Cancels Broadband Deal
SingTel-Led Network Is Said Not to Reach Enough Remote Areas
By Lyndal McFarland
The Wall Street Journal
Friday, April 4, 2008
SYDNEY, Australia -- The Australian government canceled a 958
million Australian dollar (US $869 million) funding agreement
with a venture led by Singapore Telecommunications Ltd. to build
a broadband network in Australia's more remote areas, saying the
proposed network didn't meet coverage requirements.
Stephen Conroy, the minister for Broadband, Communications and
the Digital Economy, said the proposed network by OPEL Networks
Pty. Ltd. -- a joint venture of SingTel's Australian unit,
Optus, and a unit of Futuris Corp. of Australia -- didn't
satisfy contract conditions.
Analysts said the decision will likely make an upcoming tender
for the government's planned nationwide high-speed broadband
network even more competitive.
The Labor government, elected in November, is promising to
provide 98% of Australian homes with high-speed Internet
services in the next five years. It has pledged as much as A$4.7
billion in government funds to build a so-called open-access,
fiber-to-the-node broadband network in a public-private
The government is hoping to attract proposals for the network
from a number of companies, including Telstra Corp. and the G9
consortium of nine telecommunications companies, led by Optus.
Labor had promised to honor the decision by the previous
Liberal-National coalition government to award funding to OPEL,
but it was always a contentious contract. Rival Telstra had
argued that the OPEL network would largely duplicate its
existing services with little benefit to rural Australians.
Mr. Conroy said Wednesday that the planned network failed to
meet requirements that the network provide coverage to 90% of
identified "underserved" regional areas. He said his department
determined that the network would have covered only 72% of the
identified underserved premises.
The OPEL partners said they believe the network proposal
satisfied conditions. Optus Chief Executive Paul O'Sullivan
called on the government to have an independent group review the
department's findings. Mr. Conroy said there wouldn't be an
Mr. O'Sullivan said Optus is "considering all its options," now
that the funding has been scrapped.
Mr. Conroy declined to comment on the prospect of legal action
from OPEL. He said the maximum compensation payable under the
contract is A$2.5 million.
Telstra welcomed the decision and said it will drop legal action
against the government for awarding the project to its rival.
Analysts said the news would help Telstra a bit and will mean
the company won't face high-speed broadband competition in
regional areas for some time.
--Andrew Harrison and Rachel Pannett contributed to this
Write to Lyndal McFarland at