Communications Minister Stephen Conroy has admonished Telstra for failing to bid for the National Broadband Network (NBN), and said its executives will now have to face up to shareholders.
Telstra’s broadband hopes were shot to pieces following a government decision to exclude it from the NBN tender. The telco was banned from the bidding process after its 13-page non-compliant bid did not meet requirements to include small to medium enterprises (SMEs) in the construction of the NBN.
Conroy told reporters today Telstra only has itself to blame for not lodging a compliant NBN bid.
“The government's NBN process has always been bigger than Telstra," Conroy said.
“There was nothing to stop Telstra from submitting a complete proposal and competing vigorously with other proponents in this process.
“Telstra's Board will have to explain to its shareholders why it has decided to sideline itself from a process that will shape the Australian communications sector for the next decade.”
Conroy said the Telstra board sought “special treatment” in the NBN by ignoring the tender process and asserting its own tender conditions. The telco wanted an 18 percent ROI should it have won the NBN.
“The Rudd government stands ready to take the tough decisions necessary to ensure that the telecommunications sector delivers what the nation needs for its long term economic prosperity,” he said.
Terria chair and former NSW treasurer Michael Egan said it has lobbied federal government to prevent Telstra from building a duplicate NBN.
“We made it clear that there can only be one NBN; that is the logic of the request for proposals. Nothing will stop the roll out of the NBN,” Egan said.
“It's not surprising that Telstra was excluded — it was an inevitable outcome from Telstra's refusal to accept that government and regulators have an obligation to protect the public interest.
“It has always had the attitude that it should be able to do whatever it wants whether in the national interest or not.”
Telstra's bid was in breach of clause 1.5.32 in the tender documents which states that bidders must “submit a plan outlining opportunities for Australian and New Zealand SMEs to provide goods and services to the project”.
Australia is now guaranteed an open-access, operational or structural-separated NBN if bidders Terria, the Acacia group, and Axia NetMedia remain true to their initial commitments.
However Telstra CEO Sol Trujillo told analysts it may still have a shot at the network if the remaining bids are insufficient.
Local telecommunications analyst Paul Budde said the government was forced to ban Telstra to maintain the integrity of the NBN process.
“[Minister] Conroy just had to say 'enough is enough'. He couldn't take Telstra's bullying and so they were banned from the bid,” Budde said.
Optus government and corporate affairs director Maha Krishnapillai said the tender requirements were "crystal clear".
"Optus backed by Terria, lodged a comprehensive and fully compliant NBN bid. The government in its RFP document set out crystal clear guidelines and we are confident the process will deliver the right, pro-competition outcome for Australians," Krishnapillai said.
Telstra shares today fell 8 percent.