as it has ever been. Turnbull’s comments are disingenuous in the extreme.

Imagine that!