After a wait spanning more than two years, the NSW government has spurned Australia's major telcos and awarded a deal worth up to $100 million for regional broadband services to the investment arm of retail pharmacy giant, Soul Pattinson Telecommunications (SPT).
Known as the State Broadband Service, the five-year deal covers the provision of a high-speed data communications network covering major NSW government agencies and covers some 2000 sites in 24 major regional centres.
Soul Pattinson Telecomms will also provide the management services to integrate data services for some or all sites throughout NSW and ultimately connect some 2000 sites ranging from schools, TAFE colleges, hospitals, courts and police stations.
While the wait for news on the contract has been years in coming, NSW Special Minister of State John Della Bosca has set a cracking pace for the rollout, replete with a swag of stiff performance and service delivery-level criteria.
According to Della Bosca, implementation must start within six months with a start date no later than October 2005.
The contract is also subject to a major three-year review, with an option for the government to drop the project after three years.
Part of the deal is an option for SPT to use NSW government's fibre optic infrastructure currently spanning the state in the form of dedicated pipe for NSW's state-owned rail and electricity networks.
However, a spokesman for Della Bosca could not confirm whether SPT was planning to use the government-owned infrastructure, saying it was "entirely up to them".
The path to NSW's great broadband upgrade has been a rocky one for tenderers SPT Telstra and Optus, with the latter pulling out complaining of steep costs and lengthy delays.
Telstra declined to comment on the win.
While the deal represents a major win for SPT, one market analyst questioned whether the $100 million ceiling was achievable given "that a lot of big NSW contracts" have already been cherry-picked and awarded to Telstra.
However, the same analyst said SPT's performance to date had shown "decent lateral thinking despite coming from left field", adding there was "probably less rollout cost than you would first think".
While relatively new to telecommunications, SPT's parent company, Washington H. Soul Pattinson has more than a hundred diversified investments including NSW regional television station NBN, New Hope mining, Brickworks Ltd and capital funds.
A spokesperson for federal IT Minister Helen Coonan said the deal showed "healthy" competition in the telecommunications market, but the government still suffered an inherent conflict of interest in its partial ownership of Telstra - a problem being rectified.