Telstra Kicked Out of $15bn Broadband Project

An anonymous reader writes "Australia's largest telco and ISP, Telstra, has been kicked out of the bidding process to build a national broadband network (NBN) estimated to be worth $15 billion. The Aussie government had earlier given assurances that the proposal would be considered, however it now won't even be evaluated by the expert panel, which will make the recommendations to the Senator for Broadband and Communications. The government may now take steps to legislate so that Telstra can't build a network that competes with the NBN — leaving the incumbent to focus on wireless HSPA+ technology instead."

Comments

non compliant

[Anonymous Coward]

They submit a non-compliant bid, really what did they expect.

Bid Rejected - http://www.australianit.news.com.au/story/0,24897,24800767-15306,00.html
Govt hits back at Telstra - http://www.australianit.news.com.au/story/0,24897,24802044-15306,00.html

Of particular interest is this snippet form the above stories:
"The independent expert panel charged with assessing the bids obtained five separate pieces of legal advice which said it could not consider Telstra's bid.

That advice was from internal government lawyers; the Australian Government Solicitor; respected private law firm Corrs Chambers Westgarth; senior counsel appointed by Corrs; and finally, the Solicitor-General, the Government's top legal advisor."

There were four conditions that RFP documents had to meet:
* The document must be written in English.
* The measurements used within must meet Australian standards.
* The proposal must be signed.
* The document must include a plan for how SMEs will be involved.

Telstra didn't submit anything for point 4. Now for a multi billion dollar proposal, you should at least submit a compliant bid. Instead they submitted a document with their own terms and promised "more information" if the Govt agreed to THEIR terms.

Re:non compliant

[solanum]

Mod parent up. This is all part of Telstra's brinkmanship with the government here. They tried the same thing with ADSL2, where they wanted permission to exclude/charge higher prices to competitors (despite having a monopoly on the 'last mile', so delayed making ADSL2 available to the public. In the end, the main competitors got together and put their own ADSL2 DSLAMS in place, so Telstra were forced to start allowing users onto their ADSL2 network after all.

In this case Telstra claim no one else can do it other than them, so have refused to put a proper bid in in the hope they can get more out of the government.

Re:Senator Conroy's handiwork

[Anonymous Coward]

Plenty of other ISP's have refused to participate. ISP's who have like iiNet have publically bagged the entire process.

I think you are really reaching if you think the two are related.

Re:What about competition?

[Max Littlemore]

You say eliminating the biggest provider will reduce competition? Eliminating a virtual monopoly is bad for competition? Wow.

I think it's a bit silly not even reviewing their proposal, but that's ridiculous.

Re:No Competition?

[Anonymous Coward]

Govt hits back at Telstra - http://www.australianit.news.com.au/story/0,24897,24802044-15306,00.html

Of particular interest is this snippet form the above story:
"The independent expert panel charged with assessing the bids obtained five separate pieces of legal advice which said it could not consider Telstra's bid.

That advice was from internal government lawyers; the Australian Government Solicitor; respected private law firm Corrs Chambers Westgarth; senior counsel appointed by Corrs; and finally, the Solicitor-General, the Government's top legal advisor."

Long story short- Telstra screwed themselves becuase they submit a non-compliant bid. They CAN'T accept the bid because if they do, the other parties that did submit compliant bids could possibly sue them.

Re:What about competition?

[dbIII]

They wanted to prove that they were not bound by the same rules as everyone else by not putting in a bid but expecting to be chosen anyway. If that had happened they would get to dictate their own terms. No government with even half of a clue would let this happen. The previous government dealt with it by pretending that it was not their problem even when they owned all and then most of Telstra. The current government still owns a lot of it (future fund) but their is some weird arrangement where they are not allowed to vote as if they are a shareholder left over from the previous government.

For those outside Australia Telstra can best be summed up as a combination of some of the worst aspects of the government organisation which it was and the worst aspects of a private telecommunications monopoly that it has become. Add to that a fully imported management team of executative with spectacular failures behind them of the sort that think slavery is a good idea and experise in anything is for the peasants. One was infamous for repeatedly refering to the remaining Australian management and the Australian staff as "savages".

If it wasn't close to a monopoly it would have gone the way of Enron long ago due to being run the same way.

Re:What about competition?

[tux0r]

I beg to differ.

Consider that the competitor may (yeah, I know, work with me) be able to provide a tender for a FTTH solution, as opposed to the rather short-sighted FTTN solutions bandied about. (Axia has been talking about FTTH for their bid.)

