Telstra goes down to the wire on broadband decision

The deadline for proposals closes at noon today and analysts and investors expect Telstra to lodge a bid, despite failing to gain an assurance the network will not lead to a forced separation of Telstra's retail and network operations.

Last night the communications giant and the Federal Government remained locked in a stand-off.

Telstra had threatened not to bid unless the Government guaranteed the company would not be split, and late yesterday a spokesman said that position remained unchanged.

A senior source said the Government would not bow to Telstra's bullying demands. The Government had no intention of splitting Telstra but the option would stay on the table regardless.

Other bids to build a network reaching 98 per cent of the population are expected from an Optus-led Terria consortium, a Melbourne group called Acacia, and a Canadian telco, Axia NetMedia. State and territory proposals will be made by the Tasmanian Government and TransACT.

Up for grabs is $4.7 billion in Government funding to build the network. The successful bidder would have to provide the rest for a project estimated to cost between $10 billion and $15 billion.

The national broadband network was a key element of Kevin Rudd's election platform. He envisaged work to start on the network by the end of this year and the first homes to be connected by the end of 2010.

The timetable has already blown out and the Opposition communications spokesman, Nick Minchin, said yesterday the Government had no hope of keeping its promise.

He also said there was little hope of building the network without Telstra's involvement, and the Opposition supported Telstra's demand for it not to be split.

A Telstra spokesman said the company wanted to build the network and was the best-placed bidder to do so.

Telstra is still viewed as the firm favourite to win the tender, because question marks remain about the ability of the other groups to get billions of dollars in funding during a credit crunch.