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OpenNet initiates arbitration against SingTel

Consortium tasked to build Singapore's national broadband network starts resolution process against its key subcontractor SingTel, over disputes involving delays in rollout, amid separate ongoing lawsuit against government.
Written by Ryan Huang, Contributor

SINGAPORE--OpenNet has started arbitration proceedings against its key subcontractor SingTel to resolve disputes over the delay in the installation and activation of the country's national fiber network.

In a press release Tuesday, OpenNet said that "some aspects" of its performance in rolling out the network were affected by disputes with SingTel--its key subcontractor (KSC).

Under its current service contract, OpenNet is obliged to activate connections for residential and business orders within 3 and 10 business days, respectively. However, it has been unable to cope with the demand and this had led to numerous complaints, with some cases reportedly involving waiting times of 4 to 6 months.

Dependent on SingTel as key subcontractor

OpenNet is under contract to complete the rollout of the next-generation nationwide broadband network by 2015. The company defended its decision not to hire more contractors to help with the work, after it had turned down offers by telcos M1 and StarHub recently.

The company said in the statement: "In order for OpenNet to complete the rollout in 3.5 years, OpenNet must rely on SingTel as its KSC for the construction of the fiber network and activating the fiber."

"SingTel is our key subcontractor.SingTel itself is free to engage its subcontractors as they deem fit."
-- Khoo Chin Hean
CEO, OpenNet

"OpenNet is pursuing all avenues in its work with its KSC to ensure we can jointly meet our rollout obligations and market demands," it added.

In response to ZDNet Asia's request for further details, CEO Khoo Chin Hean noted that "the details of our contracts are confidential, whether they are with SingTel or any other partner."

"What we can say is that OpenNet must rely on SingTel as its key subcontractor in order to accomplish this massive construction effort three years earlier [before the contract's deadline]," said Khoo. "SingTel is our key subcontractor. SingTel itself is free to engage its sub-contractors as they deem fit."

A SingTel spokesperson told ZDNet Asia that both companies were currently involved in "disputes over certain aspects of the contractual arrangements between the parties and are resolving the disputes in the appropriate manner and in accordance with the contracts".

"SingTel has and will continue to fulfill its contractual obligations as the key subcontractor," the spokesperson added, emphasizing that the telco was "instrumental in enabling OpenNet to fulfill its obligations under the rollout timetable", helping it stay on trackto achieve 95 percent rollout coverage by July 2012.

In an earnings call last Friday, StarHub CEO Neil Montefiore said: "Both we and M1 have offered to be key subcontractors [to speed up progress], but they [OpenNet] have rejected it at the moment." The delay in the rollout has limited his company's access to potential enterprise customers in as many as 20,000 buildings.

SingTel is not only the key subcontractor for OpenNet, it also owns a 30 percent stake in the consortium. The other parties who own OpenNet are Axia NetMedia, SP Telecommunications and Singapore Press Holdings.

Clarification of ongoing lawsuit against government

In the same statement, OpenNet sought to clarify media reports of its ongoing legal proceedings against the government. It is currently in the midst of a lawsuit against the Singapore government in a bid to secure a "quashing order" from the Supreme Court.A quashing order is part of a judiciary review which is usually sought to nullify a decision or directive made by an authority, and typically initiated when the authority is alleged to have acted outside the scope of its powers.

The company, in the press release, noted that there was speculation that its judicial review (JR) concerned the installation quota it was committed to, and the government review of its interconnect offer (ICO) or service contract.

"While OpenNet is not able to comment on the case as it is currently before the court, we wish to clarify that the JR is not about activation capacity, installation quota or the ICO review," the company said in its statement.

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