Telstra fails to offer NBN value

Telstra’s proposal for the National Broadband Network has been slammed across the board for its shocking value.

Yesterday was the deadline for proposals to be submitted to the Federal Government for companies and consortiums to bid for the rights to build the National Broadband Network (NBN).

Telstra, Terria, Acacia Australia and Axia NetMedia from Canada submitted proposals to the Government.

Despite the introduction of Acacia and Axia, the main bids are really Terria, the consortium backed by major ISP Internode and Optus, and Telstra. They’re the two with the best chance of winning the bid, but Telstra have hamstrung themselves by not submitting a full proposal.

In addition, Telstra’s proposal ignored the terms of the NBN and simply offered to expand it’s own network to 80 to 90 per cent of Australia. Citing the financial crisis, a falling dollar and the slowing economy, Telstra’s offer also failed to commit building the Government’s chosen technology of fibre to the node for the entire network.

If that wasn’t enough, the entry level broadband on Telstra’s NBN will be worse value than what you can get – even from Telstra today.

Telstra’s cheapest NBN offering would give consumers a 200MB download cap with speeds up to 1Mbps for $40 a month. Telstra Bigpond’s current ADSL offers 1.5Mbps with a 400MB quota for the same amount.

In comparison, Terria’s entry level broadband would offer a 2GB download cap with speeds up to 24Mbps for $40 a month.

Predictably Telstra’s offer has been met with derision by industry anaylsts.

“Telstra has once again proven they are all bluff, bully and bluster. But the joke of their proposal is that when it came to the crunch they would only put in this arrogant non-conforming bid,” said Maha Krishnapillai, spokesperson for Optus.

Telecommunications analyst Paul Budde said Telstra’s pricing was “totally unacceptable”.

“Nobody in the world even talks about 1Mbps internet speed let alone the price that Telstra plans on charging for it.”

“But this is exactly why Telstra doesn’t want structural separation. If it was structurally separated then it would have to offer internet services at utility prices which would of course eat into their profits.”

Mr Budde says consumers should expect high-speed broadband from $40 to $50 a month with a minimum speed of 10Mbps and an unlimited download quota. Currently neither tender from Telstra or Optus Networks Investments, who submitted a bid on behalf of Terria due to legal requirements, support unlimited download quotas.

Industry analysts also expect public backlash against Telstra’s proposal, which could put political pressure on the Government to reject Telstra’s bid.

But rejecting Telstra’s bid could induce legal action from the telco giant.

Professor Kerin, professor at Melbourne University Business School, said Telstra could use legal action to delay construction or the roll-out by refusing access to the copper lines, which Telstra owns.

“Telstra is unlikely to win but it’s good tactic to stall. Every day they delay is worth a lot of money to them.”

Both Terria and Telstra have submitted retail-based bids, while Acacia Australia have proposed building the infrastructure and reselling it to companies, making it cheaper to provide 100 per cent of the population with broadband – although this would not guarantee pricing in regional areas.

More details about the proposals submitted to the Government are expected to be released later today.

Sources: Australian IT, Australian IT, The Australian, The Australian



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