Telstra and Govt's NBN fall out bad for both sides

Telcoinabox managing director, Damian Kay said he is outraged that the largest provider of telco in the country – Telstra - has NBN bid for a minor reason.

The Minister for Broadband Communications and the Digital Economy, Senator Stephen Conroy dropped Telstra from the tender process because he claimed it has failed to submit ‘one of five mandatory requirements of the RFP .

Kay said for the industry it is vital that all appropriate players are involved to get the best result for the nation.

"Telstra's non-action in the infrastructure build of the nation's broadband will change the face of communications for the country forever,” he said.

“Industry players and consumers alike will suffer."

David Kennedy, Research Director at global advisory and consulting firm Ovum, believes the Government will also suffer from this.

“So far, commentary has focussed on how this affects Telstra. But it isn’t great for the Government either.

According to Kennedy, if Telstra stays out of the process, there are only two possible outcomes to the RFP process.

The Minister could reject all of the alternative bids, or he could award funding to a non-Telstra bidder.

"The first outcome would mean failure," said Kennedy.

"The second would mean an all-out war between Telstra, the Government, and the alternative operator that would dramatically raise the cost and risk of building a national broadband network.

"Telstra can’t be ignored, because the alternative operator needs Telstra copper wiring to build their network."

He believes every bidder needs regulatory changes from the Government to justify their investment.

"Whatever the outcome, it is hard to see the network being built without some kind of Telstra involvement, or without regulatory changes that the Government alone can achieve," said Kennedy.

"This is why the Government and Telstra will remain in dialogue, despite Telstra’s proposal being rejected.

"As angry as they are with each other at this moment, they need each other as well.”