Telstra kicked out of NBN by Federal government

In a hastily arranged briefing this morning, CEO Sol Trujillo informed analysts of the exclusion, but said that Telstra remained hopeful that either Senator Conroy or the Cabinet would allow the telco back to the negotiating table.

It has been widely speculated that Telstra submitted a proposal - rather than a full bid - to get a seat at that table, however the decision allegedly taken by the expert panel last night has effectively canned this strategy.

“The government has the power under the existing RFP process to keep Telstra in,” a Telstra spokesperson said.

“For that reason we assume they don’t wish to have us in there, and the expert panel will continue its work without Telstra’s involvement. It’s a matter for the government [whether they bring us back in].”

Trujillo added: “In our view this is all part of the process.

“If the Minister chooses to only take the recommendations of the panel then that’s a choice he has or he may choose to determine that the panel’s recommendations aren’t practical or doable and he may choose to re-engage with Telstra at that point.

“We don’t know - we’re not speculating - but in the meantime we’re getting on with what we need to do to compete,” said Trujillo.

According to Trujillo, Telstra was not given an opportunity to present its case to the NBN expert panel over the weekend. It had widely been tipped that presentations from the bidders were to begin this past weekend.

The reasoning allegedly given by the Commonwealth for the exclusion is that Telstra did not include a plan for how to involve small and medium enterprises (SMEs) in the building of the NBN when Telstra lodged its NBN proposal on 26 November.

Trujillo argued that Telstra ‘has fully complied with the RFP requirements which did not require a SME Plan to be lodged as part of the RFP Proposal itself and that the Commonwealth has used a peripheral issue to exclude Telstra’.

He said that Telstra had not had a chance to seek personal clarification from the Minister on why the proposal had been excluded.

“We just received notification [from the expert panel] last night,” said Trujillo.

“Theoretically we can’t have a conversation [with Conroy] because we’ve been under the gag process. We want a follow-up on their thinking, because we‘re a bit surprised they‘re seeking this course of action on a triviality,” he said.

Trujillo said Telstra had submitted an SME plan to the expert panel on December 4th.

Read on for more of Telstra's responseTrujillo is also banking on the alleged inexperience of some of the bidders to give Telstra a second chance at the network build.

“The panel and [Department of Communications] staff have decided to explore alternatives to Telstra in more detail and they can do that,” said Trujillo.

“We all need to be mindful that most of these alternative entities don’t have the staff, engineering capabilities or resources to get started and then to build a network of this magnitude. It’s a highly complex project that will be hotly contested.”

He continued: “The RFP process leads only to the minister getting a recommendation. The minister can talk to whoever he wants to after the expert panel submits their report. He can decide to take to cabinet any proposal he chooses.”

Trujillo said if Telstra was excluded from the NBN for good, that it had other plans and strategies in place that were in the interests of both shareholders and customers.

In particular, Telstra may be forced to rely on further development of its Next G network if the government not only excludes the incumbent from the process, but passes legislation to prevent them from building parallel infrastructure. However, Trujillo seemed fairly confident that this wouldn’t happen.

“If that were done it would put Australia in a unique category with North Korea and Cuba and put us in violation with WTO requirements,” said Trujillo.

“If it were to happen, though, wireless would be our primary broadband play.”

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