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After much negative publicity, Opel Networks' contract to supply wireless broadband to rural areas is terminated by Australia's government
According to a statement on the Web site of Optus, one of the two partners to deliver the project, Australia's government informed the SingTel-owned Optus of its decision Tuesday.
Optus noted that the Australian government pointed to a failure in meeting coverage requirements, but the company counters that the decision was made based on flawed data.
The project, aimed at delivering affordable broadband access to households in rural and remote Australia, was awarded to Opel Networks, a 50-50 joint venture between Optus and Elders Communications, last year. The contract was worth about AU $1 billion (US$909.1 million).
Nathan Burley, an analyst at Ovum, said in an e-mail the U-turn by the new Australian administration was "not too surprising".
The new Minister for Broadband, Communications and the Digital Economy, Stephen Conroy, had previously attacked "the funding, award procedure, Opel coverage claims and its chosen WiMax technology" when he was a member of the opposition party and advocated a FTTX (fiber-to-the-premises) network to 98 percent of Australia households, noted Burley.
He said: "[The lobby] included AU$4.7 billion (US$4.3 billion) in government funding and much duplication of the planned Opel network. Since the change of government in November 2007, [Conroy] has launched a tender process for this network."
Opel also faced numerous lawsuits, public discussion and attacks, including resistance from incumbent Telstra, said Burley.
The biggest loser in the saga is, however, not the potential households that stand to gain from the Opel network, according to Burley.
"Although the loss of the competitive backhaul capacity may be the largest blow, the termination will have the biggest ramifications on the WiMax industry," he said. "WiMax has received considerable bad press recently in Australia, and this [incident] will not help."
On the flip side, Burley said, Optus is now free to concentrate on its bid for the fiber-to-the-node (FFTN) network tender.
Burley explained: "Along with its G9 consortium partners, Optus has much more at stake on the FTTN decision than it did in the Opel project. The upside for Optus is that it will now be able to deploy its technical and management resources on, frankly, the main game."