The extract is so riddled with errors I am reproducing it in full here with my commentary. The original text is in bold - my commentary in italics.
In periods of technology evolution it is profoundly dangerous for governments to act as a proxy for normal commercial processes. Anointing winners never works. That is not and should never be the game of government.
"Normal commercial processes" in fact do not apply to the construction of infrastructure with natural monopoly characteristics. Government is forever picking "winners" - be that for tenders for road construction or even in making the decision which road to build. The NBN policy consisted of both - an attempt by tender then a decision to self construct.
The simple fact is there were two contending views of the "complex set of circumstances" that were creating the broadband challenge. Telstra's view was that it had no incentive to invest in an environment of cost-based regulation, its competitors view was that Telstra had the incentive and opportunity to favour itself through being vertically integrated.
Both challenges were attempted to be addressed through the NBN Mark I tender, through the contribution of Government capital to ease the investment hurdle, and the requirement for a separated open-access network. I will agree that the use a standard procurement process tender resulted in a poorly managed outcome, but the ANAO does not share that criticism.
This was simply not the case because the player with access to the network refused to bid on the basis that structural separation was not something they were prepared to agree to.