Government bans Telstra from bidding to build broadband network

The Rudd Government has sent shockwaves through the telecommunications and internet sector by excluding telecommunications giant Telstra from the bidding process to build the national broadband network (NBN).

The Rudd Government has sent shockwaves through the telecommunications and internet sector by excluding telecommunications giant Telstra from the bidding process to build the national broadband network (NBN).

In an extraordinarily controversial move, Telstra has been excluded on the grounds that it failed to provide plans on how the giant would include small and medium enterprises in the building of the NBN when it lodged its bid on 26 November.

Telstra’s chairman Donald McGauchie disputes the claims – and is livid.

“The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN,” he says.

“This is a process that seemingly excludes bidders on such trivial and legally questionable technicalities but doesn’t take any action on material issues such as financing and having the technical capability to build the network.”

Steve Dalby, chief regulatory officer at listed internet service provider iiNet, is part of the Terria consortium that has launched a rival bid to build the NBN.

Dalby says the reasons given for Telstra’s exclusion look to be a technicality at best, but claims he is not surprised to see Telstra excluded.

“I won’t be surprised at any outcome from such a poorly put together process that lacks any leadership from Government.”

He says the telco giant only has itself to blame, and claims Telstra submitted a press release rather than a proper bid.

“The day that the bids closed we felt our chances had improved. When we saw that press release rather than a bid, we had big grins on our faces.”

However, he concedes that Telstra would have bought a lot of strengths to the NBN process.

“They have a lot that they can bring to the table. It’s ridiculous to think that the largest telco in the country has been excluded from this process.”

But Telstra’s chief executive Sol Trujillo has been quick to point out that Federal Communications Minister Stephen Conroy is still able to talk to whichever companies he wants after the Government’s expert panel makes its recommendation.

“It is too early to rule anything in or out, and we remain hopeful that sense will prevail outside the bidding process at a later date.”

Dalby agrees, and says Telstra will have to be involved in the NBN process if only because it owns the customer access network at the heart of the Australian telecommunications system.

“I think just by their size and ugliness they’ll demand a spot at somebody’s table.”

Telstra’s shares have slumped more than 6% since the announcement.

Related stories:

• Broadband deadline looms, Telstra finally makes a move
• Who will win the battle to build Australia’s national broadband network?