Government claims 38 percent shortfall in Opel wireless coverage

Stuart Corner
Wednesday, 02 April 2008 12:27

Opinion and Analysis

The statement to the ASX by Elders parent, Futuris Corporation added another dimension to the issue. Futuris said it had been informed by the government that termination had been effected on the basis of the alleged coverage shortfall and "the joint venturers' identification in the prescribed risk management plan that the fibre to the node network subsequently proposed by the Government, if built, represented a material risk of duplication."

In other words this seems to amount to the government saying it is cancelling the contract because the  viability of the project is now questionable as a result of government decisions taken subsequent to the contract being awarded! Sounds to me like a strong case to demand compensation.

Meanwhile, over at Telstra the champagne corks must be popping: the threat of very substantial increase in competitive pressure has been greatly reduced. Optus CEO Paul O'Sullivan said: "As things stand, the 15,000 kilometres of new backbone optical fibre, which would have been available to other operators at wholesale prices 30 percent lower than existing levels, will...now not be delivered."

But Optus is likely to have to build at least some of this if it is to meet its stated commitment (on which it has been very quiet lately) to expand its 3G network to give coverage of around 96 percent of the population. Sharing backhaul costs would have made this much more competitive.

The decision is also a setback for Austar, which had been a member of the unsuccessful AUSalliance Broadband connect bid. It announced in January that it would sell its extensive WiMAX frequency spectrum licence to Opel for $65m. but that deal will not now go through.

 CEO John Porter however, said he remained confident that Austar would be in a position to monetise its spectrum holdings at some point in the future. "A licensed WiMAX network will be critical to the economic provision of broadband services in regional Australia, and we will continue to work with interested parties to ensure that regional Australians are not left behind."

Opel is keeping its option open, O'Sullivan said: "Optus is considering all of its options, in consultation with its fellow Opel shareholder Elders."  Stay tuned for the next chapter in the decade long (and some) debacle of broadband policy development and implementation in Australia.