Disappointment and dissent reverberated amongst network suppliers last week after news hit the channel that Alcatel had bagged a Telstra contract to provide modems for ADSL subscribers, said to be worth $20 million.
The contract for USB and ethernet modems, to be bundled with ADSL subscriptions, was tendered in March 2001 and took so long to be finalised that the involved parties were required to re-cost original submissions.
Geoff Heydon, DSL business development manager for Alcatel Australia, said that while the contract is on a pay-per-use basis, the network vendor anticipates it to be in the order of $20 million over a 12-month period. Alcatel has held the modem supply contract since August 2000, when Telstra's DSL network went commercial.
Heydon flatly denied rumours that Telstra was searching for an alternate supplier because of "technological limitations" on Alcatel's products.
"It is common practice to test the market every 12 months," he said.
Meanwhile, other parties in the tender process are questioning Telstra's due process, implying that the two companies' joint history may have clouded the objectivity of the decision.
When contacted by ARN, Telstra refused to comment on the basis on which the deal was awarded, the details of the contract, or even who wrote the specifications for the tender.
"Contracts with our suppliers are confidential. That is all I'm prepared to say," a Telstra spokeswoman said.
David Stewart, managing director of NetComm, one of the 23 companies to file submissions for the deal, admits he was surprised by Telstra's selection of Alcatel, mostly on a costing basis.
"We thought we would be more price competitive than them, considering they're a multinational and we're a specialist client-end provider," said Stewart.
Heydon said Alcatel's dominant position in the world market, its broad portfolio and its instrumental role in writing the chipsets used in modems provided the winning combination.
"You win when you have the best price and the best features," he said.
Telstra has listed all compatible modem brands on its Web site, however it is unlikely that users will purchase a piece of equipment they can get for free, according to Stewart.
He believes the bundling method will quickly give way to a retail model which will see mass merchants carrying products and services in a similar vein to mobile phone sales.
