Structural separation ‘stupid with a capital S’; threatens Telstra’s NBN bid

7 Nov 2008

The Australian is reporting that fixed line and broadband incumbent Telstra has warned it may not bid for the national broadband network (NBN) tender, just three weeks from the bidding deadline of 26 November. The issue of structural separation has long been rumoured to be a contentious issue for Telstra regarding bidding for the NBN project, with Sol Trujillo, Telstra’s CEO, calling the idea ‘stupid with a capital S’. It is believed that a failure to obtain a guarantee from the government that it would not forced to hive off the fibre-optic network from Telstra’s retail operation remains the biggest concern for the telco, with Trujillo noting, ‘Before we bid we need clarification … or it would not make sense for us to bid.’ Telstra is also understood to be pushing the government to rule out ownership of not only the network but also any further operational separation between retail and wholesale.

Telstra’s main rival for the contract, the Optus-led consortium Terria, is understood to be faltering, following the departure of three of its members whilst also facing constraints as a result of the global economic crisis. Additionally, the consortium, in direct opposition to Telstra, is arguing that no retail operator should be majority owner or operator of the NBN.

Australia, Optus, Telstra (incl. Belong)