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No competition policy reform needed: NBN Co

NBN Co believes the existing competition policy is providing the organisation with sufficient structure and regulation that allows it to even out the playing field to the telecommunications market.
Written by Aimee Chanthadavong, Contributor

No major changes to the existing market structure and regulatory regime that falls under the Competition and Consumer Act are necessary at this stage, according to the NBN Co.

In its submission (PDF) to the Competition Policy Review, NBN Co pointed out the current regime is "appropriate and works well" as it allows the organisation to achieve its two main objectives: To ensure that all Australians have access to fast, affordable broadband while facilitating competition in downstream markets; and ensure there is limited incentive and scope for NBN Co to earn economic profits and exercise any market power that will impact on competition in the telco sector.

NBN Co noted that when it was established by the federal government in April 2009, the aim for it was to operate as a national monopoly wholesale provider of fixed-line network services between the point of interconnect and end-user premises.

"The long-term interests of end-users objective seeks to strike a balance between the promotion of competition and economically efficient investment," said NBN Co.

"This is important because fixed-line telecommunications infrastructure often displays natural monopoly characteristics, and the telecommunications industry generally is characterised by phased investments of a sunk nature, and declining marginal costs."

NBN Co also recognised in another part of its submission that it was established to address the "longstanding challenges" facing competition in the Australian telecommunications industry arising from the market dominance of Telstra as a vertically integrated network — a concern previously noted by the Australian Competition and Consumer Commission

"NBN Co was created in response to these concerns as a wholesale-only, open access network, with clear line of business restrictions, in order to 'transform the competitive dynamics in the Australian telecommunications industry'," said NBN Co, highlighting its activities are constrained by the National Broadband Network Companies Act where it can only supply services to carriers and carriage service providers, and specified utilities.

However, both Vodafone and Optus believe otherwise. In their submissions to the Competition Policy Review, both telcos called for reforms to the Australian competition policy with belief Telstra continues to dominate the market. 

NBN Co concluded that its adoption of a wholesale only, open access model is similar to models adopted in other international countries, including New Zealand, Singapore, and the United Kingdom.

"There is international precedent for developing a market structure involving a broadband network provider which is structurally or functionally separate from any downstream provider and which is subject to non-discrimination and open access arrangements," NBN Co said.

The independent review into the Competition Policy led by Professor Ian Harper commenced in March this year, following an election promise that the Liberal Party had pledged during its 2013 election campaign after recognising the Australian economy has changed since the last major review of the competition policy in 1993.

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