Austria broadband tenders “rigged” in favor of Telekom Austria

Not only is there something of an uprising in the Netherlands (see separate story in this issue) against EU practise and sentiment, but there are clues in another story this week over Austria, and how monies set aside for broadband development, seem to have fallen almost exclusively to its incumbent Telco.

This week a group of rival broadband suppliers, who have all clearly tried to bid for contracts to improve Austrian broadband, have called for a review on how government broadband tenders are being managed.

The Austrian Association of Alternative Telecommunications Network Operators (which calls itself VAT) has picked up on the second tender issued for what is known as the Broadband Billion. An open letter on its website from Jan Trionow, the VAT president, who is also the CEO of Hutchison 3 Austria calls for a fresh tender for the recent slice of €140 million of projects, saying they should be shelved because the results of the previous €204 million of project tenders, have not been fully explained.

Not only do rival broadband players want to know where they were marked down on these previous tenders, they also want to know why incumbent Telekom Austria A1 won 80% of all the projects, despite not always being the cheapest.

Trionow complains that amendments were made to the tenders to favour the incumbent, such as giving extra points for having a regional presence. From our own point of view, this type of local bias should have been ironed out of the European Union system years ago. But for some members of the Union, namely Germany and Austria, it seems that there is one rule for them and another for all the more recent members of the EU. The European Commission is usually reluctant to step in when these countries step out of line.

The debate is really about rushing on with more regional broadband tenders, which will almost certainly all go to Telekom Austria, before any investigation can be heard about these complaints and before any feedback has been given for the previous tenders.

The VAT association members include UPC Austria, T-Mobile Austria, Tele2 Hutchinson’s 3 and Colt and they all want to see the selection criteria reflect a level playing field.

Trionow added, “This means that A1 Telekom Austria can further expand its fixed network infrastructure, using the large funding sums, while rivals cannot,” and he went on to say “It is understandable that the Ministry of Infrastructures would like to achieve a comprehensive coverage of 100 Mbps for all households by 2020. However, this cannot be at the expense of competition.”

A common market is supposed to be one where everyone has an equal chance of business and anything else is protectionism, and it has gone unchallenged in some parts of the EU for too long. What’s worrying is that Telekom Austria is now controlled by Carlos Slim from Telmex, and he made his own fortune in an uncompetitive environment where he always seemed to get any advantage that was going. Has the practise somehow arrived unchecked from Latin America?