Forget prez - vote Hillary for Optus

Forget prez - vote Hillary for Optus

Summary: Hillary Clinton's nine lives are not yet depleted and, despite allegations that her stubborn refusal to concede defeat earlier has fragmented her party, she fought her battle to the very end. By placing bets several ways, that battle may just turn into gold for her down the track. Has Optus taken a leaf out of Hillary's book?


Hillary Clinton is nothing if not tenacious. And even as she gets to grips with the inevitability that she will not be America's next president, her supporters are plotting several potential futures for her: a vice-presidential position, a cabinet post, a governorship, or even — in what would be a potentially devastating option — a run against Barack Obama as an independent candidate.

Clearly, Hillary's nine lives are not yet depleted and, despite allegations that her stubborn refusal to concede defeat earlier has fragmented her party, she fought her battle to the very end. By placing bets several ways, that battle may just turn into gold for her down the track.

I was reminded of Clinton's strategy after hearing that Optus, in a curious twist, has lodged its own AU$5 million bond for the right to bid on the national broadband network (NBN), that tender document has the entire telco community up in arms.

New bidders have come out of the woodwork since Senator Stephen Conroy finally gave in to reality and gave potential tenderers more time.

Optus's bond means it will be competing against the other companies to have lodged a bid — reportedly including Telstra, TransACT, Macquarie Group, Canada's Axia Group, the Tasmanian state government, and the recently-announced Acacia group of investment heavyweights. Oh, and Terria.

Yes, folks, Optus (or, rather, its parent company SingTel) will also be competing against Terria — that consortium of top-tier ISPs that have recruited Optus to their cause, presumably on the assumption that it will fight alongside them to wrestle the NBN contract from Telstra. Now, it appears Optus is determined to fight Telstra with or without them — and sending an extremely mixed message about its commitment to Terria.

Does Optus feel that the other members of Terria are not going to be able to stick it out for the long run? Does it want to improve its odds by pitching two different network designs and hoping one of them sticks? Is it trying to elbow out its allies to avoid having to share revenues? Or is this simply an attempt to cover its bases in case anything goes pear-shaped?

Whatever the reasons, this schizophrenic act by Optus muddies Terria's waters considerably. The rest of the Group Formerly Known As G9 can't help but question Optus's commitment to its group bid, wondering whether its Terria commitment isn't just a smokescreen for Optus's own top-secret tender, which will only be revealed in an eleventh-hour lodgement that will blow the collaboratively-developed Terria bid out of the water.

I am told Telstra's network planners are burning the midnight oil (but keeping their Powderfinger, presumably) trying to figure out how to cost the NBN in current dollar figures that make sense. Does Optus actually have two plans that it believes would work? Which one is it sharing with the rest of Terria? Knowing Optus has a fall-back plan, how can the other Terria carriers trust that Optus is putting its best foot forward in preparing their joint tender response?

Negotiations about Optus's role in Terria are obviously held behind tightly closed doors, and we can only speculate as to whether it is truly, madly, deeply committed to a joint NBN tender that would force it to share revenues from the network with the eight other companies in the alliance. Terria members certainly hope it is, since the continuing series of mergers in the industry — witness Soul's buyout of TPG, Nextgen Networks' purchase of Silk Telecom, and other recent deals — is raising the bar for viability in this market. Or, as Nextgen MD Phil Sykes put it, "in the current telecommunications climate, you've got to get big or get bought."

The NBN is supposed to be all about building a competitive local loop replacement that Telstra can't control, but Optus seems to be working counter to Terria's collective sense of purpose by fighting its evil twin in some sort of Superman 3-styled auto-deathmatch. The result is a potential instability, the triumph of divide-and-be-conquered rather than divide-and-conquer.

This scenario is not dissimilar from that envisioned by many in the US political arena, who worry that Clinton's heated attacks on Obama have splintered their party and given the incumbent Republicans a step-by-step character assassination guide that could lead to a November victory.

Ditto Optus, which has used its affiliation with Terria to foment an anti-Telstra movement, but is apparently just as willing to fight the fight on its own.

"If you're not with us, you're against us," goes the old saying. The fact that Optus has put a foot in both camps will keep it relevant throughout the NBN debate, but relevant in what sense? There is no value in over-saturating the tender with half-hearted proposals. If a company as large as Optus can't approach the NBN tender with a singular sense of purpose and strategy, the whole process could suffer — and compromise the larger goals of the whole exercise.

Topics: Broadband, Telcos, Optus, Telstra, NBN


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Thanks David.


    I have in the past questioned your integrity, in relation to what I (and others) perceived as a disliking of Telstra. But unlike some who will never give credit where credit is due, I must say kudos on this occasion.

