Billions in negotiating play as game changes with government Telstra CEO David Thodey prior to the Telstra Annual General Meeting in Sydney. THE boards of Telstra and casino group Echo Entertainment find themselves in very different places as a result of a change in government and consequently of government policy. Telstra now finds itself in a negotiation with the federal government over its proposed changes - whatever they turn out to be - to the National Broadband Network. While Echo faces the prospect of its monopoly over casinos in Queensland evaporating as quickly and as completely as it has already done in New South Wales. As premier Campbell Newman takes his inspiration from formerly staid Singapore's embrace of casino resorts. The Echo board should now be well and truly lamenting its failure to act proactively and most decidedly pre-emptively to cement its casino monopolies in both states. While the board of Telstra would - or can be - comfortable, with having taken the exact opposite position; of being reactive to what has been proposed to, or imposed on, it. Each is an instructive case study of dealing with governments. The very different positions the companies find themselves in was captured in their respective share price movements yesterday. Telstra up 1.4 per cent, Echo down 4.8 per cent. Telstra has an iron-clad contract with the federal government - negotiated of course with the previous government - to facilitate the building of an FTTP (Fibre To The Premise) broadband network. There are two core elements to its deal. Telstra gets paid to migrate all its existing - the vast majority of - fixed-line customers to the NBN. And it gets paid to give the NBN access to its ducts and to close down its existing copper network. An additional element is that it is prohibited from using its HFC (hybrid fibre co-axial) cable network that passes around three million homes in the major capital cities for broadband; only for the Foxtel subscription-TV service. Under the new government's broadband policy, this HFC cable - and Optus's somewhat smaller version - could either be integrated into the overall NBN mix or enabled to compete with the NBN. The bigger change is of course a switch to an FTTN (Fibre To The Node) NBN network. Which would require Telstra to keep its existing copper cables in place from node to premise. NBNCo would then have to either buy that copper from Telstra or lease it. New communications minister Malcolm Turnbull has made it clear he is going to be much more flexible in terms of the network architecture. It doesn't have to be totally FTTN. In greenfields estates especially, it would make more sense to build FTTP. But even in some established locations, it would also. This means an extremely complicated negotiation with Telstra. But one that can aim at a win-win outcome. A deal that is at least as good for Telstra, and one that saves the taxpayers some billions of dollars. Telstra is now pot-committed, as they say in poker, to the NBN. It can see a potential major boost to its future revenue streams; and its ability to dominate the combined fixed-mobile broadband spaces. And it would be indifferent to whether it closes all its copper from the kerb to each premise, or else some of it stays for NBNCo. Except crucially, keeping some copper will get Telstra (and of course everyone else) a revenue-boosting pervasive NBN that much quicker. Both sides should have an intelligent arm-wrestle. It's a matter of sharing a clear surplus. In the Queensland casino case, though, the time for arm-wrestles has gone. Echo is now in a very difficult position, It is locked into two underperforming operations, with its Treasury casino in Brisbane and what is essentially an over-sized Leagues Club, Jupiters at bikie central, Broadbeach on the Gold Coast. What it should have done, some years ago, exactly as James Packer did in Sydney, was to unilaterally decide Queensland's casino policy going forward. That is, broadly, to have made the Queensland government an offer it could not refuse. Recement our monopoly and we spend $2-3 billion-plus turning Jupiters into a full-on high-roller resort, Singapore Sentosa style; and move Treasury from its constricted site to an all-new Crown casino style six-star facility. The fact that it didn't, and it's now too late - and the way it allowed itself to be sandbagged by Packer in Sydney - arguably demonstrates the inflexibility of a public company, made starker by the ownership freedom that Packer had and used. Obviously, Echo has to make its bid for the new six-star Crown-style casino in Brisbane. It also has to decide whether to spend $1 billion on the coast, into massively expanded local and regional competition. The alternative is to accept its future lies in running two large leagues clubs in Queensland. And one casino, Star in Sydney, which is caught halfway, having actually significantly boosted its high-roller business. Another point to consider which goes not only to Echo narrowly, but the much broader issue of related party dealings, is how it all could have been so different if it had invited Packer into the tent rather than spurned him. The proposed high-roller facility at Barangaroo could have been inside or linked to Echo instead of likely cannibalising Star. And its partner Packer could have been there to persuade the Queensland government to put all its casino eggs in the two upgraded Echo facilities in Brisbane and on the Coast. But somehow, I doubt that the Echo board and management would have been up to negotiating the terms of a partnership with Packer. In reverse, let's hope the government and NBNCo are up to negotiating with Telstra.