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The Australian government has canceled a A$958 million ($871 million) funding agreement with SingTel and Futuris for an broadband wireless network, claiming noncompliance with the original agreement, reports Bloomberg

Optus Networks, a wholly owned subsidiary of Singapore Telecom, and Futuris, its venture partner in OPEL Networks, which was awarded the project, were notified yesterday of the cancellation.

The funding was rescinded because the project would cover only 72 percent of the required region, instead of the 90 percent outlined in the contract, the Department of Broadband Communications and Digital Economy said in a statement.


DBCDE undertook a detailed assessment of the testing and mapping contained in OPEL’s Implementation Plan. The assessment found that OPEL did not achieve the required service coverage.

“This was the final failed broadband plan produced by the former Coalition Government,” Senator Conroy said.

“The Rudd Government has committed up to $4.7 billion to build a high-speed, open access, fibre based National Broadband Network. The new network will deliver minimum speeds 12Mbps to 98% of Australian homes and businesses.”

“The remaining 2% will continue to receive support through the Government’s $95 million investment in the Australian Broadband Guarantee for 2008-2009.

The companies announced Sept. 10 a funding agreement with the government allowing them to build a broadband network to under- served regions of rural Australia.

We believe the Department’s process was flawed,” Optus Chief Executive Paul O’Sullivan said in a statement. “We are quite happy to have a respected independent expert audit OPEL’s coverage.”

The companies said they have satisfied the terms of the contract with the network capable of serving 889,322 customers within two years at a price 30 percent lower than existing levels.

“The OPEL access network, which was to be wholesaled to other telcos and Internet service providers, will now not be built,” the Optus statement said.

This is a commonsense decision about a billion dollar waste of taxpayers’ dollars that would have delivered the wrong technology to the wrong places,” Geoff Booth, Group Managing Director of Telstra Country Wide, said at a briefing in Sydney today.

Telstra is the largest provider of both local and long distance telephone services in Australia, and provides mobile phone services, dialup, wireless, DSL and cable internet access.

Optus, Australia’s 2nd largest communication company, has brought competition to Australia’s Telstra since the late 1980s.

Telstra claims that Optus WiMAX wrong-headedly duplicates Telstra’s 3G network with an incompatible WiMAX network and is unfairly subsidized by taxpayers. Optus says it provides competition and services that monopolist Telstra doesn’t.

On 18 June 2007 Australian Prime Minister, John Howard announced OPEL, a joint venture between Optus and Elders, and secured $958 million in funding from the Australian Government under the Australia Connected programme.

DailyWireless has more on the Australian Blowup.

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