Govt cancels A$1bn ‘failed’ Optus plan

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SingTel-backed Australian telco Optus has called into question the even-handedness of the communications policy of Australia’s four-month-old federal government, after having an A$958 million contract cancelled. The new federal government on April 2 ditched a A$958 million contract that the old government signed with the telco/rural services consortium Optus/Elders (OPEL) for a rural and regional broadband network.

A statement from the government said that the coverage the network would have provided would not have met the contract’s criteria. A condition precedent of the contract stated that OPEL would provide coverage reasonably equivalent to 90% of under-served premises identified by the communications ministry as being within its coverage area.

But Optus chief executive, Paul O’Sullivan, accused the government of “generously protecting” incumbent “monopolist” Telstra.

“The implications of this decision for confidence in future competitive selection processes conducted by this Government will need careful consideration," O'Sullivan said.

O’Sullivan complained that OPEL had spent “millions of dollars” in preparing to provide services, including agreeing to purchase wireless spectrum from Austar for A$65 million. The consortium had been planning on providing at least some of the network via the wireless technology WiMAX, although the government did not elaborate on whether well-documented problems with the WiMAX technology were partially behind its decision.

Communications Minister Senator Stephen Conroy said: “[The ministry] performed an analysis of the detailed testing and mapping undertaken by OPEL, and determined that the OPEL network would cover only 72% of identified under-served premises.

“On the basis of DBCDE's assessment, the Government determined that OPEL's Implementation Plan did not satisfy the condition precedent of the funding agreement, and as a result the contract has been terminated.”

With the government planning to go ahead with its own rival plan to put A$4.7 billion into a high-speed, open access, fibre-based national broadband network with 98% coverage, the ministry’s assessment of the OPEL plan seems to have worked in the new administration’s favour.

Conroy said: “This was the final failed broadband plan produced by the former Coalition Government.”

But Optus was, understandably, incensed by the decision, complaining it was based on flawed data.

“Our Implementation Plan showed, based on detailed field testing, that the OPEL network would have delivered broadband coverage to almost 900,000 underserved households in rural and remote Australia – 70 per cent more than the Department had assessed.

“In our view, the Department of Broadband, Communications and the Digital Economy has now made a flawed recommendation to the Minister – reflecting serious errors in its database of ‘underserved premises’ which led it to underestimate the number of underserved premises which would benefit.

“We believe the Department’s process was flawed: information was not provided to OPEL in accordance with its contract, and there was little dialogue with OPEL after it lodged the Implementation Plan in early January.

“The Government’s decision to accept the Department’s advice means that around 900,000 households, which were to have been offered a competitive choice of high bandwidth broadband services from the OPEL roll out, will now be denied that.

“Optus has made an offer to the Government which I repeat publicly today: we are quite happy to have a respected independent expert audit OPEL’s coverage database and the Department’s coverage database.

“We believe this would confirm that our claimed coverage accurately reflects the definitions in the Department’s Guidelines issued in September 2006, and delivers within the agreed 90 per cent tolerance levels upon the coverage we committed to provide in our winning bid.”

Telstra, meanwhile, was not able to pass up the chance to comment on the government’s decision. The “incumbent monopolist” released a statement in which Geoff Booth, managing director of Telstra Country Wide said: "The previous Government's decision was made as a result of poor process and delivered little for regional Australia.

"It's now time to put this mess behind us and move on. Telstra, the Federal Government and the industry as a whole need to look forward and come up with a realistic and achievable holistic solution for getting broadband to all Australians with 21st century technology."

Some might see the irony in the comment, however. It is largely as a result of inaction by Telstra over the last few years while it remained at loggerheads with the competition regulator that higher broadband speeds are not available to more of the country.


Source: Rapid TV news

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