The Federal Government has announced that the winner of the National Broadband Network tender is, well, no one, as the Government plans to look for “partners” to help build the new $43 billion fibre to the home network as it has announced that it will manage the construction of the project.
Prime Minister Kevin Rudd has said that none of the submitted proposals, including one by Optus, failed to meet the requirements that the Government established, saying in the announcement that “none of the bids offered value for money.”
The government has established a new company, the National Broadband Network Corporation, that will create the network, and it will be a joint ownership between the Government and the private sector, with the Government being a majority shareholder. Private sector investment is set to be capped at 49 percent.
“The new investment is also the biggest reform in telecommunications in two decades because it delivers separation between the infrastructure provider and retail service providers. This means better and fairer infrastructure access for service providers, greater retail competition, and better services for families and businesses,” the Government said in a press release.
The tender process has been under scrutiny, with Telstra being excluded after saying in its plan that the Government money should be spent on upgrading their network, and a security risk with Optus’ partnership with Chinese company Huawei.
Unlike the Government investing into the project that was to be built by the private sector, the Government will fund the entire project, since they are building it themselves, using the Building Australia Fund and the issuance of the Aussie Infrastructure Bonds (AIBs) – allowing people to invest into the network.
The new network will connect to 90 percent of all homes, schools and workplaces and provide 100 megabit per second speeds to those connected. The other 10 percent will have next-generation wireless and satellite technologies will bring speeds of 12 megabits per second.
As well, the Government has said that the project will “directly support up to 25,000 local jobs every year, on average, over the 8 year life of the project.”
However, while the article may sound critical of the Government, it is not. You have to remember that the Government will be the majority shareholder in the company – meaning that Telstra being the only wholesaler for ADSL is over!
This, however, will not affect state-based bids, with the Government fast-tracking negotiations with the Tasmanian Government over plans to build a wireless service and a FTTP network in the state. The status of the other state-based bidder, TransACT, remains unclear at this stage.
The Government also intends to sell off parts of its stake in the company, like it had done with Telstra, within five years after the network has been built, depending on the market conditions and if it is not a risk to national and identity security.