ACCC chief backs breakup of NBN Co

NBN Co should be broken up before privatisation, competition watchdog's chief argues

NBN Co should be broken up into separate entities before it is privatised in order to promote competition, the head of the Australian Competition and Consumer Commission, Rod Sims, argued in a speech this morning.

The ACCC chairperson used an address to an NBN Rebooted event organised by telco publication CommsDay and industry body Communications Alliance to back the conclusion of the Vertigan panel on the future disaggregation of NBN Co.

One of the top-line recommendations third report of the Vertigan panel, which was appointed by the government to conduct a cost-benefit analysis of the National Broadband Network, was that the government split up NBN Co into separate businesses.

The report recommended "the disaggregation and divestment of NBN Co’s transit, satellite and fixed wireless business units, along with associated obligations, including with ongoing subsidies if they prove to be necessary".

“[W]ere full disaggregation not to proceed immediately, the Government direct NBN Co to move to the transitional internal arrangements identified as a preparatory stage, with a further independent review of market structure being conducted in no more than five years’ time,” the report stated.

The report said that separate entities could operate the satellite network, the fixed wireless network and the HFC network, while NBN Co continued to operate the FTTx network.

"It will be strongly in Australia's long term interests for, say, three separate entities based on delivery technology to be sold that can provide a platform for future infrastructure based competition," Sims argued today, according to a copy of his speech provided by the ACCC.

In his initial reaction to the report's recommendation Communications Minister Malcolm Turnbull said that although "disaggregation of NBN Co's business units... after the network is complete cannot be ruled out" it was not on the immediate agenda.

"Breaking up NBN Co would distract its management and delay the provision of high-speed broadband to all Australians," a statement issued at the time by the minister said.

Sims said that although the ACCC backs the breakup of NBN Co, the competition watchdog acknowledges that "the government faces the present very difficult challenge of ensuring the roll-out proceeds expeditiously".

"[The government] has stated that, given this challenge, it does not intend to go down the disaggregation path at this point in time. The ACCC understands this position."

"However, the ACCC stresses that if NBN Co is not disaggregated in the near future, it is imperative that measures are put in place now to facilitate future infrastructure-based competition," Sims added.

"In this regard NBN Co should put in place arrangements that provide for future separation of NBN Co at an appropriate time.

"Such arrangements should include internal systems, accounting and reporting arrangements. The ACCC’s experience is that if this is not done early it will be extremely difficult to do down the track. While putting in place such arrangements may come at some initial cost, the benefit of doing so when it comes to separating the business in future will be far in excess."

Sims said that the separation of NBN Co should take place before the organisation is privatised.

"NBN Co should be privatised in future," Sims said. "When contemplating this, the government should not limit competition in order to maximise the proceeds from the sale; there is too much at stake for that.

NBN this morning released an update to its corporate plan.

Follow Rohan on Twitter: @rohan_p

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