STARHUB subsidiary Nucleus Connect may have written off rival Singapore Telecommunications as a bandwidth customer but it appears that all is not lost for the green camp, thanks to a little-known government decree.

According to SingTel Singapore CEO Allen Lew, retail service providers (RSPs) that want to provide Internet connectivity to public sector agencies are mandated to use Nucleus Connect.

The StarHub subsidiary is the only operating company (OpCo) appointed by the Infocomm Development Authority of Singapore (IDA) to operate and wholesale bandwidth for the country's upcoming fibre-optic broadband highway, dubbed Next-Gen NBN.

Companies that are keen to provide services such as high-speed broadband and video-conferencing through the new network can buy bandwidth from Nucleus Connect, much like how some firms are leasing SingTel's Internet infrastructure today.

'What is clear is that for any government contract that uses high speed and requires electronics to support these speeds, Nucleus Connect will be the provider,' Mr Lew told BizIT in a recent interview.

'SingTel as an RSP has a huge share of the government business and we want to continue to have that. We'll have to find a way to work with Nucleus Connect for the government sector,' he added.

The revelation would come as an added bonus for the StarHub unit. This is because Nucleus Connect had developed its business projections and pricing based on the assumption that the red camp is not willing to bite.

However, SingTel does have the option of starting its own OpCo to serve other vertical sectors.

The government had incorporated a condition in the tender for the winning OpCo to have a five-year exclusivity period or until they claim a 25 per cent share in the local broadband segment.

However, this clause cannot be triggered as Nucleus Connect's parent company, StarHub, has already exceeded the stipulated market share based on its existing cable broadband base.

'The remaining question is whether it makes sense for us to use Nucleus Connect for other segments. We'll see what their final rates are and then make a final call,' Mr Lew said.

If SingTel does proceed with its own OpCo venture, it will have to do so without any subsidies from the IDA.

However, a major benefit is that it will not be shackled by some of the operating rules that the government has imposed on Nucleus Connect.

For example, Nucleus Connect is required to be operationally separate from StarHub and have its own office and a separate board of directors. The firm is also required to offer universal pricing to all RSP customers.

SingTel has already secured a steady stream of revenue from building the Next-Gen NBN. The first government tender for the mammoth project had gone to a SingTel-linked consortium called OpenNet.

Besides SingTel, Canada's Axia Netmedia, Singapore Press Holdings and Singapore Power unit SP Telecom are the three other OpenNet shareholders.