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Monday, 15 December 2008 03:39

Conroy kicks Telstra out of NBN race

The Government has excluded Telstra from the National Broadband Network RFP process on what appears to be a technicality - that it failed to include a plan for how to involve small and medium enterprises (SMEs) in the building of the NBN.

Telstra announced the decision to the ASX this morning (15 December) and claimed that the RFP did not require an SME plan to be lodged as part of the RFP Proposal itself and that the Commonwealth had used a peripheral issue to exclude Telstra.

The decision was clearly unexpected: Telstra hastily convened a phone briefing for analysts and press on Monday morning, 15 December with only minutes notice.

Telstra chairman, Donald McGauchie, said: "Telstra provided its SME plan to the Government in early December and, in Telstra's view, in accordance with the RFP." Telstra general counsel, Will Irving, said Telstra had provided its SME plan to the Government on 4 December.

On the weekend 13-14 December NBN bidders made presentations to the expert panel, but Telstra which did not lodge a full proposal did not present. CEO Sol Trujillo said that Telstra had not had any conversations with the minister or anyone else involved before being informed of the Government's decision.

McGauchie added: "The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN. This is a process that seemingly excludes bidders on such trivial and legally questionable technicalities but doesn't take any action on material issues such as financing and having the technical capability to build the network."

He claimed that "the minister has ample powers to accept Telstra's SME Plan under the RFP and have his Expert Panel get on with a process that includes Telstra."

Telstra said it would continue to invest in its Next G and hybrid fibre coaxial (HFC) cable networks "to ensure we deliver Australia's best broadband experience."

Telstra warned of dire consequences for Australia if it remained excluded from the process. "The NBN is Australia's most critical infrastructure, underpinning future economic prosperity and social cohesion. If future generations bear the costs of a substandard NBN, today's decision will be seen as a turning-point in the nation's history.

"This is the largest, most complex NBN build anywhere in the world. Australia now risks being the only country ever to build an NBN without the existing fixed network owner in the most difficult financial climate in decades."

Asked if Telstra had "got it wrong" with its bidding strategy," Trujillo said "No". He claimed that throughout, Telstra had continued to act in the best interests of shareholders because "the single most value destroying" development would be structural separation of Telstra's local loop assets.

This story will be updated throughout the day as this issue develops - please check back later.

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