Telstra expects broadband win

TELSTRA has moved to pre-empt the Rudd Government's tender for a $9 billion broadband network, saying it "expects to get the nod" for the project, which will get an unprecedented $4.7 billion taxpayer subsidy.

The telecommunications giant, which still extracts near-monopoly profits from Australian consumers and businesses, raised the spectre of the turmoil in global financial markets.

Telstra (tls.ASX:Quote,News) publicity chief Phil Burgess claimed that no one else would be able to raise the $4.6 billion or more required to complete the network, due to the international credit crunch.

"Where are they going to get the money? Can you go out to the market and raise $4.6 billion? I didn't think so," Dr Burgess said.

Telstra used a media briefing yesterday to raise the heat on the Government over the project, repeating claims it was the only group with the capability of building the network.

But Dr Burgess also raised doubts about whether the project would even go ahead, saying the Government must make bidders post a surety bond if it was serious about the process.

"It is not surprising that Burgess expects Telstra to be given the nod to build FTTN, despite its history of gross abuse of consumers, because monopolists by definition believe that they have a right to control everything," David Forman, the head of the Competitive Carriers Coalition, which represents a range of smaller telcos, said.

"But if the Government pays even passing attention to what international price benchmarks tell us about the consequences of Telstra's market power, it will have to use the NBN process to bring Australian regulation up to international standards.

"Handing Telstra a new monopoly would be an act of gross irresponsibility and it is beyond belief that the Government would do it."

Optus, which last week lost a $958 million Government subsidy, also weighed into the debate. "We're expecting the Government to lead a fair and transparent selection process around the NBN, so it's outrageous for Telstra to assume it has already won," said Andrew Sheridan, Optus general manager, interconnect and economic regulation.

Dr Burgess also used the opportunity to again slam the competition regulator, claiming it regularly interfered in the operations of businesses around the country, and he exhorted others to take up the battle.

"We hope other business leaders will do the same thing," he said.

Dr Burgess said the Australian Competition and Consumer Commission "plays games" in the supermarket, petrol and mining sectors.

"Coal exports have been damaged enormously by federal and state regulators," Dr Burgess said. "You can't kill the goose that lays the golden egg, and that is small, mid-sized and large business, and that is where the regulator continues to meddle day after day after day."

The tender documents for companies and consortiums planning to bid for the right to build the national broadband network were due to be released by Communications Minister Stephen Conroy earlier this week but have been delayed within the Canberra bureaucracy. They may be released today.

In a further development in the telco sector, ASX-listed Telecom New Zealand yesterday unveiled a five-year plan, as foreshadowed in The Australian.

"We'll fight for every customer but once the decline starts it's a matter of moderating it and that's what we're doing here," TNZ chief executive Paul Reynolds said. "There's a real focus on cash management in an environment like this."

The company forecast a spike in capital expenditure between $1 billion and $1.1 billion for the year to June 2009 as it fast-tracked network and systems changes. This will be followed by a capital spend of $950 million in the following year before declining to $750 million by 2013.