NBN Back-up Plan: Telstra, Optus, NBN Execs to be Compensated if Politics Hinder

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By Erik Pineda | November 30, 2011 4:25 PM EST

A deal secured by Optus with NBN Co has assured the telco of just compensation in the event the National Broadband Network project of Prime Minister Julia Gillard becomes a casualty of political wrangling in Canberra.

The Coalition has pledged to scrap the $36 billion broadband program if it takes power, a scenario that assures Optus of a sizeable fraction of the $800 million agreement it forged with NBN.

Under that contract, and if approved by the Australian Competition and Consumer Commission, Optus is required to give up its cable network and make way for the NBN's plan of laying down fresh fibre network across Australia.

However, according to The Australian, a provision of the NBN-Optus deal also stipulates that no cash will be paid by the government once the ACCC has adjudged that the agreement will not deliver exceeding benefits to the Australian public.

Conversely, any government that succeeds Gillard will need to pay millions of dollars to the telecommunication firm, currently second only to Telstra Corp in terms of market share, if it opts to junk the NBN.

Quoting provisions of the latest federal budget, the Australian government, according to the publication, will earmark funds for the NBN project, including through equity channels, to ensure its roll our over the next four years, easily amounting to more than $18 billion.

All in all, the federal government is set to release $27.5 billion for the NBN program, including what The Australian termed as 'sufficient funding' for the project's likely termination in case the Coalition is elected and fulfills its promise of scrapping the billion-dollar broadband network.

Along with the protection extended by the government to both Telstra and Optus, it also appears that NBN directors directly involved in the NBN deals with the two telcos are amply protected in the form of just indemnities.

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