Telstra bids, but makes demands

Telstra has not submitted a full bid proposal for building the Rudd Government’s national broadband network, saying it will only provide access to 90% of the population.

Telstra has not submitted a full bid proposal for building the Rudd Government’s national broadband network, saying it will only provide access to 90% of the population.

The telco will only use $5 billion to extend its existing network. It also says it will only take part in the project when given a guarantee the Government will not separate the network from its retail operations.

Telstra says the slowing economy has restricted the scope of its proposal, and that it will only extend its existing network rather than construct another from scratch.

“The financial climate has changed dramatically since the RFP (request for proposal) was issued in April, fundamentally altering assumptions on which earlier business cases were built,” Telstra chairman Donald McGauchie said in a 10-page letter.

“Telstra can have building well underway next year – far faster than any other alternative.”

The group proposes download speeds of up to 50 megabytes per second for up to 75% of the network. It also proposes an entry-level 1 megabyte per second plan at $29.95 per month, four times faster than already on offer at the same price.

But the group says it still has no intention of separating the network from its retail operations, which has been a point of contention between itself and the Government.

Broadband Minister Stephen Conroy has refused to guarantee it will not require structural separation, with Telstra threatening to walk away from the bidding process.

Proposals for building the network were due at noon yesterday. The Optus-led Terria group, Canadian telco Axia, and Acacia Australia have also submitted proposals.

But Optus spokesman Maha Krishnapillai says Telstra’s bid should be disqualified, and that it is holding the Government to ransom.

“I think it’s the height of arrogance to claim, as Telstra does, that they’re the only one in the world that could possibly build the network,” he told Business Spectator.

But McGauchie has hit back, telling ABC television the Optus/Terria proposal cannot be funded.

“They can’t fund it, they’ve got no money. If they were able to fund it they would have put the money up, they would have indicated how much money they have got available and clearly they haven’t,” he says.

McGauchie claims separation of the network from retail operations would be impossible, despite calls from Optus/Terria that separation is necessary for ensuring healthy competition in the industry.

“Those people who propose that kind of concept should first of all show us that it is possible to make such a proposal work,” McGauchie says.

Results from the bidding process will be announced in January.

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