Support accelerates against NBN Co privatisation

Support for the Federal Government to keep the key National Broadband Network (NBN) wholesaler NBN Co in public hands has continued to grow among both the industry and the Opposition.

While the authors of the NBN Implementation Study recommended the Federal Government fully privatise the company in the future, they cautioned that timing should remain flexible. The Government is currently set to finish privatisation of NBN Co five years after the network's roll-out is completed.

"Attractive earlier alternatives to privatisation may also emerge such as taking on higher levels of commercial debt to effectively reduce Government’s equity investment through special dividends," the study reads.

However, the case against privatisation continued to grow in a final report released by the Senate select committee on the National Broadband Network (NBN), which reinstated points made in its fourth interim report that the government pay careful attention to legislation regarding the privatisation of the company.

Under the committee's recommendations, only the Layer 2 active infrastructure aspect of NBN Co would be privatised, pending independent advice about the health of the telecommunications industry and the time, and potential safeguards against adverse competition. The committee recommended that Layer 1 aspects, including all network backhaul owned by the wholesaler, would be "better kept under public ownership for good and not privatised at all".

"The situation for backhaul assets is different - uncontested backhaul will remain a bottleneck asset that is very difficult to regulate," the final report reads. "Stand-alone commerciality of backhaul will always be challenging while ensuring affordability, so a commercial owner will rationally under-invest."

The Liberal-biased committee's recommendation comes despite comments made by Opposition leader, Tony Abbott, that privatisation would not be an issue.

"For years we had a nationalised telecommunications carrier," Abbott told Alan Jones on 2GB AM radio in May. "We finally sold it off to the public. Telstra’s not perfect but it’s better in private hands than it ever was with the public servants running it and we don’t want a new Telecom in this country today."

The recommendation also comes despite the committee, and particularly its chairman, Senator Ian McDonald, having difficulty in clarifying knowledge about the layers of a telecommunications network, as stipulated under the OSI model. Committee members' confusion over the heirarchy of network layers - and particularly the difference between Layers 2 and 3 - continued to take up a lot of questioning of stakeholders at public hearings.

"We've got the larger fraction of the non-Telstra industry on board with the idea of a public interest test and a vote in Parliament before we sell it down," Greens senator, Scott Ludlam, told Computerworld Australia. "That's really what we're asking for, we can't prevent a future majority in Parliament doing whatever it likes, but we can put some safety nets in there."

The Australian Greens have traditionally championed the notion of keeping NBN Co a public company, with Ludlam arguing that privatisation would mean accountability measures for the company are lost.

The Competitive Carriers Coalition (CCC) and Optus have also voiced support against privatisation, with the telco worried wholesaling pricing could spiral out of control without a wholesale price cap enforced on NBN Co by the ACCC.

"Because [NBN Co] is a monopoly network, we would be concerned if this sort of network could continue to increase its wholesale prices without any reflection on the retail market," general manager of networks, Michael Wagg, told the select committee at a recent hearing.

Computerworld Australia contacted communications minister, Stephen Conroy, for comment on the issue, but did not receive a response at time of writing.


Copyright © 2010 IDG Communications, Inc.

Shop Tech Products at Amazon