TransACT concerned NBN will force its split

Wholesale telecommunications provider TransACT has raised concerns with a parliamentary committee that National Broadband Network (NBN) legislation could force it to structurally separate in a similar manner as Telstra.

At a Senate Committee hearing examining NBN legislation — National Broadband Network Companies Bill 2010 and Telecommunications Legislation Amendment (National Broadband Network Measures — Access Arrangements) Bill 2011 — in Sydney today, TransACT CEO Ivan Slavich said he was concerned that it was unclear in the access legislation whether his company would have to split its wholesale and retail arms.

Slavich said that in the Open Systems Interconnection (OSI) model, TransACT operated as an open access wholesale broadband provider on layer three, or the network layer, supplying services to 11 ISPs. Under the NBN legislation currently before the Senate, only open access wholesale providers on layer two, or the data link layer, would be able to operate.

"If we're required to move from our layer three capability to a layer two capability and also separate our wholesale and retail business then no question there would be multimillion dollars associated with having to do that," he said. "They are costs the shareholders would have to incur without gaining any revenue or margin."

Slavich suggested that either TransACT be exempted from the legislation, or the Bills be amended so that as long as a wholesale provider offered open access to its networks, then the layer it was offered on should not matter.

The CEO also raised concerns about parts of the legislation that prevent fibre providers from cherry-picking by offering wholesale services in more profitable places such as metropolitan areas where there are more customers. Slavich said that as TransACT had been in operation in areas that may be deemed to be a cherry-picking area for the past 10 years, it should be exempted from this clause.