telstra will be a broadband bidder: optus

http://www.smh.com.au/news/technology/telstra-will-be-a-broadband-bidder-optus/2007/07/20/1184560041079.html

Telstra will be a broadband bidder: Optus
Matt O'Sullivan
July 21, 2007

AUSTRALIA'S second largest telecom, Optus, claims Telstra will be forced to take part in the bidding for the right to build a $4 billion plus high-speed broadband network, despite its arch rival threatening to pull out if the tender process drags on.

The industry is waiting upon the release by a government task force of tender guidelines - expected towards the middle of next month - for the new fibre-optic network in large cities.

In a closed briefing to investors on Friday, Optus's regulatory chief, Paul Fletcher, heralded the emergence of a "pro-competitive regulatory framework" for a high-speed fibre-optic network after the Government last month committed to a tender process instead of a backroom deal with Telstra.

Mr Fletcher, who returned to work this week after missing out on Liberal Party pre-selection for a federal seat, issued a veiled warning to Telstra that it faced adverse regulatory changes if it did not take part in the tender process.

The Optus-led G9 consortium wants the Federal Government to change legislation so only one new network is built, as well as making access equal for telco companies.

"There is a strong incentive to put in a bid, and to not put in a bid is taking quite a risk," Mr Fletcher said. "The process that has been set up by both the Government and Labor is designed to create incentives for all interested parties to put propositions on the table."

But he said that even if the G9 was unsuccessful in its plans to build a network it would have ensured prices were "significantly more attractive" to Optus and other carriers than would have occurred had the Government buckled to Telstra's demands earlier this year.

Optus claims Telstra's strategy in pressuring the Government to accept its terms for a fibre-to-the-node network has been designed to "restore its monopoly" of telecommunications.

Telstra maintained on Friday that it was willing to take part in the bidding process, although it warned it would seek other options if the process dragged on for too long.

"If it doesn't move along in a speedy process we will look for alternatives," spokesman Jeremy Mitchell said. "We are waiting now for the Government and the panel to give us the guidelines."

Telstra boss Sol Trujillo wrote to staff last month, saying that "if the process that is put in place strings out a decision over months rather than weeks, it will not meet the 'timeliness' test that our leadership team has to meet in order to make this year's capital allocation deadlines".

But Optus believes the government taskforce has enough time before the federal election late this year only to issue final guidelines for the tender process - not the selection of a successful bidder.

ABN Amro analyst Ian Martin agreed on Friday that Telstra faced a big risk if it did not lodge a bid to build the network.

"Another player in metro areas would be a disaster for them," he said. "The appropriate outcome for Telstra is that they play ball with the Government."