Ovum: Telstra plays both sides of NBN

David Kennedy, research director at Ovum said it sees this as an invitation to the Government to sit down with Telstra and negotiate a deal that achieves political goals while meeting Telstra’s commercial criteria.

“Telstra’s desire to negotiate at ‘senior levels’, meaning the Minister Conroy and the Prime Minister, attests to this,” said Kennedy.

“By preserving pricing for entry-level telephone and broadband services, and offering new wholesale services, Telstra is trying to deflect concerns about its market power.

"It hopes this will make the offer of negotiation more attractive."

However he claims the real question is – “what’s next?”

“It’s hard to see the other bids being competitive against the strength of Telstra’s financial and technical capabilities in the current economic climate,” claimed Kennedy.

“If the Government isn’t satisfied with the other bids, it will be forced back to the negotiations with Telstra.

"That would put us back right where we were in late 2005, when Telstra first announced it wanted to build a FTTN broadband network”.

Optus’ takeover of the Terria proposal is a realistic step, because it’s the only Terria partner with any access to significant investment capital.

According to Kennedy, “reality has kicked in”.