Telstra network bid 'a joke'

TELSTRA has set a challenge for the Rudd Government, refusing to put in a detailed bid for the $10 billion plus national broadband network unless it gets a range of guarantees, including that there be no further split of its operations.

But as the Government has refused to give any such guarantees ahead of tenders closing for the project yesterday, the telecommunications giant is effectively asking the Government to force tough regulations on it or give in to its demands.

A range of other bidders, led by Singtel Optus, have lodged bids for either national or state-based networks as part of a competitive process started in April. Optus said a new entity called Optus Networks Investments, backed by the Terria consortium of Telstra's rivals, had lodged a bid for the national network, alongside Acacia Australia and Axia NetMedia.

The Government has promised to commit $4.7 billion -- its biggest single election commitment after tax cuts -- as a subsidy to get top-grade broadband services to regional and rural areas.

In a continuation of its anti-regulation stance, Telstra lodged a "non-compliant" bid in the form of a 12-page letter to Communications Minister Stephen Conroy, from its chairman Donald McGauchie. Optus Networks Investments' proposal is said to run close to 1000 pages.

"We need a clear statement on separation or we can't bid, it is an uneconomic proposition if we don't get that," Mr McGauchie told The Australian.

"The contractual arrangements are not commercially acceptable. No one could put them in front of a bank or rating agency. None of the other bids have any money. This is a smoke and mirrors exercise." he said. "We have told our shareholders where our money is coming from; if Optus were serious they would have told their shareholders, they would have put their money on the table."

Instead of lodging a bid conforming to the terms requested, Telstra proposed an alternative solution that would see its broadband network expanded to cover between 80 per cent and 90 per cent of the population.

Telstra said the economic conditions meant a 30per cent increase in cost would hinder the Government's plans to construct a network that delivered at least 12Mbps internet speeds to 98per cent of the population.

Senator Conroy dismissed concerns that Telstra had not lodged a valid bid. "Telstra's proposal will be considered in exactly the same way as all the other five proposals," he said.

He said Telstra's offer to roll out broadband to 90 per cent of the nation would be judged against the Government's objective of 98 per cent coverage.

Senator Conroy ruled out spending a cent more than $4.7billion. Telstra said it was not viable to roll out the network to more than 90per cent of the country unless the Government tipped in more money.

"With this joke of a bid Telstra is just thumbing its nose at the Government," Optus spokesperson Maha Krishnapillai said.

Optus planned to tap superannuation funds and other investors for billions as part of its bid for the network. Singtel has committed to $1billion-$2billion in equity for the project, but Mr Krishnapillai said it would contribute "whatever we need to".

Additional reporting: Lenore Taylor, Mitchell Bingemann