Telecommunications
Government releases draft NBN legislation
(1 March 2010) The Government has released draft legislation covering the ownership and operations of the NBN for public comment.
The legislation is designed to codify the policies that the Government outlined last April when it first announced the $43 billion project. These include:
- NBN to be a wholesale-only network;
- Government to retain majority ownership until the project is deemed to be complete (a period of 8 years has been flagged;
- Full privatisation within 5 years of completion.
All these policies are contained in the Bill – but they are by no means watertight. The sell down timetable, for instance, can be varied in line with market conditions.
That’s a sensible enough provision. The aspect of the Bill that has provoked most comment, however, is the discretion given to the Minister
to allow NBN Co to offer services to customers other than retail telecommunications carriers. This would allow NBN Co to offer services to state and federal government departments, for instance – but also, potentially, to any other customer the Minister determines.
The Minister will have an equally free hand on “content” services e.g. movies, games. NBN Co is not supposed to offer these either – unless the Minister determines otherwise.
Commentators have seen these Ministerial powers as putting another card in the Government’s hands in its ongoing negotiations with Telstra: “Come to an agreement or we will compete directly against you for government contracts.” But these provisions might also be read as being designed to allow the Government to vary the NBN business model if its wholesale-only model runs into difficulties.
If this occurs and NBN Co is forced at some time in the future to move higher up the value chain – as many commentators believe it will – it will not only be Telstra which feels the competitive pressure. The squeeze will come on Optus as well and on all the smaller players who have looked to the NBN to boost their own businesses, not compete against them.
It is not always good to get what you wish for.
For more information, contact the CEPU via feedback@cepu.asn.au