Government Dumps Rural Broadband Scheme
Government Dumps Rural Broadband Scheme
April 2, 2008: The Federal Government has scrapped the $958 Million contract with OPEL, the joint Optus-Elders venture that had been charged with setting up a rural WiMax broadband network.
The parents have come out to play with Singtel, the parent company of Optus and Futuris, the parent company of Elders, both announcing to the Australian Stock Exchange (ASX) that the Government has terminated its $958 Million broadband contract.
The deal was actually put into place under the former Howard Government and became a heated election issue. OPEL’s plan was to rollout a wireless broadband network into parts of regional Australia who were unable to access high-speed internet through other technologies such as ADSL.x
Criticisms for the OPEL network had been coming thick and fast though the contract was in place and spending had begun.
According to Futuris, the Government has terminated the contract on the basis of OPEL's implementation plan not meeting prescribed coverage requirements and the possibility of Labor's proposed Fiber-To-The-Node plan causing duplication with the OPEL network.
Singtel’s statement to the ASX expressed confidence in OPEL’s ability to meet the requirements of the funding agreement.
“The OPEL network was capable of meeting the objectives of the Government's Broadband Connect Infrastructure Program and delivering improved broadband services to 889,332 underserved premises in rural and regional Australian within 2 years at metro-comparable prices,” the statement said.
This sentiment was echoed in the Futuris statement, which explained that “the joint venturers maintain that the OPEL plan satisfied the prescribed coverage requirements and all other conditions precedent to the Funding Agreement.”
Singtel expects to write off $9 Million in capital expenditure from the venture, with Futuris anticipating $15 Million barring recoveries from the Government.