Telstra NBN lawsuit "100%" likely

Summary:The Federal Government is extremely likely to be forced into a legal battle with Telstra after kicking the telco out of the National Broadband Network bidding process, according to numerous industry onlookers.

the reaction The Federal Government is extremely likely to be forced into a legal battle with Telstra after kicking the telco out of the National Broadband Network bidding process, according to numerous industry onlookers.

When Robin Simpson, research director of analyst firm Gartner, was asked what he thought the odds were of Telstra challenging its exit from the NBN bidding process, he said "100 per cent", pointing out that the telco had not been frightened to use its legal clout in the past.

He was backed by Stephen Collins, web strategist and founder of the acidlabs consultancy, who reacted to the decision today on his blog. "The senior management continues to believe that being, to quote a trading phrase, 'big swinging dicks', is going to get them what they want," he wrote.

Stephen Collins
(Credit: acidlabs)

"I hope that the Federal Court tells Telstra to pull their heads in when the inevitable case comes before the full bench," he said. Shadow Communications Minister Nick Minchin also considered action possible saying he was sure Telstra was keeping its legal options open.

Legal action from the incumbent telco would not be necessary if Telstra chief executive Sol Trujillo's comment in a briefing this morning that the government might bring Telstra back into the process after receiving the recommendations of the expert panel came to fruition, but Gartner's Simpson thought that was unlikely.

"That's really clutching at straws," he said. "I said [its strategy] was risky and a little bit crazy... The trouble with brinkmanship is one side loses."

Minchin didn't rule an about turn, saying no one could fathom what the government's motives and hidden agenda were, and as he claimed the process had already been poorly run, he wouldn't be overly surprised if Telstra bypassed the other bidders at the end of the process to negotiate with the government.

Supplying information in 'early December' means your submission was missing key elements. Morons.

Stilgherrian

ABN AMRO telecommunications analyst Ian Martin also said that it was possible the government could be considering such a strategy to improve its bargaining position with the big telco, but added that no one would know until February. Despite this concession, he believed Telstra's and the government's positions on delivery of network information and equity involvement were incompatible.

Telstra's main union, the Communications, Electrical and Plumbing Union (CEPU), which has been leading a strike at the telco since Saturday, was very concerned about the turn of events. "Our members in Telstra are keen to use their valuable skills in the development of such a critical piece of national infrastructure. They won't have that chance now," the union said in a statement.

CEPU National president Ed Husic was unable to say whether Telstra's ejection from the NBN would mean layoffs, since the company had failed to tell the unions whether it would use internal or contracted workers to build the NBN.

Husic believed there were many parallels with the way the union had handled its employees and the way it had handled its pitch for the broadband network.

Stilgherrian
(Credit: Stilgherrian.com)

Technology and media consultant Stilgherrian, writing on his blog, believed the telco should have remembered what it learned at school about handing in things on time. "The closing date was 26 November. Supplying information in 'early December' means your submission was missing key elements. Morons," he said.

"Did you ask the teacher for an extension? Did you have a note from your mother? ... If you can't even provide your goddamn submission on time, why the hell would we be stupid enough to give you $4.7bn of our money?"

Topics: Legal, Broadband, NBN, Telcos, Telstra

About

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for t... Full Bio

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