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NBN amendments clarify cherry-picking

New government amendments to National Broadband Network legislation takes aim at cherry-picking provisions that had raised industry concern, but also creates price inequity for customers outside of the network's fibre footprint.

New government amendments to National Broadband Network legislation takes aim at cherry-picking provisions that had raised industry concern, but also creates price inequity for customers outside of the network's fibre footprint.

In the Senate earlier this week, the government flagged intentions to introduce a number of amendments to the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (NBN Measures — Access Arrangements) Bill 2010 legislation.

Communications Minister Stephen Conroy yesterday circulated the full detail of the proposed amendments to the legislation, mainly framed around clarifying anti-cherry picking provisions.

NBN Co cross-subsidises the cost of providing access to regional and remote areas with the lower costs of providing access in metropolitan areas. The anti-cherry picking provisions in the access legislation are designed to prevent fibre providers building new networks only in areas of the country with a high population, allowing them to provide access to consumers at lower prices than those offered by NBN Co.

The proposed amendments will exempt networks servicing public bodies, and backhaul providers from the provisions. Instead, the provisions will mainly target networks servicing residential and small business customers.

Networks that were in existence prior to 1 January 2011 will also be able to extend their existing networks under the amendments, provided this extension is no greater than one kilometre.

The minister of the day will also have the power to exempt networks from the cherry-picking provision.

Those providers who do build networks after the 1 January 2011 data, and are hence not exempt, will have to provide open wholesale access to their networks. Conroy said the amendments would ensure equal broadband access across the country.

"By requiring that new fibre networks which serve residential and small business premises and built after 1 January 2011 to supply services on an open access, wholesale-only basis, like the NBN, will mean people can have access to the same high-quality broadband services in terms of performance and retail competition, regardless of the network provider," he said in a statement.

Additional amendments

Customers who want more than the basic NBN package in the 7 per cent of Australia not covered by fibre may pay more than their fibre counterparts under a new amendment to the legislation. This amendment specifies that while basic package pricing (ie 12Mpbs connections) must be uniform across fibre, wireless and satellite, the government has allowed for variations in pricing between the technologies for higher speed services.

"The price for NBN Co's entry level service must be the same across Australia and across NBN Co's fibre, wireless and satellite networks. However, the prices for higher-speed services only need to be uniform within a specified technology, and not across all technologies," the memorandum explained.

This means a customer with a service above the basic package on wireless or satellite would pay the same regardless of the area in which they live, but would end up paying more than a customer with the same package on fibre.

The amendments also addressed the controversial provisions allowing NBN Co to offer services directly to utilities, with the government clarifying that any layer two services offered directly to utilities by NBN Co could not be resold by that utility.

Shadow Communications Minister Malcolm Turnbull said this amendment didn't address the Coalition's concerns about the NBN being a retail player.

"This makes an absolute mockery of the claim NBN is a wholesale provider of telecommunications services," he said in a blog post yesterday. "It would mean that the private sector telcos would run a very real risk of being limited to the small business and residential markets."

Turnbull said that NBN Co would become a monopoly provider to corporations and government and would ultimately deprive telcos of a large part of their business.

An addditional amendment will also exempt Telstra from any state and territory stamp duties it may incur as a result of the $11 billion deal with the government to sign onto the NBN.


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