Telstra said it has been informed that the Commonwealth has excluded it from the National Broadband Network request for proposals process - news that has sent its ASX stock crashing and electrified the industry. Amazingly, the company said it was excluded because it did not include a SME business development plan!

In a press release, Telstra chairman Donald McGauchie said: "The decision to exclude us from the RFP is the Commonwealth's decision to make. But Telstra is the only company to have submitted a proposal with a real financial commitment - of $5 billion. And Telstra is the only company with the existing -network, technical know-how, world-leading vendor, skilled workforce, established wholesale systems and proven track record of building world-class networks."

Telstra said the reasoning given by the Commonwealth for the exclusion is that Telstra did not include a plan for how to involve small and medium enterprises in the building of the NBN when Telstra lodged its NBN proposal on 26 November. Telstra said it considers it has fully complied with the RFP requirements which did not require a SME Plan to be lodged as part of the RFP Proposal itself and that the Commonwealth has used a peripheral issue to exclude Telstra. 

"Telstra provided its SME Plan to the Government in early December and, in Telstra's view, in accordance with the RFP," McGauchie said.

"The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN. This is a process that seemingly excludes bidders on such trivial and legally questionable technicalities but doesn't take any action on material issues such as financing and having the technical capability to build the network."

"What is even stranger is that the Minister has ample powers to accept Telstra's SME Plan under the RFP and have his Expert Panel get on with a process that includes Telstra."

"Telstra has sought to build a world-class NBN since mid-2005 and we have seen a range of government processes come and go, none of which have resulted in any decision to build. Throughout this time, Telstra has successfully pursued its business strategy and has not allowed itself to be distracted."

As well as its ADSL and ADSL2+ services, Telstra said it will continue to invest in its Next G and Hybrid Fibre Coaxial cable networks.

"The costs of a substandard NBN, today's decision will be seen as a turning-point in the nation's history.  This is the largest, most complex NBN build anywhere in the world. Australia now risks being the only country ever to build an NBN without the existing fixed network owner in the most difficult financial climate in decades," said McGauchie.

Telstra stock has plunged 6.5% in early trades.