Telstra warns of potential for NBN ‘mission creep’

Telstra has joined other telcos in expressing concern over a bill that will open the door to NBN’s line-of-business restrictions being altered through regulation

Telstra has indicated it is concerned about a government bill that would allow the communications minister to alter NBN’s line-of-business restrictions, which are intended to ensure it remains focussed on being open access, wholesale network provider.

The Telecommunications Legislation Amendment (Access Regime and NBN Companies) Bill 2015 forms part of the government’s legislative response to the Vertigan review of the National Broadband Network rollout.

The National Broadband Network Companies Act 2011 currently restricts NBN to supplying communications services to carriers and service providers (with a handful of exceptions).

Under the rules NBN is prohibited from supplying content services, non-communications services, and goods that aren’t linked to delivering network access to RSPs. NBN’s investments in other companies are similarly limited to those related to its core mission.

“There are not compelling arguments for either strengthening or relaxing the restrictions on NBN Co’s supply of goods and services,” the Vertigan panel stated in its review of regulations governing the rollout of the National Broadband Network.

“There is some merit, however, in NBN Co’s argument that there could be developments that arise that warrant modifications of the constraints that apply to it and it should be possible to deal with these through regulations, rather than always having to return to Parliament to seek amendments of the [National Broadband Network Companies Act 2011],” the report stated

“The scope to make these changes through regulation should be introduced, noting that regulations are subject to rigorous development processes and are subject to disallowance by either House of Parliament.”

The Telecommunications Legislation Amendment (Access Regime and NBN Companies) Bill 2015 would allow NBN to dispose of surplus non-communications goods; that provision has not met with controversy.

However, while the bill maintains NBN’s restrictions on operating its network on a wholesale-only basis, the amendments in it would allow the restrictions that prevent NBN from supplying non-communications services and non-communications goods, as well as restrictions on investing in other companies not directly linked to delivering the National Broadband Network, to be varied through government regulation.

Read more: Telstra to acquire Kloud

Telstra in its submission (PDF) to the inquiry examining the bill argued that the creation of the NBN as a monopoly wholesale provider has led to a process of strategic realignment among telcos.

“Clear, fixed boundaries around NBN Co’s permitted scope of business are needed for all Retail Service Providers (RSPs) to make the substantial investment required to retool themselves for this new model,” the telco argued.

“When the NBN was launched, it was recognised that the line of business restrictions on NBN Co were so fundamental that they should be embedded in legislation to provide investors with the degree of certainty they needed.”

Because variations to the restrictions placed upon NBN would not necessarily be subject to the same wholesale-only rules that govern network access, it could potentially, depending on regulations made by the minister, permit NBN to provide “systems integration services to large corporates, advice on retail product development by RSPs, provide services to digitalise information and manage databases to verticals such as the health sector, or operate data centres”.

The minister could also through regulation override section 20 of the NBN Companies Act and permit NBN to invest in a third party that supplies communications services directly to end users, Telstra argued.

Telstra noted the gap between government funding for NBN and the cost of the network rollout.

"NBN Co is reported to be considering new business directions as it tries to grow revenue," Telstra's submission stated.

“The mooted plans have included providing transmission services between the NBN points of interconnection (PoIs), which would compete directly with private investment in a competitive part of the market. NBN Co is also reported to be considering assisting new RSPs to enter the market, which could risk its RSP neutrality obligations.”

Although parliament can disallow government regulations, that is an “inadequate substitute for a legislative amendment to change NBN Co’s remit,” the telco argued.

“Any such departure from a fundamental aspect of the NBN policy should be fully debated through Parliament.”

Optus and Macquarie Telecom have also argued against changing the legislation governing line-of-business restrictions for NBN.

Telstra also argued in its submission for the reintroduction of merits-based review of Australian Competition and Consumer Commission decisions relating to the telco sector.

CCC concerns

A Competitive Carriers’ Coalition submission (PDF) to the inquiry said it strongly opposed the passage of the bill in its current form.The group, which brings together a number of Telstra’s rivals, said it was concerned over provisions in the legislation that would relax NBN’s non-discrimination rules in order to facilitate trials and pilots of new technologies.

The CCC is also concerned about other aspects of the bill including the changes governing NBN line-of-business restrictions and ACCC regulation.

The inquiry is due to report on 22 February.

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