NBN Co's current uniform national wholesale prices will be replaced with price caps to ensure that the price of the National Broadband Network (NBN) cannot rise in either urban or regional areas, but NBN Co will be able to respond to competition under the Australian government's policy reforms that it plans to implement for the telecommunications sector.
In a policy paper (PDF) released on Thursday, the government set out a road map of reforms that will gradually replace existing market regulations with more "competition-friendly settings".
"This [current] model is unsustainable in the long term, and not in the interests of the consumers, who ultimately fund the cost of the services under any model, and typically face higher costs where competition is reduced," the paper said.
Under the reforms, from March 1, 2015, developers and home owners served by NBN Co in new developments will be paying for some of the costs of the infrastructure upfront, but the prices will be capped to ensure the charges "do not impact on housing affordability". This is expected to allow private contractors and network operators to compete with NBN Co on a more level playing field.
"Price caps will not lead to an increase in the wholesale access prices charged by NBN Co anywhere in Australia. There will be scope for reductions in particular markets, however, where this arises from more competitive arrangements," said Minister of Communications Malcolm Turnbull and Minister of Finance Mathias Cormann in a joint statement.
"NBN Co charging for infrastructure in new developments would be consistent with charging for the provision of other infrastructure in new developments. It will foster competition, which will benefit developers and consumers by increasing choice and putting downward pressure on costs.
"Overall, the approach set out in the policy paper provides increased certainty for an industry that has been undergoing regulatory change since the original NBN was announced in 2007."
However, Shadow Minister for Communications Jason Clare has called the federal government out on its proposed changes for new developments, pointing out that new home owners will be hit with an AU$300 NBN connection fee, while developers will be charged AU$600 for the deployment of the NBN, which can be passed on to home buyers.
"Home prices are already very high. This tax will hit those who can afford it the least -- young families just starting out. The last thing new home buyers need is a new NBN tax," he said.
"This tax is also unfair. It means that if you buy an existing home, you don't have to pay anything extra for the NBN. Your taxes pay for it. But if you buy a new home, you have to pay for it twice."
Under the reforms, NBN Co will also trial processes whereby developers can contract with the company to build and then transfer network infrastructure at a pre-determined price. NBN Co will also be encouraged to trial alternative network rollout models, including co-investment and public-private partnerships.
A new carrier licence condition will come into effect on January 1, 2015, requiring providers of super-fast broadband networks providing services to residential customers to be functionally separated, and offer a 25/5Mbps wholesale bitstream service at no more than AU$27 per month.
As part of the road map, the government intends to introduce a new telecommunications sector regulatory framework on January 1, 2017. The Australian Competition and Consumer Commission (ACCC) will be given the power to authorise functional separation of high-speed fixed-line broadband networks, and impose conditions as part of that authorisation.
Along with the reforms, the policy paper also outlines the government's response to 53 recommendations for regulatory changes proposed earlier this year, following a review carried out by an independent panel and chaired by Michael Vertigan.
The Competitive Carrier's Coalition (CCC) has welcomed the government's "measured response" to the Vertigan review. It said that the government's decision to not relax non-discrimination restrictions on NBN Co should "put the argument to bed".
"A compromise that specifically addresses NBN Co's claims that the non-discrimination rules make it difficult to conducts trials and pilots is sensible," said CCC chairman Matt Healy.
In addition, a policy paper on the provision of telecommunications infrastructure in new housing developments has been released for comment.