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Telstra Kicked Out of $15bn Broadband Project 158

Posted by timothy
from the yeah-but-those-are-australian-dollars dept.
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."
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Telstra Kicked Out of $15bn Broadband Project

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  • non compliant (Score:5, Informative)

    by Anonymous Coward on Monday December 15, 2008 @02:15AM (#26116939)

    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:non compliant (Score:5, Interesting)

      by solanum (80810) on Monday December 15, 2008 @02:40AM (#26117069)

      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.

      • by Whiteox (919863)

        Yeah but it's not Telstra per say, it's Sol Trujillo.
        Evidently he stuffed up another Telco in the USA. Read about it a year ago but can't find the links. Somewhere in the mid-west I think.

    • The document must include a plan for how SMEs will be involved.

      Perhaps this is an Aussie thing, but what do they mean when they are talking about "involving" Small and Medium Enterprises? Is this about subcontracting work to other companies? Making the final service affordable to smaller businesses? Etc. It's a very non-descriptive statement.

  • by QuantumG (50515) * <qg@biodome.org> on Monday December 15, 2008 @02:16AM (#26116949) Homepage Journal

    They're afraid of being broken up (because they're a monopoly) so they tried to put conditions on their bid. The government slapped 'em back into their place. Now they're crying about it.

  • Why wouldn't the government allow them to compete?
    • Re:No Competition? (Score:5, Informative)

      by Anonymous Coward on Monday December 15, 2008 @02:34AM (#26117041)

      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)

      by mcbridematt (544099) on Monday December 15, 2008 @02:53AM (#26117137) Homepage Journal

      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:No Competition? (Score:4, Insightful)

        by Nefarious Wheel (628136) on Monday December 15, 2008 @03:51AM (#26117371) Journal

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

        Having been in The Machine before (what Australian contractor hasn't been that hungry at least once?) I suspect they simply couldn't get it together to make the bid. Sol decimated the Telstra bureaucracy. This is both good and bad; the latter because they have utterly no clue how to communicate internally any more. No way is that executive team going to do any bid work to that level any more, they just don't have it in them. Big isn't necessarily muscular. That dog is too old to go hunting.

    • I should clarify my point.

      They don't win the government grant, fine

      But why not let them build their own network with their own money parallel to this? Explicitly forbidding this seems a little too socialist.

      • They haven't been specifically forbidden. They're just not going to be in the running for this particular lot of government funding.

        Telstra won't build their own network because they don't want to have to spend their own money on it. They have been given a free ride and are complaining now that they have to actually do some work.
        • Directly from the Slashdot summary:

          "The government may now take steps to legislate so that Telstra can't build a network that competes with the NBN"

          • Re: (Score:3, Insightful)

            by Gideon Fubar (833343)
            Yes, may. As opposed to have.

            Turns out that speculation about the future doesn't directly influence fact in the present, no matter how hopeful it is.
            • Re: (Score:3, Funny)

              by Leafheart (1120885)

              Turns out that speculation about the future doesn't directly influence fact in the present, no matter how hopeful it is.

              You don't follow the stock market much, do you?

              • Re: (Score:3, Insightful)

                by Gideon Fubar (833343)
                Point taken and noted ;)

                In this case though, the real story is that Telstra basically told the government they weren't going to bother with a FTTN network if they didn't get funding for it, and then made a token effort in the selection process. If Telstra don't make a new fiber network, it won't be because the government mandates it; They'll just be focusing on mobile and wireless stuff instead.

                Besides, i think it's pretty obvious that laws forbidding Telstra from building a network are pure speculation o
          • by Firethorn (177587)

            "The government may now take steps to legislate so that Telstra can't build a network that competes with the NBN"

            Now, I'll admit that I'm not that familiar with Australian legislative processes, but from my experience with the US one, wouldn't they be able to do this no matter what's going on, assuming they got a big enough bug up their butt?

            Going on, it sounds like I should be glad to not have to deal with Telstra. Deutsch Telecom was bad enough when I was in Germany. Now I'm with a local coop, and love them.

    • They submitted 10-20 pages for the Request For Tender (or whatever it's called). That's barely enough to buy half a rack of servers - the technical Aussie term for this would be "taking the f***ing piss".

  • All or nothing bet (Score:3, Insightful)

    by shirro (17185) on Monday December 15, 2008 @03:09AM (#26117203) Homepage

    Sol gambled and the shareholders lost. A triumph of greed over common sense. Has his reality distortion field finally shattered?

    The current Telstra management seemed to have brought a lot of anti-regulation baggage with them from the US. They seemed unable or unwilling to adapt their management style to the realities of operating in Australia.

    A lower return to shareholders would still have been a return but they had to be greedy. Now they might be a footnote in the countries broadband history.

    • by c_g_hills (110430) <chaz AT chaz6 DOT com> on Monday December 15, 2008 @03:20AM (#26117255) Homepage Journal

      "Trujillo's final dramatic quote to the analysts was "Nothing Stops Telstra"." (Business Spectator [businessspectator.com.au])

      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.

    • The shareholders didn't necessarily lose. Simply increasing the size of a business by taking on a new venture is not necessarily good for a business, and it's not clear this whole national network is going to make money for the providers. It could be a lead-in for more profitable services, but it could also be a huge money pit for the telco serving it if they have the wrong technologies, wrong management, or wrong policies to handle it.

