Optus slams NBN legislation

Optus, the nation’s second largest telecommunications company, has partnered together with Telstra in attacking the Federal Government’s proposed legislation for the National Broadband Network, saying it raises the possibility that NBN Co. could become a retailer.

This aspect of the draft legislation has been a controversial point between the Government and the telecommunications industry, with the latter fearing a situation could occur where the state-owned NBN would compete against private retailers.

In a submission to the Senate Select Committee on the NBN, Optus has said the legislation will provide the NBN Co. with “significant scope to operate as a retail service provider of telecommunications or content services”.

“This represents a significant and worrying step back from the Government’s clear commitment to operate the NBN Co. as a wholesale-only provider when it announced its NBN plans on April 7, 2009.”

The Government originally said the NBN would operate as a wholesale-only operation. However, one clause within the legislation has given scope for the network to operate in a retail environment when designated by the communications minister.

Additionally, Optus has said changes must be made to the legislation before it can approve of the $43 billion networking endeavour and possibly hand over some of its coaxial cable network for use.

“If these issues are not addressed then it is highly questionable as to whether the Government’s vision for a viable and successful NBN at the heart of a reformed and competitive fixed-line telecommunications market will be realised,” Optus says in its submission.

“To put this into sharper perspective, access seekers are unlikely to be willing to commit to the NBN or provide confidential information to NBN Co. while doubts remain about the future of the NBN Co. as a prospective retail competitor.”

The submission is just one of the signs that support for the National Broadband Network is beginning to fail. It is understood negotiations with Telstra regarding a sale of its networks to the project are in question, while political support for the project has faltered after the Government repeatedly refused to release the KPMG implementation study before legislation was tabled before Parliament.

While communications minister Stephen Conroy has said he will release the study before the May Budget, relieving some fears of a Parliamentary stand-off in the Senate, the latest submission from Optus indicates private sector support for the project may be harder to gain.

Additionally, Optus said in the submission that the equivalence measures in the draft legislation were no improvement on current standards, which it claims has helped Telstra dominate the telecommunications industry.

“Despite assurances to the contrary, the legislation also allows the opportunity for Telstra to gain a privileged position on the NBN (for example access to better pricing or conditions), jeopardising the promise of improved retail competition.”

“As it stands, Telstra could potentially negotiate special prices in return for an agreement to migrate its eight million customers to the NBN – it is unlikely that any other carrier would qualify to receive those same terms,” the company said.

Among its 18 recommendations for updating the legislation, Optus said the Government should:

• Remove the discretion allowed within the legislation for the communications minister to designate the NBN as a retail provider.
• Designate that the NBN should restrict services to suppliers.
• Establish rules outlining what minority shareholders in the project can or cannot do with regard to undermining the Government’s objectives.
• Consider imposing a public interest test on any proposed sale of the NBN.

Both Telstra and telco Primus have outlined their own specific objections to the current draft legislation, with the latter suggesting the Government should “establish specific criteria or guidance around the making of such a determination” in its own submission.