Volleys fly as NBN debate heats up

01 Dec 2008

The market temperature has risen in Australia's next-gen broadband project, with all key players - Telstra, Optus and the government - coming under fire.

Telstra has attacked SingTel subsidiary Optus for not making any financial disclosures for its A$10 billion ($6.5 billion) National Broadband Network bid.

Optus's failure to inform the Australian Stock Exchange (ASX) how it intends to raise its A$1-2 billion share of the investment means “there is an A$10 billion funding hole in the Singtel Optus proposal,” a Telstra spokesperson said.

Optus is the Australian subsidiary of SingTel.

According to the spokesperson, even if Optus's share in the investment is taken as read, the company has not indicated where the remaining A$8 billion ($5.2 billion) will come from.

“Telstra is the only serious builder of the NBN. It is the only company that has committed serious capital to the project and disclosed that commitment to the ASX,” he said.

But Telstra's underwhelming bid has attracted its fair share of criticism as well.

According to ITNews, Telstra's submission was ill-received by the Australian media, with one incredulous journalist asking, “is the Telstra submission a joke?”.

And David Forman, executive director of the Competitive Carrier's Coalition, has attacked Telstra for using its size and market dominance to attempt to bully the government.

“The truth is that for three years Telstra has tried to force successive governments to do a secret deal, but its terms have been so unacceptable that no one could responsibly agree,” he said.

“The responsibility of the Government and the entire Parliament now is to defend the interests of other bidders who have acted in good faith and within the rules by putting forward serious bids.”

IBRS analyst Guy Cranswick believes the situation will result in a network that fails to deliver hat was promised in terms of both reach and speed, and has criticised the government for its handling of the tender process.

“That is a problem that could have been dealt with by stronger policy planning at the outset, [and] the bidding process could have been managed better,” he said.

The government intends to commit $3 billion to the construction of the NBN, with the winning bidder contributing the remaining costs.

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