Broadband costs `higher without Telstra`

The cost and risk associated with the national broadband network will rise dramatically if Telstra is not involved in the project, a leading consultancy firm says.
Australia's largest telco has been left out of the loop after it lodged a bid which failed to meet a mandatory requirement contained in the federal government's request for proposals for the multi-billion dollar project.
Telstra was told on Sunday night it would be excluded from the tender process after it failed to set out a plan to involve small- and medium-sized business in the rollout.
The company's share price continued to tank on Tuesday in the wake of the news, closing the day more than three per cent lower and wiping another $1.4 billion off the company's market value, taking the losses over the past two days to $7.4 billion.
Telstra chairman Donald McGauchie said the company would have risked more shareholder losses if it had entered the bidding process without certainty over the rules governing operation of the network.
The telco had been seeking assurances from the government that it would not be broken up if it wins the rights to the project.
Mr McGauchie also blamed what he described as a highly-technical bureaucratic process for the decision to exclude Telstra, adding there would be a negligible effect on the company.
Other bidders had made "immense promises" to governments in the past and had delivered nothing.
"We'll just wait and see what happens," Mr McGauchie said.
But David Kennedy, research director at global consulting firm Ovum, believes the government will re-engage with Telstra.
There would be an "all-out war" between Telstra, the government, and the alternative operator that would "dramatically raise the cost and risk" of building the network if another bidder was chosen, he said.
Telstra cannot be ignored, because any alternative operator would need Telstra copper wiring to build its network, he said.
"Whatever the outcome, it is hard to see the network being built without some kind of Telstra involvement, or without regulatory changes that the government alone can achieve.
"This is why the government and Telstra will remain in dialogue, despite Telstra's
proposal being rejected.
"As angry as they are with each other at this moment, they need each other as well."
The opposition on Tuesday maintained its attack on the government in the wake of the
decision to dump Telstra, suggesting the tender process would end up in a "legal
morass".
"The national broadband network promise of Labor's has been mired by delays and
confusion," opposition communications spokesman Nick Minchin said.
"Now, I think, it's just going to end up in a legal morass."
Senator Minchin described the tender process for the network as a "complete
shambles", saying it could well end up in the courts.
"I doubt that we'll see any construction before the end of next year," he said.
"What Labor is doing is actually setting Australia back in the pursuit of high speed
broadband."