What's behind Telstra's non-compliant bid for the National Broadband Network?

By lodging a short, non-compliant bid for Australia's National Broadband Network, Telstra has kept itself in the running for the federal government’s funding, but at the same time has kept its options open, claims telecommunications analyst and consulting company, Ovum.

David Kennedy, research director at Ovum, said: “We see this bid as an invitation to the government to sit down with Telstra and negotiate a deal that will achieve the government’s political goals while meeting Telstra’s commercial criteria. Telstra’s desire to negotiate at ‘senior levels’, meaning Minister Conroy and the Prime Minister, attests to this.

“By preserving pricing for entry-level telephone and broadband services and offering new wholesale services, Telstra is trying to deflect concerns about its market power. It hopes this will make the offer of negotiation more attractive.

“The real question is: what next? It’s hard to see the other bids being competitive against the strength of Telstra’s financial and technical capabilities in the current economic climate. If the government isn’t satisfied with the other bids, it will be forced back to the negotiations with Telstra. That would put us back right where we were in late 2005, when Telstra first announced it wanted to build an FTTN broadband network.”