[LINK] NBN - compo bill?

[Jan Whitaker]

[Now even stock brokers are giving legal opinions! Sounds like 
somebody lost a packet on Telstra shares.]


Government could face massive broadband compo claim

http://www.theage.com.au/news/technology/biztech/government-could-face-massive-broadband-compo-claim/2008/12/18/1229189787944.html?page=fullpage#contentSwap1
December 18, 2008 - 4:19PM

The federal government could face a compensation claim of more than 
$80 billion if Telstra is forced to provide the company that builds 
the national broadband network access to its existing infrastructure.

In a letter to shareholders on Thursday, Telstra chief Sol Trujillo 
said the company would move on after its expulsion from the 
multi-billion dollar project's tender process this week.

Telstra's exclusion has left three bidders - Optus, Canadian outfit 
Axia and a syndicate of Australian businessmen called Acacia - in the 
running to roll out the network.

The decision to expel Telstra has seen billions of dollars wiped from 
the company's market value.

But Ivor Ries, director of research at EL&C Baillieu Stockbroking, 
says Telstra would be entitled to compensation from the government if 
another proponent wins the rights to the project.

It's likely the company that eventually wins the bid would need 
access to Telstra's existing network.

"Telstra's network is private property," Mr Ries said.

"For the government to expropriate all or part of its network to 
build the NBN, Telstra will be entitled to compensation under the 
Constitution, which enshrines the principle of no expropriation 
without compensation.

"Telstra's compensation claim would probably start at $80 billion and 
move upwards," Mr Ries said.

Communications Minister Stephen Conroy on Thursday said he was not in 
a position to discuss hypotheticals.

However, earlier in the week, Senator Conroy pointed out the issue of 
access to Telstra's network had already been ruled on by the courts.

"In fact, Telstra decided to take this matter all the way to the High 
Court," Senator Conroy said on Monday.

The High Court rejected Telstra's claim.

"Even (chief justice) Michael Kirby joined the other six members to 
say that when Telstra purchased the network, they purchased it with 
an access regime in place. Get used to it," Senator Conroy said.

The matter of compensation would be considered after the government 
made a final decision on which company would build the national 
broadband network, he said.

Australia's biggest telco was expelled from the project's tender 
process this week after its high-stakes game of brinkmanship backfired.

The telco chose not to play by the rules by lodging a bid that fell 
short of the government's stated objectives, which required 
proponents to include a plan of how to involve small business in the project.

Telstra also wanted a guarantee its network and retail arms would not 
be separated if it won the rights to the project.

Mr Trujillo on Thursday refused to resile from the stance taken by 
the company, adding Telstra would continue to explore other options.

"While Telstra disagrees with the decision and reserves its rights in 
respect of the matter, the company will move on," he said in a letter 
to shareholders.

Mr Ries said Telstra was right to seek certain guarantees from the 
government in relation to the broadband project.

"The company has just spent $25 billion upgrading its fixed line and 
wireless networks and is committed to spending another $20 billion 
over the next five years continuing its upgrade," he said.

"At the rate at which technologies change, Telstra is worried that 
the NBN will be a white elephant long before it is actually in operation."

The outcome of the national broadband network tender process is now 
in the hands of a government-appointed expert panel which has been 
given six weeks from the bid deadline to consider proposals.

The panel will then have a further two weeks to consider advice on 
the proposals from the Australian Competition and Consumer Commission 
before the government announces its preferred bidder.



Melbourne, Victoria, Australia
jwhit at janwhitaker.com
business: http://www.janwhitaker.com
personal: http://www.janwhitaker.com/personal/
blog: http://janwhitaker.com/jansblog/

Our truest response to the irrationality of the world is to paint or 
sing or write, for only in such response do we find truth.
~Madeline L'Engle, writer

Writing Lesson #54:
Learn to love revision. Think of it as polishing the silver for 
guests. - JW, May, 2007
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