Terria NBN bid morphs into Optus bid

Stuart Corner
Wednesday, 26 November 2008 08:38

Business IT - Networking

After promising for months that it would bid for the national broadband network the Terria consortium has been reduced to a supporting role in a bid from its dominant member, Optus, which through Optus Networks Investments (ONI), has submitted a bid for the NBN "backed by Terria"

Their joint statement gave few details of their new relationship, or of the bid itself. Terria chairman, Michael Egan, said: "The Terria board resolved that Optus would lodge the NBN bid since that is in the best interests of Terria and the achievement of the Terria principles developed by all members over the past 12 months.

"Terria has agreed to ONI submitting the NBN bid – while maintaining the Terria principles – with genuine open and equitable access to all access seekers, a strong ACCC mandate and structural separation of the National Broadband Network."

He told iTWire that ONI was an entity created by Optus as a wholly-owned subsidiary for the NBN, that both it and Terria had lodged the $5m bond required to enable them to bid for the NBN and that "for a variety of factors" it had been decided that "ONI was the most appropriate vehicle through which to lodge the bid."

The original proposal was that a Terria NBN would be built and owned by an entity that would be independent of any company involved in the provision of services and Egan said that this would still be the case: if the ONI bid is successful ONI's shareholding would expand to include other Terria members, and possibly financial backers including the government

The NBN Network as proposed by ONI/Terria will be subject to compliance with the concept of structural separation, which means that it will not be a vertically integrated provider of wholesale and retail services and will be subject to strict ring-fencing rules to ensure there can be no discrimination in favour of a related entity.

It will provide all access seekers access to the network on a transparent and equivalence of inputs (EOI) basis in respect of: the technical, functional and operational features and quality of access (including upgrades and updates); the process and timing of provision of access; the provision and timing of support (including fault identification and rectification) of access to the Network; the pricing of access; and the administration and management of the Network and access to it.

Prices for services will be set at "prices which are sufficient to recover only the efficiently incurred capital and operating costs incurred by ONI in providing access to and operating the Network, plus a reasonable rate of return."

The ACCC will be given clear and defined oversight powers to regulate access to the NBN on an ongoing basis.

Ravi Bhatia, CEO of Terria member, Primus Telecom Australia, confirmed the 'outside in' approach announced earlier "meaning we will address areas without broadband first – rural and regional Australia and metro black spots."

Mr Michael Malone, CEO of another Terria member, iiNet said: "All Australians deserve equal access to reliable, affordable, high-speed broadband services, regardless of where they live and work."

However, ONI/Terria has not indicated whether its bid meets the requirement of a minium of 12Mbps to 98 percent of the population, whch Telstra has claimed in its, non-bid, proposal, would cost $1 billion beyond the cost of reaching 90 percent of the population.