Telstra will win the NBN contract

There is a good chance that Telstra will win the contract for the national broadband network, because the government will deem it to be the safest option in this time of economic uncertainty. Telstra has already reportedly done a heap of legwork on the project — it says 1900 engineers have already put in 1.5 million hours of work for the design of the new network — but not only that, Telstra is set to pony up $5 billion of its own money to fund the project.

The bad news is that Telstra isn't setting its sights too high. It says that it will upgrade the existing network (something that the government might also deem to be a safe option), and that it will provide speeds up to 4Mbps. That's a far cry from the 12Mbps that the government laid out in its requirements for 98 per cent of the population, but with many rural areas, and even outer metropolitan suburbs not getting that sort of speed these days, the government might be willing to compromise. It shouldn't. In fact, it should be asking for a minimum of 20Mbps.

All services will eventually be based on IP — including voice and television — so the government needs to select the consortium that will guarantee the fastest possible speed, and prove that it can deliver it. But logic tends to go out the window when governments make such large decisions (the Joint Strike Fighter deal comes to mind), and the government might also take into consideration Telstra's willingness to build its own fibre network even if it does not win the tender. Why select another consortium if Telstra is going to build its own network anyway? Optus has stated that it wants legislation preventing Telstra from doing just that if Optus wins the tender, because it claims only one network will be able to survive. If there's anything the broadband prices in this country have told us, it's that we need more competition, not less.

If it's willing to spend its own money to also create a competing fibre network, it can only be a good thing for this country, and especially for rural users. Will the Optus/Terria bid pull out if the government selects it to build the network but won't change legislation to keep it happy? The government probably won't bother going through all that in the first place, and will give it to Telstra.

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