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Australia's government will build a A$43 billion ($52 billion)
national high-speed fibre-optic broadband network, rejecting bids
in a controversial tender involving some of the country's top
telecoms firms.
In a surprise decision, Prime Minister Kevin Rudd said the
government would ask private companies to join a new private-public
firm to build the network.
Australia has slower and more expensive internet services than many
developed countries; raising concerns about competitiveness, but
the project will be made more difficult by the country's vast
distances and inhospitable terrain.
The government would sell its majority stake after five years when
the network was fully operational.
The centre-left government had been expected to announce the winner
of a tender to build the network, which was a centrepiece of Rudd's
winning election campaign in late 2007.
"It's time for us to bite the bullet on this. The initiative
announced today is a historic nation-building investment focused on
Australia's long-term national interest," Rudd told reporters at
parliament.
A little-known consortium comprising wealthy Australian businessmen
and telecoms industry veterans had been favourite to win the
project ahead of Optus, which is owned by Singapore
Telecommunications and Canada's Axia NetMedia.
The tender process was enveloped in controversy after the country's
largest phone company, Telstra Corp, was dumped from the running in
December, after the government panel overseeing bids said its
proposal did not fit requirements.
Telstra shares jumped four percent in early trade amid expectations
the company could bid afresh to be part of the project.
But communications and business strategy analyst Ross Dawson
said the decision was bad news for Telstra.
"This is not good news for Telstra. Essentially up until now
Telstra has had a monopoly on access to the home and connectivity,"
he said.
"Telstra will need to reposition, as indeed will other telcos, to say what value-added services they provide."
Rudd said the new network would be built with money from a $24 billion national infrastructure fund and the sale of bonds, following an initial government investment of A$5.7 billion.
Private sector investment would be capped at 49%.
The network would operate on a wholesale-only, open access
basis, separating retail operations and allowing Optus, Telstra and
other companies to build services into the system.
The fibre-to-the-home scheme, which still needs parliamentary
approval, would be the largest infrastructure project in
Australia's history, Rudd said, and would support up to 37,000 jobs
as the country teeters on the edge of an expected recession that is
likely to push the jobless rate above seven percent next
year.
Around 90% of homes would be connected to a network with speeds of
up to 100 megabits per second.
Rudd estimated that building the network would take 7-8 years,
presenting a risk that voters could be alienated by the long delay
as the government faces re-election late next year.
"We've delivered an enhanced election commitment. We're actually
delivering faster speeds to more people," Communications Minister
Stephen Conroy said, shaking off concerns that the scrapped tender
could anger voters and big telcos.
"The global financial crisis impacted right in the middle of the
process. The crisis landed right on top of (telcos), the money
dried up for everyone," Conroy said, adding that Telstra would now
be invited back into the process.
Rudd said the tender process was being scrapped because none of the
submitted bids offered value for money.
"(The tender) has not produced an outcome which we believe, and we
have been advised, makes the best use of the taxpayer's dollar.
This does, and at the same time provides a fundamental reform for
the way in which broadband services are delivered to the economy at
large," he said.
