Broadband deadline looms, Telstra finally makes a move

There’s just one day left until bids for the Rudd Government’s broadband network are due – and Telstra has finally shown its hand.

There’s just one day left until bids for the Rudd Government’s broadband network are due – and Telstra has finally shown its hand.

The Federal Government plans to provide a bidder with $4.7 billion to develop a high-speed national network offering speeds of up to 12 megabits per second, and will connect 98% of the population.

After much speculation, Telstra is set to make a bid. The group’s managing director of public policy, David Quilty, told AAP today the group is confident.

“We are ready to go. We have been doing the planning for three years and are best placed to build a world-class national broadband network. We have the experience, the technical know-how, the trained staff and the financial capacity to do the job properly.”

Telstra has played a highly tactical game, with chief executive Sol Trujillo saying the group will not bid if it must separate its network business from its retail division.

Senator Stephen Conroy, Federal Minister for Broadband, Communications and the Digital Economy, has refused to give Telstra the guarantee.

However, if Telstra does not emerge as the winning bidder, the Government could find itself in the middle of a legal battle, as the telco may claim it has been treated unfairly.

But with three other major bidders, both of which have publically called for structural separation, the Government has a lot of choice.

It is almost certain the Optus-led Terria group of ISPs will emerge as the likely winner. Terria has proposed a $15 billion network plan including 100,000 kilometres of fibre, creating 4174 jobs over five years.

Terria chairman Michael Egan says that structural separation of the retail and network business is necessary for other competitors to remain in play.

Terria – which includes groups such as Internode Systems, iiNet and Primus Telecom – has come under criticism for not disclosing its financial backers. However, spokesman Maha Krishnapillai says Terria has been fully supported by parent company Singapore Telecommunications.

He says the funding is backed by SingTel and the entire board has approved the broadband bid.

The Acacia Group – led by Melbourne businessmen Solomon Lew and Doug Shears – is also set to make a bid.

Meanwhile, Canadian group Axia, which has built fibre networks in Singapore and France, says it will lodge a bid.

Axia chief executive Arthur Price also told a Senate committee if Telstra wins the bid, structural separation would be necessary.

“Only in the telecommunications industry does anyone advocate that competing with your customer can work. To get a high-performing end result and choice for the end user, the party who has the next-generation network should not be competing with its own customers.”

While the network was initially scheduled to begin construction by the end of 2008, the Government’s extension of bidding deadlines will see building commence in mid-2009.