Stop NBN Co from retail creep: Liberals

The Federal Opposition yesterday vehemently protested key provisions of legislation associated with the National Broadband Network, which it claimed would open the door for NBN Co to become a retail provider of broadband services, going against its "wholesale-only" mandate.

Liberal Senator Mary Jo Fisher has warned that the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (NBN Measures — Access Arrangements) Bill 2010 open the door for NBN Co to experience mission creep and enter the retail market.

"Coalition senators are concerned that these latest Bills continue to undermine the government's repeated reassurances that NBN Co will provide 'wholesale-only' services, and will not compete in any way whatsoever with retail service providers," Fisher said.

The Bills would allow NBN Co to directly service the internal needs of utilities such as water and electricity suppliers "thereby cutting other retailers out of bidding for that potential market", said Fisher, and would also allow NBN Co to directly service the internal needs of licensed carriers.

Utilities had appealed to the committee to be allowed to be given services direct from NBN, arguing that the added level of a retail service provider would bring unneeded complexity and costs that would be passed onto consumers.

There has been speculation in the telecommunications industry on the issue of whether large companies such as banks would be able to qualify for a carrier licence, and thus buy telecommunications services directly from NBN Co. NBN Co rejected the concerns from Telstra, stating its proposed amendments would effectively prevent itself from offering wholesale services on to other telcos.

"We remain concerned that the Bill is operationally ambiguous, and in several aspects so vague in a new telecommunications framework, as to fail to prevent the NBN from engaging in 'mission creep' — that is, from extending beyond the wholesale market," the Coalition senators said in their statement.

The Opposition also recommended that the cherry-picking components of the Bills be removed.

In addition, the Opposition objected to clauses in the legislation that require the communications minister of the day to declare the NBN was complete and fully operational, and the finance minister of the day to declare market conditions were suitable, before NBN Co itself could be privatised.

"We also think the milestones set for future privatisation of the NBN are deliberately so onerous as to stop it ever being sold," Fisher said. "It's hypocritical for the government to require a Productivity Commission review of NBN Co should the company be privatised in the future, whilst continuing to evade a similar level of scrutiny before committing the Australian taxpayer to the most expensive single project in the country's history."

The calls came as the Senate's Environment and Communications Committee, which is composed of senators from three sides of parliament — Labor, Liberal and Greens — culminated its investigation into the Bills, recommending both be passed by parliament in a report available online (PDF).

The committee's sole recommendation was that the second Bill be modified as previously amended in the House of Representatives to make NBN Co accountable under Freedom of Information laws.

The committee dismissed the other concerns raised in the inquiry, such as those from fibre wholesale providers such as TransACT that the laws' cherry-picking provisions, which would require other fibre providers to open up their networks to other providers, would adversely affect their business and prevent them from building future fibre networks.

"The committee notes that some concerns have been overstated as the requirements do not prevent other companies from rolling out fibre networks. Furthermore, the provisions do not require network operators to mirror NBN Co's operations or match its terms and conditions," the committee stated. "They do, however, legitimately require them to operate within a comparable regulatory framework so that end users have access to the same quality services regardless of the network provider."