Australian government details new national broadband plans

7 Apr 2009

Reuters is reporting that the Australian government has rejected the bids of all parties involved in the tender for the country’s National Broadband Network (NBN), and will instead create a new public-private company to oversee and build the network. It is understood that the decision was made after none of the bidders met the government’s requirements, with Prime Minister Kevin Rudd noting, ‘None of the bids offered value for money’. The government will hold a 51% stake in the new entity, and it has indicated that it will sell its holding five years after the infrastructure is fully operational; the completion of the network is expected to take between seven and eight years. Mr Rudd said the cost of the NBN could reach as much as AUD43 billion (USD30.8 billion), reiterating that the state will make an initial investment of AUD4.7 billion. A further AUD20 billion will be taken from a national infrastructure fund, with the sale of government bonds also set to contribute towards the build. Under the new plans speeds of up to 100Mbps will be made available to around 90% of homes using fibre-to-the-home (FTTH) technology, with the aim of bringing speeds of up to 12Mbps to the remaining 10%. The network will operate on a wholesale-only, open access basis and will separate retail operations.

The revelation is good news for incumbent Telstra, which had been excluded from the tender in November 2008 for submitting an offer that reportedly failed to meet government guidelines. Communications minster Stephen Conroy noted that the telco would be invited back in to the process following the new developments. However, it has been suggested that structural separation of Telstra may be considered once again, alongside rumours that the operator may be forced to sell its hybrid fibre coaxial (HFC) network. In a separate but related announcement the government has called for submissions on a regulatory reforms paper, putting forward two options, either a strengthening of current operational separation arrangements or a mandate for full functional separation of retail and wholesale.

Australia, Optus, Telstra (incl. Belong)