NBN a 'great leap backwards'

Opposition Leader Tony Abbott has compared the national broadband network (NBN) to ripping up a freeway and replacing it with a toll road.

In contrast, Treasurer Wayne Swan says it is a "red letter day" for competition in the telecommunications sector with both Telstra and Optus striking a deal with the NBN Co. He praised an $800 million agreement between Optus and the NBN Co to migrate customers to the national broadband network (NBN).

Telstra has also signed deals worth $11 billion.

"The two major telcos have signed up with the NBN," the treasurer told reporters in Canberra.

"That will mean a very strong take-up of the NBN."

Mr Swan said the contracts would completely change the market structure of Australia and offer genuine competition to customers for the first time.

But Mr Abbott said it was a "great leap backwards" and similar services could be delivered more cheaply with a mix of technologies.

"What the government is doing is analogous to closing down a freeway to make Australians use a toll road," Mr Abbott told reporters in Canberra.

"And it's typical of the incompetence and the ineptitude of this government that they are paying vast amounts of money not to create infrastructure but to close it down."

Mr Abbott said it showed a lack of proper economic priorities.

"They are going to spend $50 billion plus on something which is not necessary at a time when Australia's road, railways and ports are completely clogged," he said.

Mr Abbott said a coalition government would announce "at the time" what it would do in terms of broadband services.

"We don't know how far advanced the NBN will be, if and when we take government," he said.

His communications spokesman, former leader Malcolm Turnbull, said it was a bad deal for consumers and the 'nail in the coffin' for competition in the sector.

CONROY: HISTORIC DAY

Communications Minister Stephen Conroy says the deal will allow Optus to decommission its hybrid fibre coaxial (HFC) cable network and migrate customers to the NBN fibre platform.

"It is truly a historic day and milestone day for the telecommunications sector," Senator Conroy said.

He said Telstra and Optus represent 60 per cent of the retail broadband connection market.

Optus has also agreed to use the NBN's fibre network to deliver all of its services.

Senator Conroy said the NBN corporate plan did not include this arrangement so it will mean additional customers on top of what was included in the business case released last December.

It represents a clear message endorsing the NBN, providing a national wholesale only open access network," he said.

Optus chief executive Paul O'Sullivan said the telco currently provides for 1.4 million households.

"History shows the size and population density of Australia cannot sustain two competing networks economically," Mr O'Sullivan said.

"That's one of the main reasons that Optus believes a single wholesale-only national broadband network is the right thing to do."

He said the NBN will create a true level playing field for fixed line services by separating the ownership of infrastructure from competition in the retail market.