Updated: Government to control the prices of NBN rivals

Updated: Government to control the prices of NBN rivals

Expert claims the move could signal the end of private telco infrastructure investment

Communications Minister, Senator Stephen Conroy, has confirmed to ARN that his proposed legislation to regulate NBN Co rivals will include controlling their prices.

The information all but confirms industry fears that creating rival networks may soon become unfeasible and unprofitable as the Government seeks to ensure the financial viability of its National Broadband Network.

According to a statement from Conroy’s spokesperson, the legislation aims to reduce overbuilding of fibre networks that compete with the NBN. The announcement comes days after Brisbane Lord Mayor, Campbell Newman, launched a fibre network to rival the NBN.

“The legislation will ensure any new or upgraded networks will have to meet NBN standards and offer a wholesale service on an open and non-discriminatory basis,” the spokesperson said. “Non-discrimination includes in relation to price.

“These arrangements will ensure all future networks will support effective retail level competition and deliver NBN-consistent outcomes for everyone.”

The spokesperson said while prices of NBN competitors would not have to match the Government's exactly, they would have to be similar and be overseen by the ACCC.

Ovum research director, David Kennedy, said such a move would signal the end of private investment in telco infrastructure.

“It’d pretty much mean the Government declaring an end to infrastructure competition in that segment of the market,” he said. “That’s a huge deal because it’s a reversal of the market trend of the last 30 years.

“The effect would be that the capital expenditure bill is picked up by taxpayers as it would stop private investment.”

Kennedy said the move would increase the commercial viability of the NBN, a point agreed to by telco analyst, Paul Budde. He claimed the Government’s proposal brought fibre into line with other utilities and infrastructure.

“A fundamental decision has been made that we treat the very basic telecom infrastructure as a utility,” Budde said. “For the last 20 years we’ve tried to come up with facilities-based competition…and for 20 years nobody wanted to [build a national system].

“We don’t have issues with governments organising the electricity or the roads.”

But Budde said opposition would arise if the Government did not pay a reasonable sum to existing infrastructure-owners like Optus and TransACT. Conroy recently signalled that Optus was in talks to provide its cable services over the NBN.

“The companies that do want to participate in the NBN want to get the best possible price,” he said. “If this legislation stops them from competing then the Government has a very strong position with lots of pressure.

“There should be compensation for the use of the network that is similar to what Telstra received.”

ARN contacted the office of Malcolm Turnbull, but he declined to comment.

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Tags NBNpaul buddeSenator Stephen Conroydavid kennedyCommunications Ministerovum research directorfibre networks


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