Telstra Kicked Out of $15bn Broadband Project 158
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."
non compliant (Score:5, Informative)
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 [news.com.au]
Govt hits back at Telstra - http://www.australianit.news.com.au/story/0,24897,24802044-15306,00.html [news.com.au]
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:No Competition? (Score:5, Informative)
Govt hits back at Telstra - http://www.australianit.news.com.au/story/0,24897,24802044-15306,00.html [news.com.au]
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:No Competition? (Score:5, Informative)
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 [mac.com] 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:Senator Conroy's handiwork (Score:5, Informative)
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 [smh.com.au]
Telstra excluded from broadband network tender [abc.net.au]
Re:Senator Conroy's handiwork (Score:3, Informative)
Optus spent $5 million creating a 900 page bid [optus.com.au] proposing an open playing field. I don't think the details are public yet, but that link has the media release. They also fronted a $5 million bond [itwire.com].
Telstra sent in a 14 page memo saying something along the lines of "we'll do it as long as you guarantee our infrastructure monopoly and we wont pay the bond, but we promise to put in $5 billion".
If this gets up, this is a win for all Australian Internet users. "Telstra has said entry-level access to its proposed NBN would start at $39.95 per month for a 1 megabit per second connection with 200MB of download capacity."[ref] [news.com.au] This is what we could look forward to under Telstra. More of the same shite. That 200mb includes backhaul too.
Re:What about competition? (Score:5, Informative)
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? (Score:3, Informative)
I don't think Telstra wanted to win. They had to put in a bid for sake of appearances, and reports are that what they put in was gratuitously half-arsed. I doubt they plan to play this game by the rules. Perhaps winning would have been quite inconvenient for them.
Recall that a FTN tender was already called, bid, won and accepted, but that Telstra managed to get it canceled, and the process restarted. Maybe they hope to do so again. In truth they haven't been seriously considered, and if they can manage to prevent their own recalcitrance and mistakes being raised in court, which maybe they can if the Law is, as so often is said, an ass, then they will get another bite at the cherry. Third-time could be the charm; the Government might well give up on the idea.
It's not obvious what else they could gain by this, unless it's merely a few more months to a year to exploit their final piece of monopoly infrastructure; the local loop. FTN will shrink that monopoly from copper runs of thousands of meters length to perhaps one-hundred meters. Whatever price they presently justify for the local loop surely will be reduced by a factor of 10 to 50 after FTN is deployed.
I've heard that the local loop represents 60% or more of the total capital value of Telstra, from which I conclude that (an opposition owned) FTN will reduce their value by over 55%.
Note to self: ob Telstra shares: sell! sell! sell!
-- Newall
Re:Senator Conroy's handiwork (Score:4, Informative)
I'll quote this from ABC earlier on as it shows a different tack:
Prime Minister Kevin Rudd says the decision to exclude Telstra from bidding to build the national broadband network was made at arm's length from the Federal Government.
Telstra submitted a brief proposal instead of a full bid because it was not satisfied there was enough detail from the Government on regulatory requirements.
Telstra says it has been excluded because it did not say how it would include small and medium businesses in the network's construction.
The telco has accused the Government of using a peripheral issue to block it from winning the tender.
But Mr Rudd has said the decision was made by an independent panel assessing all of the bids and the project is still on track.
"We've regarded this as a necessary investment in the nation's infrastructure and we would do so on the basis of a competitive tender process," he said.
"That panel that's been at work has been full at arm's length from Government and has reached its own conclusions.
*snip*
Still optimistic
However Telstra remains hopeful it still has a chance to build the national broadband network despite being excluded from formal consideration.
A media analyst from stockbroker BBY, Mark McDonnell, has told ABC Radio's The World Today the exclusion is a dramatic development for the telco.
"It potentially spells the end of Telstra's aspirations for re-eingineering its network to provide high-speed broadband," he said.
But in a briefing with analysts, Telstra chief executive Sol Trujillo has argued it is not the end of the road for the company.
He says the Government may decide to reengage with Telstra if the other three national bids are inadequate.
Mr McDonnell says there could be more to the Government's decision than has been publicly disclosed.
"The question then is whether this is really part of some sort of gaming process, trying to soften up Telstra with a plan to ultimately reengage with them," he said.
"That is probably the most optimistic view you could take from a Telstra perspective on this, or in fact whether there is some other agenda."
Telstra shares have fallen more than 7 per cent in an overall strong day for the market.
This was earlier on and has fallen out of the RSS feeds.
http://www.abc.net.au/news/stories/2008/12/15/2446644.htm [abc.net.au]
Re:What about competition? (Score:3, Informative)
I doubt this is only about the proposals. 6 weeks ago, Telstra criticized the government over Internet Filtering. This action to kick Telstra out of the $15bn Broadband Project, is the government's reaction to that criticism.
For example,
"Australia's ISPs Speak Out Against Filtering"
http://yro.slashdot.org/article.pl?sid=08/11/01/0248221 [slashdot.org]
"The leaders of three of Australia's largest internet service providers -- Telstra Media's Justin Milne, iiNet's Michael Malone and Internode's Simon Hackett -- have, in video interviews with ZDNet.com.au over the past few months, detailed technical, legal and ethical reasons why ISP-level filtering won't work."
Re:All or nothing bet (Score:3, Informative)
It will be driven into the ground and Sol with leave with his millions. Then the taxpayers will have to take up the bill since no private company will touch whatever smoking ruins are left.
Re:Just when I thought Sol couldn't top his antics (Score:3, Informative)
I know the USA still thinks of Australia as a place full of convicts but I wish you wouldn't send crims like Sol Trujillo and Robert D. McCallum.
Re:Outside the square (Score:2, Informative)