ACCC moving too slow, Turnbull looks to cap FttB access cost

NBN Co and the Australian Department of Communications' ongoing stoush with TPG continued today as Minister for Communications Malcolm Turnbull issued a draft carrier licence condition that would see providers of residential broadband networks capable of 25/5Mbps or greater forced to functionally separate wholesale and retail operations.

Under the terms of the draft, carriers operating non-wholesale residential networks would need to establish and maintain a wholesale business that offers services on a non-discriminate basis.

The licence would cap the monthly price offered by the wholesale business to AU$27 per port.

"The government's aim is to ensure that carriers provide wholesale access to FttB [fibre-to-the-basement] network infrastructure and remove the ability to favour their own downstream retail operations over other retailers on the network," Turnbull said in a statement.

"Without such arrangements, competition and consumers can suffer. These are equivalent issues to those addressed by the structural separation of Telstra and NBN Co's wholesale-only operation."

Beginning in 2015, the proposed licence change would run until the end of 2016.

Prompt action was needed to resolve the situation at hand, an early assessment regulatory impact statement (PDF) also released today said.

"The declaration process can take up to one year to complete, and the result is uncertain," it said. "TPG has said it will provide a wholesale service over its network, but has not provided further details. It is not operating on a wholesale-only basis."

The impact statement said that the declaration inquiry undertaken by the Australian Competition and Consumer Commission (ACCC) was long and uncertain, and would not address the issue of network operators being able to repurpose existing networks to target residential customers and favouring their own retail services above those of other retailers.

"Any rollout by a carrier of vectored VDSL2 reopens the competition concerns that the NBN and the structural separation of Telstra were intended to address," it said. "Carriers could roll out vectored VDSL2 networks on a vertically integrated basis and reopen the competition issues that led in part to the decision to deploy the NBN and seek the structural separation of Telstra."

The Department of Communications said it estimates that up to 1.8 million premises could fall within TPG's footprint, should the telco decide to extend its network beyond the 500,000 premises it currently has.

"The rollout is of such a scale that a significant proportion of premises in Australia will be affected.

"Should other carriers elect to make use of the statutory 1km exemption, a substantial percentage of the population could then be covered."

The impact statement recommended that a licence condition remain in place for two years, allowing for any regulation and possible legislative changes to be put in place.

Submissions on the draft changes are open for the next month.

Last month, the ACCC said that TPG's rollout was allowed because the network was in place before new anti-cherry-picking laws came into effect in January 2011, and the telco confirmed that it was not extending the footprint of its network by more than 1 kilometre.

TPG acquired a significant amount of fibre networks in CBD locations as part of its takeover of AAPT.

In response, NBN Co CEO Bill Morrow said that allowing TPG to roll out its own network would undermine the business model for the company.