Staff writers

UPDATED #2 | Optus and Elders, which formed the joint OPEL venture, have been notified by the federal government that their regional broadband contract has been terminated.

The contract was awarded in June last year by the Coalition government, and consisted of $958M in funding to help build a new regional broadband network. But the plan has been in doubt since the Labor government was elected.

The government says it terminated the contract because it believed the proposed network would not meet coverage requirements, and that it would likely duplicate coverage that will be provided by the future FTTN network it is planning.

A media release from Conroy's office clarified the remarks. "A condition precedent of the contract stated that OPEL would provide coverage reasonably equivalent to 90% of under-served premises identified by the then Department of Communications, Information Technology and the Arts as being within its coverage area."

"DBCDE performed an analysis of the detailed testing and mapping undertaken by OPEL, and determined that the OPEL network would cover only 72% of identified under-served premises."

But Optus shot back, saying that the government's decision was based on flawed analysis, causing it to "underestimate the number of underserved premises which would benefit".

It said that the previous government assessed OPEL's bid as "serving 526,474 underserved premises". "OPEL lodged an Implementation Plan in early January this year which showed that it would meet the coverage requirements in the contract. Our Implementation Plan showed, based on detailed field testing, that the OPEL network would have delivered broadband coverage to almost 900,000 underserved households in rural and remote Australia – 70 per cent more than the Department had assessed."

Conroy said that the new government's proposed national broadband network would cater for 98% of Australians. But the rest would have to rely on existing funding under the Australian Broadband Guarantee.

Links:

• Optus / Singtel announcement  (ASX, 2 Apr 2008)
• Elders / Futuris announcement  (ASX, 2 Apr 2008)
• Conroy Media Release  (DBCDE, 2 Apr 2008)
• Optus Media Release  (Optus, 2 Apr 2008)
• Optus wins regional broadband funds  (Whirlpool, 18 Jun 2007)