Suddenly there's no issue with Telstra - the whole legacy copper network is leapfrogged. Competition on pricing and/or quotas rages. Australia is future-proofed and Telstra has to come up with another (distinguishable) technology to stay in the game.

I realise this is not an overnight solution, but we should all be thinking further than ten years into the future. I am very hopeful that FTTH becomes a reality with the new Australian NBN, and now that Telstra is out, it's just that little bit more likely...

Re:Senator Conroy's handiwork

[dbIII]

No. Sol has been playing politics on this broadband plan from the start. The trick to win the bid without putting in a proper bid would let him set his own terms.

Re:Senator Conroy's handiwork

[mister_tim]

Or rather:

3) Telstra submitted a non-conforming tender and the Government had no choice but to reject it.

Being a Government employee myself, when it comes to tendering you have to apply the same rules to everyone. If the Government had accepted Telstra's tender, even though it did not comply with the requirements in the RFT (and this was well publicised, they would have left themselves open for all sorts of problems, e.g. being sued by other applicants.

Optus was right to say that Telstra's submission was a joke: a 12 page letter to the Minister in lieu of a serious tender for a $4.7bn project is brinkmanship of the worst sort and the Government was right to call their bluff.

Re:No Competition?

[mcbridematt]

They submitted a 13 page 'proposal' at the last minute while (apparently) even the smallest of the bids were throughly detailed.

I bet when each bidder had to front the 'expert panel' on the weekend the panel decided not to waste their time entertaining a 'proposal'. Being a 13-page 'proposal' the lawyers would've had no trouble finding missing bits.

Besides, the process is pretty lame. The goal was to build the exact same proposal that Telstra came out with in 2005 - $4billion AUD for FTTN(which will be obsolete in 10 years anyway), and only do FTTH in brand new developments.

Its been pointed out by the head of another ISP (Internode, who I use) that Telstra could simply build a FiOS-style FTTH network and keep it to themselves, with no strings attached while the older PSTN remains. Keep in mind that Telstra's entire goal throughout this process has been to decimate the competitive environment that exists. There are ADSL2+ plans which offer 100x more value than the proposed wholesale FTTN port price!

Re:All or nothing bet

[c_g_hills]

"Trujillo's final dramatic quote to the analysts was "Nothing Stops Telstra"." (Business Spectator)

The man reeks of arrogance. Nothing good can come of letting the incumbant monopoly. I hope that Australia ends up with the network it really needs, rather than the one that Telstra has given them.

As usual headline is totally wrong.

[timmarhy]

No where does it say they are making laws to keep telstra out. they did however reject telstra's non compliant bid, and i didn't suprise me in the slightest they are sick of Trujillo's bullshit. he keeps trying to claim telstra are the only company that can build a national network. seriously who does he think he is fooling. there is a dozen companies in oz that could build a better network than telstra. this along with constant hollow threats of not building the new network, when no one wants them to be involved to begin with are enough to make anyone sick to death of them.

IMHO Trujillo needs to get it through his thick head that 15 billion in tax payers money is going to come with strings attached, like it or not.

Re:Senator Conroy's handiwork

[Ralish]

I loathe Conroy, and everything national internet filtering involves, but in this case, it's more than just a technicality.

Whereas all the other major contenders submitted official proposals in the tender process, Telstra instead submitted an "informal" proposal that lacked significant details that the other official proposals had, not to mention vague estimations on things as minor as "network coverage". Further, many of these estimations fell far short of the government requirements in the first place. Add in the fact that Telstra wanted their flawed and half-baked proposal to be considered with the same standing as the detailed official tenders their rivals had submitted, and you being to realise that Telstra is just a joke.

Today it emerged that they didn't submit details on how they intended to liase with and include small business in the construction and development process; which is oh-so-fitting keeping in mind this is a giant telecom monopoly.

These articles better explain how absurd Telstra's position and conduct regarding the tender process has been to date. I challenge you to read them and not agree that they should have been kicked out of the evaluation process. Frankly, I'd have kicked them out some time ago.

Telstra bends the rules on internet bid

Telstra excluded from broadband network tender

Re:What about competition?

[mgblst]

Their proposal was 12 pages long, compared to serious proposals of hundreds of pages. Telstra were threatening not to bid at all, unless the government gave them some guarantees that no matter who won, they would be involved in the projects.

Telstra were pushing themselves, and the government called their bluff. They have been punished in the markets, dropping 12%, and they should be punished by the government as well.

Re:What about competition?

[witherstaff]

Telstra was simply overdoing it. In the US you can ask for 700 billion with only 3 pages.