Australian Federal Government Announces the Result of its National Broaband Network nbn Tender

…and the winner is?

No-One!

oh, hold on …the Government!

The Government awarded the contract for its National Broadband Network build to itself having ‘formally teminated’ the NBN tender.

The proposals submitted by Acacia, Axia Netmedia, Optus, Tasmania, Telstra and TransACT were ‘under-developed’ – especially Telstra’s effort.

The Australian Federal Government will establish a public private partnership to roll out ‘the largest investment in infrastructure’ in Australia’s history. In five years time the Government will sell down the company as a wholesale and open access network operator.  

The Government also announced a discussion paper to seek public comment on ways to improve telecommunications regulation to make it work more effectively in the interest of consumers and businesses.  The Government is keen to break Telstra’s ‘monopoly’ hold on telecommunications services in Australia as the owner of the once public telecommunciations infrastructure and the largest retail service provider in the country.

It’s hard to believe that the Government doesn’t have a pre-prescribed view on what form telecommunications de-regulation (the separation of Telstra’s operations) should take given the size ($43billion) and scope (fibre to the home) of its public private solution.

The Regulatory Reform paper canvasses a range of options for reform, including:

• streamlining current regulatory processes, by allowing the ACCC to set up-front access terms for companies wanting access to Telstra and other networks;
• strengthening the powers of the ACCC to tackle anti-competitive conduct by allowing it to impose binding rule of conduct when issuing competition notices;
• promoting greater competition across the industry, including through measures to better address Telstra’s vertical and horizontal integration, such as functional separation;
• addressing competition and investment issues arising from cross-ownership of fixed-line and cable networks, and telecommunications and media assets;
• improving universal access arrangements for telephony and payphones; and
• introducing more effective rules, requiring telephone companies to make connections and repairs within set time-frames.

The Government is seeking submissions by 3 June 2009, before making final decisions and introducing legislation into the Parliament.

The net result of this anouncement is delay. The Government is taking on a high risk project – public private partnerships don’t have a fantastic track record in Australia. Many are suffering from a lack of private funding.

The Government directly references Telstra’s control of the last mile as one of the reasons for failing the NBN tenderers - citing their exposure to extensive legal liabilities which make the business case for building the network unpredictable and untenable.

The biggest obstacle between the Government and a national high speed broadband network continues to be Telstra. Its appropriate for Telstra to protect its business interests having been fully privatised by the Federal Government just over 2 years ago.

Could this new approach by the Government be designed to provide an incentive for Telstra to separate its wholesale and retail operations and partner with the Government to establish the nbn, which would make it the ideal purchaser of the network assets in 5-years time.

It also provides the Federal Government with an opportunity to stimulate the national economy through job creation and big fees for consultants as we embark on YET ANOTHER episode in the long drawn out saga of a high speed broadband network spanning the country.

Finally, combined with the proposed Internet filter this strategy will provide the Government with a great deal of control over the Internet – lets hope they wield this power in a truly open fashion.

This extract from the Government Panel Evaluation Report provides a succinct summary of the decision making process.

Tags: Acacia, Axia, Conroy, deregulation, Optus, public, rudd, separation, stimulus, telecoms, telstra, TransACT