Okay, maybe Telstra won't build the NBN after all

In the last blog entry I wrote, I talked about how the government will likely give the NBN contract to Telstra because it would be the safest option in these economic conditions. However, the government has done the opposite, banning Telstra from the bidding process, and in turn given me faith that it actually is taking the national broadband network seriously.

It has scratched Telstra from the list of candidates because it was not satisfied that the company's proposal offered adequate opportunities for small-to-medium enterprises (SME) to get in on the construction of the network, but also, it wasn't happy that Telstra submitted its SME plan in secret to the ASX -- the government got the plan in early December -- suggesting that Telstra knew its bid was non-compliant and it was doing it this way to force the government's hand.

Rather than play games with the telco, the government rightly booted it out of the running. Telstra's initial NBN bid was a last minute inclusion and paltry in comparison to the other bidders, and the company was wary about getting in on it because the government wanted to split up its network and retail arms. It would create an unfair playing field if it owned the infrastructure and continued to function as an ISP.

We've enjoyed faster speeds and better competition from ISPs since they started installing their own DSLAMs in telephone exchanges, and this is the reason so many of us enjoy fast ADSL speeds currently. If it were up to Telstra, we'd probably all still be stuck on sub-1Mbps connections. It's fair to say that the government has made the right move here, but it still remains to be seen if legislation will be put in place to prevent Telstra from going ahead and building its own network anyway.

Read more about the situation here.

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