Telstra submits non-compliant NBN bid

Telstra submits non-compliant NBN bid

Summary: Telstra this morning submitted what appeared to be a non-compliant mini-bid to build the National Broadband Network, in what appeared to be a 'middle-ground' approach after receiving no certainty on whether a successful bid would force it to separate its operations.

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update Telstra this morning submitted what appeared to be a non-compliant mini-bid to build the National Broadband Network, in what appeared to be a 'middle-ground' approach after receiving no certainty on whether a successful bid would force it to separate its operations.

Donald McGauchie

Telstra chairman Donald McGauchie
(Credit: Telstra)

The full Telstra bid can be downloaded here (PDF). Telstra had been threatening not to bid because of the looming spectre of structural separation of the network's operator, where the network arm would be operated as a separate business to that of the retail and wholesale arms.

The government had been unable to provide clarity on whether the telco would be required to separate if it won. Telstra had held a last minute board meeting today to decide. A few minutes after 12 noon, the company published its bid documents, consisting of a mere 13 pages, compared to rival Terria's approximately 1,000.

"Unfortunately these issues [such as separation] have not yet been able to be addressed in a manner that would enable Telstra to submit its fully detailed bid under the RFP today," Telstra said.

Telstra was also concerned about other issues such as the use of its information and the contract terms issued by the Commonwealth.

The telco's bid documents included what appeared to be non-compliant components, such as building a network which would not reach 98 per cent of the population. Telstra said its current bid would reach 90 per cent.

"Telstra has spent very considerable time and effort attempting to find a way to reach coverage of 98 per cent of the population that is the target in the RFP. However, three factors have made that unreachable at this time," the bid said.

They were that the cost rose exponentially as the population coverage reached 98 percent and that current economic conditions had increased build costs and the cost of capital. The telco also mentioned the possibility of slower customer take-up rates in a sluggish economy.

However, the coverage could turn out to be even less, according to the bid, perhaps sinking as low as 80 per cent.

"The actual population coverage will depend on a range of factors relating to Commonwealth funding, forecast build costs at the time contractual commitments are made, take-up levels and the suite of regulatory settings," the bid said.

Telstra would commit $5 billion of its own cash to building the network, according to the document, with which it said it could even roll out to five of the capital cities without the government's $4.7 billion, in the case that the government required the money for something else in the current economic environment. However, to reach 80 to 90 per cent population coverage, it would need the government's money, preferably as a loan at favourable interest rates, Telstra said.

The details
In 65 to 75 per cent of the footprint, downlink speeds would be 25Mbps to 50Mbps, according to the company, with speeds of 12Mbps to 20Mbps for the rest of the footprint.

Entry-level access to the network would be at 1Mbps/256Kbps for retail users, the company said, with a 200MB download quota costing $29.95 with an "NBN telephone service" and $39.95 without one. Business users would have access to 1GB at speeds of 1Mbps/1Mbps for $65 with a phone service and $75 without one.

Telstra would try and reach as many people as quickly as possible with the roll-out, according to the company's bid, which would steer it towards starting in metropolitan areas.

"Because Australia is highly urbanised, the majority of those currently without fast broadband are located in the major cities, where homes and businesses located more than 1.5 km from their local telephone exchange cannot currently get fast fixed broadband using Telstra's existing telephony network," the documents said, saying that the roll-out priority shouldn't be based on geography for its own sake. The build could be "well underway next year" according to the bid.

The company confirmed that Alcatel-Lucent was its chosen vendor partner, to supply the equipment and know-how for the roll-out of the network.

Despite the shortness of the bid, Telstra reiterated its beliefs that it was the prime bidder, saying it had the right experience, the workforce and the wherewithal to finance the investment, especially since it claimed the work would only be an upgrade of the company's own network.

"Telstra believes the Government can consider its proposal under the existing terms of the RFP and should agreement be reached on outstanding concerns a possibility exists for more detailed dialogue."

The company did not seek any protection against competitive networks, according to the documents.

Topics: NBN, Broadband, Telcos, Telstra

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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Talkback

62 comments
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  • They don't need government help

    This bid reads as though they are simply responding to shut up those who said they would not bid and those who said they would paper to the government's whim.

    Let someone else win the $4.7B and let Telstra build this themselves, I would welcome two competing networks. If one offers 12Mbps to 98% and the other 25Mbps to 90% I would pick the 25Mbps option even if it was a few dollars more.
    anonymous
  • Heh

    Even with only 500MB of included downloads? You'd run out after less than 3 minutes! :p~
    anonymous
  • Please sir, may I have some more...

    Off page 3 .. "Firstly, the cost to build increases exponentially towards the 98% level, thus requiring a much larger Commonwealth contribution if the NBN is to reach that far".

    Interesting quote, considering throughout the entire NBN process one of Telstra's key arguments have been that they are the only ones with the skills and support to build the NBN and that any other bidder would ultimately requirement a government bailout. They aren't asking for a bailout, they're cutting straight to the point and asking for extra funding to meet the required 98% from day 1.
    anonymous
  • This is a bid?

    It would seem Telstra don't want to build the network after all. Do thery really expect to win a 4.7 billion dollar contract with a 13 page submission that says they can't build what is being asked for?

    Telstra really are crazy!
    anonymous
  • 1Mbps????

    I don't believe this! The government promised a "minimum" of 12Mbps to 98% of the population. Yet Telstra is offering $29.95 per month for a lousy 1Mbps connection and a lousy 200MB per month.

