In its bid letter Telstra said it is "impossible" to build or maintain a network if structural separation is enforced, is this true?
PB: No, of course not. They might not enjoy the same levels of cross-subsidisation they currently access regarding basic network infrastructure costs and high value-add retail products, but that's an economic argument, not an argument about whether it is possible or not. In practice, all the non-Telstra service providers today that use Telstra's wholesale and re-sold services and products are proof that it is possible to have a business model that works when a company provides value-added services, which are delivered through a combination of their own equipment and other parties' networks, including Telstra's. If the wholesale arm actually had incentive to make things easy for their customers, then the business case for the separated retail arms becomes even stronger.
What do you make of Optus' Terria backed bid – realistically are they capable of building the network and achieving the outcomes set out in the tender documents?
PB: Without seeing the proposal it is impossible to tell – only the expert panel and their advisors will be able to make a judgment on this. Certainly with enough time and money Optus can leverage and access any extra resources they might need beyond their current staffing levels to build the nationwide network. The question is whether they have the experience to manage all the parallel activities that need to occur to build all the national infrastructure in the 5 year timeframe.
Can Australia sustain multiple next-generation broadband networks?
PB: We can maintain multiple networks – in the CBD areas we already have multiple fibre networks, and nationally we have several mobile phone networks. There is nothing magical about having a single network, apart from the economies of scale available. What will be interesting in future discussions is working out how the state-based bids – Tasmania and the ACT – might inter-work with whoever builds out the rest of the country.
How realistic is it that whoever wins the tender will be able to achieve 98 per cent coverage, given Australia's geographical spread? And will it be future-proof?
PB: The interesting thing about Telstra's bid is that by only looking to cover 90 per cent of the population, compared to the 98 per cent that was requested, Telstra has been able to leave open its technology selection for the remaining 10 per cent. The winner, or winners, of the project have five years in which to achieve the required network coverage. Technology developments in that 5 years can easily make some of the initial network technology choices obsolete even before the final parts of the network are finished. It may well be that the detailed planning the other teams have done to cover that very difficult tail-end of the population distribution curve – which are likely to be built nearer the end of the project than the beginning – will be redundant depending on the future development of, for example, wireless standards, equipment, and spectrum usage.