Telstra's proposed amendments to legislation for the National Broadband Network (NBN), which seek to limit NBN Co's ability to offer services directly to non-telco corporations with carrier licences, would in fact stop Telstra from offering wholesale fixed-line services, a Senate inquiry has heard.
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 yesterday, Telstra raised concerns that its existing customers such as councils, banks, supermarkets and other large corporate entities may seek services directly from NBN Co.
Telstra outlined amendments to the legislation in its submission to the inquiry (PDF) specifying that only retailers which offered services directly to the public could purchase services from NBN Co.
Yet this amendment would only serve to prevent all retailers from offering wholesale services, NBN Co's regulatory affairs principal Caroline Lovell, told the hearing.
"The effect of these provisions, by requiring our customers to only acquire in order to supply to end users, would in fact prevent any wholesale competition at layer three. Telstra appears to be proposing a change which would stop Telstra from being an aggregator or buying our services on a wholesale basis to sell to a wholesale customer of its own," she said.
"Telstra must be intending not to have any further wholesale operations in this area because this amendment would appear to preclude them from doing so."
Lovell said that as long as entities such as Woolworths obtained a carrier licence, it would simply be more competition on the network. She also insisted that getting such a licence wasn't a simple task.
"I think we're underestimating what are the requirements for being a service provider," she said. "[NBN Co] is not selling services suitable for end-user consumption in anything but a small subset of cases. If those people are prepared to meet the requirements of being a carrier ... then perhaps they are entitled to be a customer [of NBN Co]."
Daryl Quinlivan, deputy secretary with the Department of Broadband, Communications and the Digital Economy, said the costs for a company becoming a carrier should not be underestimated.
"In this case it would involve purchasing equipment to transform NBN Co's basic connectivity services into services it could use for its own telephony, internet and other services," he said. "They would also include regulatory obligations such as requirements to provide the security and law enforcement agencies with plans and assistance, pay the universal service levy and annual carrier charges and provide access to facilities and services to other end users."
Quinlivan said that if a company found it more efficient to pay these costs than to pay for services from RSPs such as Telstra, then the Telecommunications Act that has been in place since 1997 would not prevent it from doing so. He said the government was simply maintaining the status quo and was not seeking to change this law as part of the NBN.
The legislation was also maintaining an exemption in the legislation allowing utilities to seek services directly from NBN Co, Quinlivan said in response to earlier criticism from Telstra and Optus. He highlighted that while basic access would be given to utilities by NBN Co, telephony and internet services would still have to be sought from a retail service provider.