    Is it me, or do I get the feeling that if Telstra wins, we'll be paying more for the same services that we're getting right now?

    Well I guess I shouldn't really be complaining. Besides it'll only be "5 YEARS" before I can even experience this high-speed internet revolution! Sigh!
    anonymous
  • Speed, Data and Excess Fees

    If the network that offered 12Mbps also offered 5GB of data a month, while the 25Mbps network offered 500MB a month, then I would definitely pick the 12Mbps network!

    Speed is not the only issue here, mate!
    anonymous
  • Well Done Telstra.

    Just keep going. The longer you do, the better the reasons for separation become.
    And 'I did it my way' will become a fitting epitaph for McGauchie and Trujillo et al.
    anonymous
  • For shame Telstra

    LOL rubbish download quota's from Telstra
    Nothing has changed 200mb? What a joke! Whats with Telstra and crappy download quotas?.

    Telstra your a freaking joke I don't know how anyone would support such a greedy crummy company/
    anonymous
  • Gee - eve this didn't shut up the Telstra bashers

    Telstra did not submit a complaint bid - which is what I said they would do weeks ago.

    The Government now will have to decide if they exclude Telstra from the remaining prcess.

    My guess is they will disqualify them.

    Telstra will then go off and build its own network (because they havwe the funds to do so) and not be required to share it with anyone.

    They will be able to buy from the new non-Telstra NBN to provide services where they do not reach.

    sensational outcome for Australia - NOT.
    anonymous
  • Check the strategy

    In case you hadnt noticed, Telstra is moving away from capped plans to unlimited plans with bandwidth limiting.

    My guess is that the bandwidth will be reduced to the basic standard entry offering for the NBN(read the bid document) of 1MB/s.
    anonymous
  • Bring back OPEL

    So glad the govt canned OPEL.....

    That 8% being ignored by Telstra's bid are those that OPEL was designed to cover.

    Thanks for f***g rural users Telstra and Comrade Rudd.
    anonymous
  • that's much better...

    So, for the first 2 minutes of the month, you get the full 25Mb/s then you hit the 200MB download limit and are stuck on the lowest speed for the next 30 days, 23 hours and 58 minutes. Heh, yeah, I'll pay extra for that!
    anonymous
  • What's the point?

    I'm not new to the NBN debate but I must confess I find this perplexing. To do a fibre rollout and still stick with their same unbelievably stingy plans - 1Mbps, 200MB quote (that's 30 minutes of d/l a month) - what a ridiculous outcome for Australia. Unless 12Mpbs or more is being actually provisioned to homes, with quotas to match, the dollars are better spent elsewhere.
    anonymous
  • Speed Throtling costs more than allowing unlimited data

    Correct me if I'm wrong, but the whole idea of FTTN (FIBRE TO THE NODE) is to INCREASE the amount of throughput and data to end users. $29 for 200 Meg... C'mon, I can download over 300 meg a month via dial up on a 56.6K Modem up if I have it on 24/7. for just less than $10 a month.

    Paying for, and monitoring the equipment used to throttle speeds once a download limit is reached costs MORE (A LOT MORE) than allowing an unlimited amount of data through.

    Think about it. Does a 100 megabit switch use less electricity if it's on and sitting there not having traffic running through it, or does it use more electricity if it is working at 100% capacity... IT'S THE SAME !!! No more no less... I know, I checked with a Amp-Meter myself. Need I mention the servers, backups, manpwer and infrastructure needed to monitor and manage the throttling???

    Telstra thinks the $4,700,000,000 is an investment in it's stock, IT ISN'T. It's to Pay for the cost of the infrastructure. And to get me and every other Aussie FASTER and CHEAPER internet access. From Telstra it will be SLOWER AND MORE EXPENSIVE than it is now!!!

    In the USA I can pay $99US for Unlimited Phone calls and SMS on my mobile and Landline and unlimited unthrottled internet access 24/7 in the one package. They can afford to do this as they don't have the bandwith monitoring and throttling, and other overheads.
    anonymous
  • NBN

    It is quite likely that Telstra will take the 4.7n, declare their existing NextG coverage of 98% of the population as satisfying the NBN requireents and pocket the 4.7b, thank you, job done!
    anonymous
  • moron

    sorry to call you a moron, but the only people who service that 8% at the moment besides satellite is telstra Next G, so stop your whinging? or whinge at one of the companies that actually does nothing instead of just bitching about the larger one.
    anonymous
  • Telstra = National Disgrace, Joke, Pathetic

    Telstra is a national disgrace. Entry level plans of 1mbps and 200mb download for $29. I currently have access to 24mbps, and 25 gigabytes a month for $60 a month. Why would we spend a cent to have people on anything less than that!

    I feel sorry for anyone in the country who had OPEL cancelled on them - you've got no hope of a good broadband service for at least another 5 years now.

    Can someone get rid of the greedy mexican and his band of fools.
    anonymous
  • Who is the moron?

    Who was is that didn't submit a proper bid for OPEL, then threatened legal action against OPEL, and scared the new govt into canning it?

    Yes, your beloved Telstra.

    Why - because they wanted to protect their backhaul rural monopoly.
    anonymous
  • dont worry

    telstra cant win with that bid, and will have to build there own network to compete, which means large network competition for once
    anonymous
  • 7,6,5,4 bottles on the wall.

    It would probably be better if Telstra proceeds to roll-out their own FTTN. Forget the Government 4.7B that will quickly be swallowed up by the Optus/Terria/whoever pretenders before they go broke.
    anonymous