Optus has threatened to pull out of the fibre-to-the-node (FTTN) tender process unless the government approves operational separation for Telstra and a delay to the bid deadline, while Telstra has threatened to withdraw if it does.
Speaking on ABC, Optus CEO Paul O'Sullivan said without an extension to the July closing date, the tender process will be unfair.
To make a bid, Optus needs an understanding of Australia's existing fixed network layout, O'Sullivan said. The government is introducing legislation to make telcos including Telstra divulge details of their infrastructure, but the data will be a while in coming, he added.
"We face a prospect of having to supply a bid by July and yet only receiving that information on the network days or weeks beforehand. That's clearly not a level playing field, that's clearly not a fair go and it's quite ridiculous to expect that a serious player like Optus would participate in a tender on that basis," O'Sullivan told ABC.
The Optus CEO is now calling for an extension of at least five months from the date the network information is provided.
However, Communications Minister Stephen Conroy has refused to consider an extension to the tender.
As well as the delay to the tender process, O'Sullivan wants to see operational separation become part of the bid process.
"Before we put our reputation on the line, before we spend a lot of money preparing a bid we want the assurance from government that it is committed to structural separation, that it will have a role for the ACCC in setting prices to protect consumers and protect competition and that if it invests money it will use that funding to ensure a pro-competitive outcome," he said.
Without structural separation, Telstra could end up with monopoly control over the infrastructure while also setting prices and access terms to the network, according to O'Sullivan.
Speaking at the CommsDay summit in Sydney recently, Conroy reiterated his pledge to consider operational separation of Telstra if the FTTN network required it.
"As I have said, the current operational separation regime is not sufficient. Depending on the nature of the proposals we receive, I am prepared to look very carefully at much stronger measures," he told delegates.
But Telstra chairman Donald McGauchie labelled such separation as dangerous, saying the telco would withdraw from the tender process if it was forced to formally separate its wholesale and retail arms.
"There are no examples anywhere of where structural separation has been effective and indeed there are plenty of examples where a structural separation was tried — the US is the best example of that where the effect is serious damage to any future investment in the network and the system," he told the Business Spectator.
"Frankly, I think if that was done, not only would it be unattractive to us, but it would be incredibly damaging to Australia." AAP contributed to this article.