Telstra NBN lawsuit "100%" likely

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.

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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, Telcos, Telstra, NBN

Suzanne Tindal

About Suzanne Tindal

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 the site.

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48 comments
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  • Blah

    It will be just another of Telstra's costly dummie spits and it will achieve nothing, except from a barrister's point of view.

    Telstra's childish antics are going to make dozens of barristers very rich next year.
    anonymous
  • Lawsuit

    The only reason Telstra would bring a lawsuit up would be to delay the winning bidder getting the money, and in turn delaying the rollout of the NBN. So end customers would suffer.

    On the flip side if the government did turn and Telstra got the bid than all the other bidders would launch lawsuits (and rightly so) against the government. So I doubt that will eventuate.

    The best thing right now for Telstra to do is bow out gracefully, they failed to meet the criteria of the bid by the due date and they know that, bringing a lawsuit in now won't win them the bid and will only hurt end customers.
    anonymous
  • Telstra move on!

    Why doesnt Telstra just create their own network? So they won't get a $5bn hand out. So what? They don't want to be government controlled anyways, so this is an opportunity for them to build it their way and prove to the rest of Australia that their way is better. Either put up or shut up. Whingeing won't get the job done Telstra.
    anonymous
  • lawsuit

    Sorry, Telstra don't know what it is to "bow out gracefully" They will use every means to delay and nobble the successful bidder. Nothing will change until the current morons running the organisation and given the boot.
    anonymous
  • Contempt

    The problem is, Anonymous, that when Tesltra build anything "their way" (the only way they know how to do anything, mind you) the prices are ridiculous and service limits and caps are unworkable. Just look at NextG.

    I get 7 gigs at 8 Mbps for $20 per month. Try doing that on Next G. Telstra didn't even offer ASDL2+ at my exchange until a competitor came along to do the same. So I went with the competitor.

    The level of contempt for the customer displayed by that type of corporate behaviour almost defies description.

    Telstra thought they could bully the Government and therefore control the NBN process. Wrong.

    So Telstra fanbois, your shares are down 12% today. Still feeling relaxed and comfortable?

    If losing a few thousand more bucks from your share portfolio doesn't make you angry enough to demand the Telstra Board sack all those responsible for this debacle, then you get what you deserve.
    anonymous
  • Yay

    Finally the government has done something good for once. Telstra said they offering broadband plan for $85 when an international telco from Singapore will only charge $15. Seriously why wouldn't want to pay the extra $60 for small plan on telstra network because all low economic status familys that can't afford the Internet will be able to
    anonymous
  • Australia is now a laughing stock

    What happens if the nbn doesnt end up starting, Telstra should be freely allowed to offer thier own prices which cost put about 60% of thier competitors into danger of folding.

    Telstra wont have to offer broadband services to regional / rural areas because they arent the ones who have too, the competitors will not be relying on telstra's network .

    Shame Australia shame , it is not certain the nbn will bring cheaper prices they will be much the same or dearer.

    Telstra will be the only superior network in Australia and the others have to wait til one is being build which may never happen

    Shame Australia Shame
    anonymous
  • Wait and see.

    Does anybody believe that Telstra, with the largest legal team in the Australia, made the mistake of not including the SME detail.

    Telstra are now sitting pretty, let the others make the NBN a complete "balls up" probably cause Mr Rudd and co to be a one term Government, and finally make a take-over offer for bankrupt opponents which Telstra will get for peanuts.

    Examine the financial resources of those who want the Australian taxpayers $4.7 billion. Axia with a working capital of 19.3 million. Total market capitalisation of 101 million. Employees 138. Big risk Mr Conroy the taxpayers wont be happy.
    anonymous
  • So you want to use Telstra??