      In fact, from what I'm seeing about Telstra, it would probably break the

      • Re: (Score:3, Informative)

        by dbIII (701233)
        The shareholders get no say. A good example is that they voted against Sol's annual bonus (or around $13 million) for leading Telstra into decline. The board overuled them. Every time Sol say's he has to do something because it's for the shareholders he just makes them angry with the transparent lie.

        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.

        • OK, that makes sense. But that still doesn't make clear whether shareholders lost money by Telstra screwing up the possibility of participating in this effort.
        • by daver00 (1336845)

          I think its a bit short sighted to say Sol has lead Telstra into decline. Barring yesterdays stock tumble Telstra stock has been moving up against the tsunami that is the current financial crisis. I'd say that shows something at least. I'm no fan of Telstra, but Sol is infinitely more capable than his bumbling predecessor. The declines were more about restructuring the company, Sol inherited a company in dramatic decline under Zwitkowski, and has turned it around at least somewhat. You have to give him som

          • by dbIII (701233)

            I think its a bit short sighted to say Sol has lead Telstra into decline

            We've had a few years of him now.

            but Sol is infinitely more capable than his bumbling predecessor.

            That is possible but there is as yet no evidence - any competance has been very well hidden. There have been a lot of loud announcements of success that have been outright and transparent lies and thus had not even the benefit of temporarily raising the share price.

            Sol inherited a company in dramatic decline under Zwitkowski, and has turne

  • Next Canada (Score:3, Interesting)

    by EmperorOfCanada (1332175) on Monday December 15, 2008 @03:22AM (#26117271)
    Please let this happen in Canada! We have a few cell companies that simply refuse to compete. We need them barred from the next few bandwidth auctions. It was recently calculated that sending text messages in Canada costs more per byte than data sent from the Hubble telescope. Another comparison showed that what costs $1 to send via a normal high-speed connection would cost $16 Million via a cell phone in Canada. (no exaggeration)
    • by mjwx (966435)

      Please let this happen in Canada! We have a few cell companies that simply refuse to compete.

      Sorry mate but we have multiple Mobile providers in Australia and they still refuse to compete on anything beyond a superficial level (just enough to keep the competition watchdog off their backs) and they will attempt to force you into a contract (difficult to find a Pre-paid plan with credit that lasts longer then 30 days in Australia, they want their monthly danegeld from you one way or another).

      Also the sha

  • by timmarhy (659436) on Monday December 15, 2008 @03:23AM (#26117273)
    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: (Score:3, Insightful)

      Not to mention that most customers would prefer to spend their money on a vendor they can trust. With their saber rattling over regulatory constraints (and deregulation is not a popular song just now, is it?) using some fairly egregious terms, I doubt that anybody would want to spend money in Telstra's direction.

      You can only insult your customers so often before you lose their attention. We know at this point it would be simply good money after bad, just like the US Bush-era Information Superhighway spe

  • Outside the square (Score:2, Interesting)

    by Nycran (1282174)
    So why did Telstra not want to win this? It seems the perfect out. Submit a half baked proposal and omit an obvious required detail. It looks like they tried but actually they wanted to fail. Interesting. This might be a long term play at not having to service the whole of the country, which is unprofitable and expensive (Australia is a big desert, with dense population centers on the coast). Maybe Telstra predict better profit margins in delivering high speed data through the air, and are betting that
    • Re: (Score:3, Interesting)

      by MichaelSmith (789609)

      So why did Telstra not want to win this? It seems the perfect out. Submit a half baked proposal and omit an obvious required detail. It looks like they tried but actually they wanted to fail. Interesting.

      The loser gets to focus their workforce on profitable urban customers, while the winner sends their staff into the outback pulling cables through the desert to snare 150 homes.

      They are being paid for it but it means taking people away from other tasks.

    • Re: (Score:2, Informative)

      by Nycran (1282174)
      Hot damn I'm good. This just in: "Earlier yesterday, Telstra told the stock exchange that it would boost the speed of its Next G mobile broadband network to the point where it is faster than than the Government's proposed fibre-to-node network. It will also boost the speed on its Foxtel cables."
  • You are Sol's [wikipedia.org]
  • Telstra used to be the national government-run telephone monopoly. It's now semi-privatised, though maintains a lot of its monopoly over the network (in particular, the last mile). As a profit-making entity answerable to its shareholders, it has, of course, been squeezing that for all it's worth, at the Australian consumer's expense. It's about time Telstra got smacked down.

  • by agendi (684385) on Monday December 15, 2008 @06:51AM (#26118245)
    I remember thinking when I heard that Ziggy had left the Telstra camp "Man I'm glad Ziggy is out and Telstra can get on with sorting itself out, after all they couldn't hire anyone worse..." Boy was I wrong.
    • Re: (Score:3, Informative)

      by dbIII (701233)
      Ziggy is now in charge of everything nuclear in Australia. I think we need to deport him before he spills something, and hopefully find some way to deport his Mexican bandit successor while there is still something left of Telstra outside of Sol's pockets.

      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.

  • Maybe they won't get to build it, but it will be totally entertwined with Telstra's existing network. Lots of last mile hops will be Telstra, and many of the backbone fibers will be leased from Telstra, or bought from them.

    We did the same thing in Ohio, and AT&T wasn't allowed to build it, but we are totally intertwined with them anyway. We don't even peer with them, it's all layer 1 or 2 service.

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