Telstra & the NBN: it will be a long time till the fat lady sings

Stuart Corner
Monday, 15 December 2008 05:41

Opinion and Analysis

Its exclusion from the National Broadband Network appears to have taken Telstra by surprise, but it certainly won't be taken lying down, and there are many hurdles to another bidder getting a green light, and the funding to rollout the NBN.

As Telstra CEO, Sol Trujillo, reminded analysts and media in a hastily convened teleconference, the outcome of the NBN RFP is only a recommendation from the Expert Panel to the minster. If the minister accepts it, he must then take it to Cabinet which must in turn accept it and authorise the $4.7b of government funding on which it depends.

Reminding his audience that "The department has a long history of failing to deliver on new infrastructure projects," Trujillo said: "The minister can talk to whoever he wants to after the panel reports to him...He can take to Cabinet whatever proposal he chooses...[and] it is open to the government to re-engage with Telstra if and when it wishes."

Even if the NBN process does run its course and Cabinet accepts the proposal, as Trujillo pointed out "based on what has been made public by the bidders [it] will require legislation to implement...Even after the decision has been made there will be lot of time left to run before any one else starts building."

In the meantime he warned that "Of course we will respond competitively," concluding that: "It is too early to rule anyone in or out...And we remain hopeful that sense will prevail outside the RFP at a later date." Of course in this sense, "sense" means letting Telstra build the RFP.

The word coming out of Canberra of late is that Telstra is extremely unpopular, not just with Conroy and his department but all the way up to prime minister Kevin Rudd himself. If the NBN RFP process and perhaps Conroy's position are to survive over the coming months they will likely need all the Telstra unpopularity they can get.

Telstra will likely start immediately to ramp up competitive alternatives to the NBN, to reinforce at the highest levels of government the dangers of awarding the contract to anybody else and to put in train, or threaten to put in train, whatever it can to delay the process.

As Trujillo said: "If someone outside of Telstra were to build the NBN there are whole not of interconnect issues and process that do not exist anywhere in the world."

He concluded: I don't think we should be overly concerned about what might be and what should be," adding rather menacingly: "Nothing stops Telstra."

Others, however can be relatively easily stopped: simply by having their funding - which is unlikely to be firmly commited until the last minute - withdrawn. If, as that time approaches, Telstra is seen to be a very strong competitive threat to the NBN and if, as is highly likely, the global financial situation has not improved, backers may have second thoughts.