Turnbull moves against cherry-picking threat to NBN

Communications minister Malcolm Turnbull has released the new licence condition for operators of 'superfast' broadband networks that will potentially compete with the National Broadband Network.

Turnbull announced in October that he would issue the licence condition in response to a finding by the Australian Competition and Consumer Commission that TPG had not violated 'anti-cherry-picking' rules designed to protect the NBN.

The ACCC had investigated TPG's roll out of fibre-to-the-basement (FTTB) services.

The anti-cherry-picking rules were designed to stop infrastructure competition that could undermine the business case for the NBN by preventing telcos from rolling out superfast networks in high-value areas where NBN Co could otherwise expect to generate significant income.

The new licence condition affects operators of networks capable of delivering 25/5Mbps speeds to end users.

Carriers affected by the new condition will need to have separate wholesale and retail businesses and offer non-discriminatory access to competitors on a wholesale basis.

The condition, which comes into force on 1 January, will initially force carriers to offer wholesale services on a non-discriminatory basis. From the new financial year, carriers subject to the condition will need to have separate wholesale and retail companies.

The licence condition expires at the end of 2016.

In its response to the recommendations of the Vertigan review of the NBN and telco regulatory environment, the government said it would introduce "legislation to require new networks targeting residential customers and offering high?speed broadband to be structurally separated as a default and offer non?discriminatory access".

"The legislation will remove the 1km statutory exemption [that currently prevents the extension of existing superfast broadband networks]," the government's response to the Vertigan reports states.

"The legislation will also provide for the ACCC to authorise functional separation arrangements (subject to undertakings from carriers detailing satisfactory arrangements for access and equivalence to minimise anti?competitive effects). The arrangements will include appropriate grandfathering measures for pre?existing high?speed broadband networks. In line with the proposed arrangements for NBN Co, the non?discrimination arrangements for other providers will be reviewed at the same time."

Copyright © 2014 IDG Communications, Inc.

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