Telstra puts in non-bid broadband bid

All the posturing was for nought – Telstra has decided to join the process for the Australian government’s National Broadband Network (NBN) despite not having received assurances it had sought that there would be no structural separation of its business.

The company had claimed it would not bid unless the government ruled out structural separation into distinct wholesale and retail arms. The minister for communications had declined to do so on a number of occasions and most recently at the start of the week.

But Telstra is still adamant its bid is subject to “ a number of conditions for the life of the project, including no further separation of Telstra and regulatory certainty.”

It has worked around the impasse between itself and the government by claiming its bid is not a bid but a proposal. The proposal “outlines what would be achieved by the fully detailed bid that Telstra has prepared but could not be submitted due to a number of unresolved issues in the Government's Request for Proposals (RFP).”

Telstra’s “proposal” is that the company invest A$5 billion of its own capital, matching the government’s promised A$4.7 billion. The network would be capable of downlink speeds between 25Mbps and 50Mbps in 65%-70% of the footprint, with downlink speeds of between 12 Mbps and 20Mbps in the remainder.

But only “up to” 90% of the population would be covered, some way short of the government’s stated aim of covering 98% of the population with speeds of over 12mbps. That would cost far too much, said Telstra.

Telstra’s non-bid bid was one of four national bids, with second-ranked telco Optus submitting a bid on behalf of the Terria consortium it leads.

The Terria proposal envisages a structurally separated, open access network with cost-based pricing and a “reasonable rate of return”.

Paul O’Sullivan, Optus Chief Executive said, “As others have blustered and complained, we have been working together quietly for many months to develop a bid which delivers on the Government’s policy objectives. Our bid gives full effect to the principles which have been consistently articulated by TERRiA. We are proposing a structurally separated, open access network with prices regulated by the ACCC and offering full equivalence to all access seekers.”

Other bids came from Canada’s Axia NetMedia and Acacia, a private equity group put together specifically for the bidding process led by Melbourne businessman Solomon Lew, and about which little is known. The government of the state of Tasmania and Canberra-based telco TransACT are believed to be submitting separate proposals for their regions.

Axia said its approach was “based on creating a sustainable value chain of industry players that each excel at delivering their core competency. The result would drive transformation to markedly improved performance, lower cost and increased choice to end users. Axia has proven that this approach works in the rural/remote sector through the Alberta SuperNet; in medium density regions in France; and in a high-density metropolitan city network in Singapore.”

A panel of experts appointed by the government now have two months in which to assess the proposals with the minister, Senator Conroy, telling the Senate that Telstra’s non-bid proposal would be considered along with the rest.