    I take it by your comments that you really really want to be a Telstra customer??

    why is that?? what do they offer that you do not get now??
    anonymous
  • Legal team

    the fact that Telstra has the largest legal team in the country is a sad inditement of how the organisation operates. Whenever backed into a corner (often by its own ignorant and arrogant actions) it comes out swinging with lawyers.
    Indicative of the way the company thinks and acts...
    anonymous
  • Due Process

    Telstra had their chance to submit a tender document and they couldn't even manage that.
    anonymous
  • Telstra holds the trump cards

    Regardless of who builds the NBN, Telstra would have to be its biggest customer. Remember that in spite of its name, the NBN is also there to provide phone services and unless all of Telstra's customers port en masse to another carrier (not just a reseller of a Telstra service), Telstra will be the NBN's number 1 customer - if they choose to use it. If they choose to do something different, the NBN builder end up paying a lot of money to Telstra for access to a NBN that few people are using. Take that story to a bank and try to secure a loan. Not even a legislated monopoly can close off all of Telstra's options.

    Like them or hate them, the simple fact is that Telstra is holding all of the trump cards. They own the biggest component of a FTTN network. They are ultimately its biggest customer. They have the power to bring the government's NBN process to its knees. Does anyone doubt it will exercise that power?
    anonymous
  • FTTH or bust

    Funny as hell.

    What were the govt. supposed to do? Bend over like a 2 dollar ho? This has been a long time coming, sooner or later we had to realise, it's unfettered corporate power vs the people.

    Finally a govt. with kahuna's to stand up to these jerks. And now?

    The easiest (and cheapest) option is now the one that was always superior - Fibre to the home.

    Labour have been handed a golden opportunity by these clowns. A slow, steady rollout of a TRUE Next Generation network - going to take half a decade? No worries, that's not our fault, it's Telstra's.

    Can Telstra sue if their assets are left untouched by FTTH? Good luck.

    Oh, going to pack a tantrum and only rollout HFC? Uhh.. wasn't that their plan anyway? All city, no country?

    Escape their obligation to the rural sector?
    Nope - we're not touching your copper, the obligation to PSTN still stands.

    Checkmate, Sol. ;)
    anonymous
  • Not quite a full house

    Telstra only have a leg to stand on if the govt. choose FTTN - which after this, would be INSANE.

    IF a FTTH solution is chosen, there is no legal obligation to immediately cut over anyone's phones.

    Meaning, Telstra aren't freed from the USO.

    FTTH can be quietly rolled in, as a data only service, allowing the consumer the individual choice of either cutting over to VOIP, or staying with the (legally obligated) Telstra.

    Govt business + the no doubt MASSIVE publicity around the (can't argue this really) WAY superior FTTH, will provide the slow and steady migration of customers - any investor is going to see this is the future - i can.

    FTTN was only ever about killing off the competition. We all know it.
    anonymous
  • FTTH or bust.

    BUST is a distinct possibility.
    anonymous
  • Yawn!

    Telstra goes to court and loses
    Telstra goes to court and loses
    Telstra goes to court and loses
    Telstra goes to court and loses
    Telstra goes to court and loses
    Telstra goes to court and loses

    And they are going to lose again which is typical.
    anonymous
  • The bids were about FTTN

    For the most part, the bids were for a FTTN network. FTTH nationwide would be just too expensive. Ultimately, it will happen, just not right away. Also, the government's $4.7B would be a drop in the ocean towards a FTTH network. In fact, given Telstra's exclusion from the FTTN bid, FTTH is one of their options, unless the monopolists get that technology outlawed as a competitor to the NBN.

    Your point about the USO is a good one, but Telstra can use any access method they like - they do not have to use FTTN, FTTH, or whatever technology someone else dictates.
    anonymous
  • Telstra move on!

    Telstra doesn't do this because the ACCC has the power to come along with very limited justification - as it's not held accountable by anything! - and say...well we 'declare' this service and boom! the force Telstra to wholesale their investment at below cost.
    So tell me would you invest in something that is faced with the risk of being expropriated below cost to your competitors?
    anonymous
  • Telstra holds the trump cards

    This is bang on!

    And this will happen. Telstra does not care who builds the NBN...if they don't get it on their terms...as all the other (supposed) builders want it on their terms i.e. Singtel Optus want a monopoly! Telstra will expand their Next G and HFC networks...biggest loser = any non-telstra NBN builder.
    anonymous
  • last mile copper?

    ULLS, now i may be wrong, so ppl feel free to correct me, but with ULL unlooping doesnt the competitor basically buy the line off telstra for the how ever long and basically pay a maintanence contract??
    anonymous