AAPT quits Terria but iiNet says it will stay

After the recent announcement from AAPT that it will be quitting the Terria Consortium, iiNet, the current No. 3 internet service provider in Australia, has confirmed that it will stay amid concerns that if the group disbanded the Government may grant the $4.7 billion broadband subsidy to Telstra.

As the second largest Terria member after Optus the AAPT, owned by Telecom New Zealand, has made the decision that by not being a part of the official process for tender it would be more able to influence the plan for the government national broadband plan.

Paul Broad, the AAPT chief executive said “I didn’t want to feel hamstrung by the terms and conditions of the bid — I want to say things publicly and what I think is going on.”
Michael Malone, the iiNet chief executive said that his company would remain with Terria “on the basis that more harm will be done to customers if Telstra were the only bidder”.

With regards to providing funding for the build, Optus is currently the only company with Terria to have done so. It is, however, hopeful that non-telco investors with be able to own and fund the network. The current estimates for overall costing are between $10 and $15 billion to provide a fibre-to-the-node network that will offer coverage to 98 percent of Australian users.

A block on the winning bid being able to provide both wholesale and retail services is being lobbied for by Terria, which will essentially prevent Telstra the current frontrunner from bidding. Mr Broad did say that he had no issues with Telstra both owning and build the network, but only as long as the industry was happy with the terms of access and that it was completed on the price Telstra agrees to.

He said “You won’t hear me bagging Telstra or telling them they can’t do their business. You won’t hear me telling (the Government) how Telstra should be structured. You’ll hear me talking about how the industry should be run, how regulation should be run, how we enhance competition through the right rules and regulations.”

Although there has been confirmation from Michael Egan that the Terria bid is “full steam ahead” with its bid for the network, David Kennedy, the Ovum research director, has said that “the probability of a Telstra win” is something that the telco industry should be preparing for at this stage.

He advised “AAPT’s presence in the process would have definitely increased the credibility of the Terria bid, and to that extent it probably does reduce the competitive tension in the bidding process.”