NBN: Coalition argues for greater competition

The Coalition has issued a dissenting report claiming the Bill will give NBN Co an unnecessary monopoly over private fibre providers

Coalition members of the Joint Committee on the National Broadband Network have filed a dissenting report that suggests the Telecommunication Amendment (Fibre Deployment) Bill 2011 will have damaging effects on competition between fibre providers and NBN Co.

The report claims that the existing policy framework would give NBN Co an unnecessary central role, while inquiries have highlighted a strong private market for fibre construction.

“There are a number of competitive greenfields operators (CGOs) active in this market, and Coalition Members believe that this market should be encouraged not stifled,” the report reads.

“CGOs will be at a fundamental cost disadvantage because NBN Co is prepared to install fibre at zero cost, incurring a loss on the installation which it presumably hopes to recoup over time from service revenues.”

The Coalition has proposed an amendment to remove the disincentive for developers to use CGOs to install fibre infrastructure and to enable developers who have installed fibre, in compliance with specifications, to have the option of requiring NBN Co to acquire the network.

According to the report, this would give developers and incentive to use GCOs, ensure they have choice beyond NBN Co for fibre construction, and impose cost discipline on NBN Co by requiring it to purchase connections at a “reasonable price” set no higher than NBN Co’s connection installation fee.

The Bill (PDF) will damage competition, the Coalition claims, as the standards for a “fibre ready facility” to be built in Greenfields developments are likely to be set by NBN Co, leaving developer with no choice. Additionally, it will ensure the process of fibre construction at the new developments in unnecessarily “slow and bureaucratic” for developers.

“At a time when Australia is facing a growing housing shortage, the arrangements mandated by this Bill add expense and delay for those wishing to build new housing estates. Despite the government’s rhetoric, in practical terms the Bill gives developers a very strong disincentive to deal with operators other than NBN Co.

“In turn, this leaves developers at the mercy of NBN Co’s responsiveness and timeliness. The NBN Co will become a bottleneck through which all property developments must pass before they can be completed and brought to market.”

The Coalition's report argues for an amendment to grant GCOs flexibility, including an exemption from the Bill, of any fibre network not owned or operated by Telstra or NBN Co, any network installed in a new development under contract between the network’s owner and developer, the network was owned and operated by the same entity that built it, and if it delivered retail services only to persons residing in the development.

“This amendment would have the effect of preserving competition in the market for the provision of new fibre infrastructure. It would be open to CGOs to install and operate new fibre networks in new developments, without needing to meet the requirements of Parts 7 and 8 of the Telecommunications Act, which are tailored to be appropriate to the very different and much larger scale business to be operated by NBN Co.”

The committee's majority report noted industry concerns around the potentially negative impact the government’s Fibre in New Developments policy would have for smaller fibre providers, calling for the Federal Government to investigate.

Follow Chloe Herrick on Twitter: @chloe_CW

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