Australian broadband minister, Stephen Conroy has officially ruled out the eligibility of Australia's largest phone company, Telstra from the bidding process to build the $15-billion government-sponsored national broadband network project.
Stephen Conroy said the company has 'excluded itself' by failing to submit "one of five mandatory requirements of the RFP and there was nothing to stop Telstra from submitting a complete proposal and competing vigorously with other proponents in this process.''
The minister also confirmed that other bidders like Acacia, Axia, Optus-Terria, TransACT and the Tasmanian government have all met the requirements and conditions for participation.
The $15-billion project involves laying a fibre optic cable network to 98 per cent of Australia by replacing the old copper cable with high speed fibre optic cable and Telstra has a commercial advantage over its rivals as it owns the exchanges from where the existing copper wires are to be replaced.
The mandatory requirements for bidding included that proposals were to be written in English, Australian legal units of measurement are used, they include a complete and signed 'proponent's declaration', that proposals for more than one state or territory include a proposal for all states and territories, and the inclusion of an SME plan is 'the condition for participation'.
Conroy said, NBN bidders were informed of the mandatory requirements in writing on two occasions, and accused Telstra of having ''more than enough time and resources to fully understand what was required of proponents in this process''.
The Australian government rejected the company's eight page proposal because it didn't provide plans on how it will include small and medium businesses in the network's construction.
The independent expert panel in charge of assessing the bids obtained legal advice from five different sources which unanimously said it could not consider Telstra's bid.
That advice was sought from internal government lawyers, the Australian government solicitor, private law firm, Corrs Chambers Westgarth, senior counsel appointed by Corrs, and the Solicitor-General, the Government's top legal advisor who all confirmed that Telstra's proposal does not meet the mandatory requirements for participation in the RFP process.
The company, which has its own in-house and external legal advisors, said its eight page proposal complied with all the legal obligations for the tender process.
After months of threatening to pull out of the tendering process unless the government removed the condition for a structural separation of its broadband network infrastructure from the retail arm, the Telstra boards finally decided to bid for the tender. (See: Telstra to bid for $15 billion Australian telecom project)
Telstra had been trying to bully the Rudd government and tried to play a game of brinkmanship by demanding a guarantee that the government would not try to force structural separation of the company if it wins the tender, which was refused.
Instead of bidding, Telstra lodged an eight-page letter offering to lodge more details if the government complied with its demands.
Conroy accused Telstra of seeking special treatment by making its own rules for the tendering process and although the national broadband network was one of the main election promises made by the government where it will contribute $4.7 billion and ask private telecom companies to join in as a partner wherein they bid for the project which is estimated to cost about $15 billion, Australia's plan to build a country-wide high-speed network ''has always been bigger than Telstra,'' Conroy said
In a statement released after disqualifying Telstra, Conroy said, ''Telstra's board will have to explain to its shareholders why it has decided to sideline itself from a process that will shape the Australian communications sector for the next decade. The government's NBN process has always been bigger than Telstra.''
"It would be unfair to the other bidders for us to, after the bids had closed, to re-open them to re-admit one of the bidders who had failed to supply all the information," as all the other bidders met with requirements and conditions for participation.
''The Rudd Government stands ready to take the tough decisions necessary to ensure the telecommunications sector delivers what Australia needs for its long-term economic prosperity,'' he added.
Telstra chairman, Donald McGauchie released a statement saying, the reason for its exclusion was ''trivial'' and ''Telstra is the only company to have submitted a proposal with a real financial commitment - of $5 billion and Telstra is the only company with the existing network, technical knowhow, world leading vendor, skilled workforce, established wholesale systems and proven track record of building world class networks.
''The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN. This is a process that seemingly excludes bidders on such trivial and legally questionable technicalities, but doesn't take any action on material issues such as financing and having the technical capability to build the network.''