    This blog/article was well written and purely asking the very same question I'm sure all but the most ardent Telstra hater, is also asking?

    If Optus are serious and 100% behind TERRiA, why the splinter group?

    Now I don't know if this is factual whatsoever, but this was posted by a member of the public. ZDNet 22/4: -

    'The Optus figures are skewed due to some very questionable business practices. I have seen first hand how (when I was working for them) we would offer a client an Optus solution, to increase our chances of winning we would also send in a colleague or two from one of our other companies offering cheaper pricing and then a third with even cheaper pricing. We covered a wide spread of pricing just in case Telstra or another competitor came in, we would discuss solutions and what the customer was saying about us as often they didn't realise we were working for the same company. I left in disgust, lodged a complaint with the ACCC (under a Liberal government), as expected heard nothing and now will never go back to the communications industry".

    Unsubstantiated or not, this could conceivably explain the plan?
  • Bid

    I would say that Optus is only making the bid so that it has a way out if Terria doesn't end up bidding. If Paul didn't take that precaution, the shareholders would have his head.

    Can't wait until a winner is decided - Terria seems to be getting serious and is getting their foot in the door with Egan. We also have the bids which would see the network return to public hands - if there is nothing vitally wrong with it, I can't see the Government saying no.
  • TransACT have done this too

    How come no mention that TransACT have their own bid and are a Terria member as well?
  • You got to wonder...

    SJT I am assuming you are talking about the corp/gov sector as it would seem a bit of a waste of resources to put that much effort into SME space.
    The ACCC have been quite happy to ping Optus in the past over things like advertising so I don't think they are exactly scared of Optus.
    The activity you describe seems pretty risky as a simple google search on any subsidiary company would reveal all. People sourcing telco services for corp/gov are not stupid.

    There was talk about SingTel bidding for some time before the NBN deposit cut off date. Who knows what could happen to Terria over the next 6 months (just look at what might or might not be happening with Soul). Optus is merely covering bases. Not necessarily the best look but probably diligent.
  • Don't sell the farm.

    The whole thing gets sillier and sillier. How could any company be serious about two bids for the NBN tender when each knows the others bidding information.

    Telstra has the capabilities and resources to complete the NBN build on time and with satisfaction to all but others would be questionable and could prove very dangerous for the Government and the Australian people.

    My question remains. If Telstra must remain, by Government regulation, 65% Australian owned how could a company with no Australian ownership be considered to be the owners and controllers of Australia's vital communication network.
  • What's so silly about having multiple proposals?

    Whether Optus, Telstra or any other carriers or consortiums submit multiple bids it will simply provide the government with a more diverse range of options to choose from. At the end of the day all that matters is the end result which will hopefully be the best proposal measured by reach, speed and value for consumers.
  • I agree

    Hello James. I actually agree with you x 2!

    "At the end of the day all that matters is the end result which will hopefully be the best proposal measured by reach, speed and value for consumers" - exactly my friend.

    Unfortunately the word "value" means different things to different people and hence our problem!

    I also agree again, there's nothing silly per se` about having multiple proposals, it's simply a business decision like any other decision, that has been made by Optus (and TransAct, as Anon pointed out above).

    Maybe Optus has no intention of bidding at all and simply considered $5m an inexpensive investment in obtaining their own information about Telstra? Who knows? Although, I guess that will be answered if they don't bid! One things for sure though, they didn't spend $5m for nothing!

    But if I were another member of TERRiA, I'd be, as I'm sure you would too, "just a little uneasy" about my colleagues motives!
  • Common sense

    Personally I think this is just common business sense. If Terria falls apart or gets immobilised by internal faction fighting then Optus/Transact (or any other company serious about a bid) may find themselves in a position where they lose the opportunity to put forward a strong proposal to what is the most significant development in telecoms for a generation. If I were in their position and had deep pockets I would do the same ... as insurance if nothing else.

    Ultimately it doesn't matter who builds it, so long as the entity that owns/manages the network provides transparent access to all access seekers on equitable terms. Frankly I think this means structural separation ... I can't think of another way that stacks up but I am happy to be convinced otherwise. From there any regulated rate of return (16-18%?) becomes a negotiation point with the bidders to secure the best outcome for Aus considering all factors.

    I should disclose that yes, I am a customer of both these companies & yes, I have worked for both.

    SJT - forgive me, but I'm not convinced one necessarily needs be classified as a "Telstra hater" unless they think a second bid is fishy.

    Also, although familiar I'm no expert on the trade practices act. But if the ACCC had found any telco guilty of misleading or deceptive conduct (Telstra, Optus or otherwise) then I find it highly unlikely they would keep it quiet. I'm not sure how much stock I would put in the value of anonymous comments without your own investigation (yes, the irony is supreme ... my comments included). Sorry if I seem to be contrarian, I'm sure you only meant it to demonstrate a possible strategy for the second bid, but I find it a little unfair to reproduce unsubstantiated claims of questionable business practices for any one telco in particular. Google could probably supply me with a plethora for any one you wish to pick (admittedly some more than others!)

    Having said that, you're dead right though ... I would be nervous if I my group went from being the only serious alternative bidder to one of several including my own partners ...

    Who knows, maybe the second bid decision wasn’t even made in Aus, and SingTel have a different bid approach to the Optus gang … time will reveal all hopefully. Nonetheless, it’s an exciting prospect that our country will have world class fixed communications infrastructure after seeing first hand what some other countries have available right now …


    Sydney Lawrence ... are you serious? I hesitate to even try to explain as your comments seem like a blatant Telstra plug and probably indicate undisclosed motives. I assume you speak for everyone in this great land of ours when you say Telstra would be a bid winner "to the satisfaction of all"? And you speak with authority for "all" when you state factually that "others" would be questionable & dangerous? You wouldn't happen to be a good old fashioned "Telstra lover" & shareholder with an axe to grind by any chance?

    BTW – As far as I know no company is the Terria group is entirely foreign owned. If you were referring to Singtel Optus, it is a publicly listed stock with Aus shareholders & there are other telcos in the Terria group that are predominantly (and wholly?) Aus owned. Regardless, I question the relevance of your ownership comment to the successful outcome of the NGN process. I have shares in 3 different telcos including Telstra & Singtel Optus ... want to disclose your interests?
  • Australians backing Australia.

    To the unnamed person who referred to my recent Post.

    Firstly, concerning my interest in Telstra. Every Australian has a financial interest in the well being of Telstra. Simply as follows- the 45 thousand Australian Telstra employees. The 1,600,000 Australian Shareholders. The millions of Australians who have investment in Telstra via their Superannuation. And finally every Australian man, woman and child through their ownership of Telstra Shares held in the Future Fund.

    Concerning the NBN Tender surely all Australians would agree that where an Australian company can provide a business plan and has the ability to deliver to the consumer on time and within budget, against foreign competition, then the Australian company should b granted the build. Whatever happened to the "BUY AUSTRALIAN" campaign?
  • Yes commonsense.

    Dear Anon, thank you for the reply and its respectful nature.

    You are indeed correct in relation to my blanket comment referring to Telstra haters/bashers etc. Unfortunately, having been previously replied to many times myself very unrespectfully, e.g, once with 3 simple words "die Hel$tra scum", makes one quite cynical, and I now simply fight fire with fire so to speak! So please keep this in mind, before making judgement. I think Telstra hater is actually pretty sedate in comparison, don't you?

    As for Optus' bid. Basically, they are either fishing for info or perhaps looking to bid. Regardless my point being and I see you concur, if I were a TERRiA member I would be a little uneasy!

    In regards to structural separation there are many views which believe it detrimental. Here's 2 links one to my friend James' best mate - Kevin Morgan and another to an article late last year by Grahame Lynch - as you'd know, both very highly credentialed telecoms experts!

    Infact according to Mr. Morgan, no one anywhere has enacted "full structural" separation and no one (apart from maybe us dumb skips) are even considering it - go figure!

    Also of great interest, one of our combatants Lord Watchdog may like to comment? Here's what he said just a few weeks back, in relation to another topic where the new "buzzword" separation was touted. 20/05/08 - ZDNet "The issue here is not about separation, which I do agree is a bad idea".

    Although in general I disagree with him, it would be interesting to hear him expand upon these comments!

  • A very good point

    but my main intention was to point out the risks introduced by Optus, specifically, doing this. As Optus has a national footprint and a significantly larger telecoms business than any of the other Terria members, it is the linchpin of the whole deal -- I don't think Terria would be anywhere near as viable without Optus' support, although it could probably survive the withdrawal of TransACT.

    IMHO the real danger comes if Optus sees this process as a way to lowball Terria and secure the whole contract for itself - unless, of course, Optus is going to share details of its independent bid with the other Terria members? In which case, it would be putting itself in a tenuous situation, not the least for violating the non-disclosure clauses of the NBN tender.
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  • And again for the dummies

    What is there to expand on? I said I disagree with seperating Telstra. What part of that do you find hard comprehending?
  • Spammerbot alert

    Whack it with a cold spoon and get over it.