NBN Co will be a retail ISP, warns Coalition


The Opposition yesterday vehemently protested key provisions of legislation associated with the National Broadband Network which it claimed would open the door for NBN Co to become a retail provider of broadband services, going against its ‘wholesale-only’ mandate.

The calls came as the Senate’s Environment and Communications Committee, which is composed of Senators from three sides of parliament — Labor, Liberal and Greens — yesterday culminated its investigation into the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (NBN Measures — Access Arrangements) Bill 2010, recommending both be passed by parliament in a report available online (PDF).

The committee’s sole recommendation was that the second bill be modified as previously amended in the House of Representatives to make NBN Co accountable under Freedom of Information laws.

But in their own separate statement (PDF), the Liberal senators who were on the committee — led by deputy chair Mary Jo Fisher — warned the bills as laid out opened the door for NBN Co to experience mission creep and enter the retail market. “Coalition Senators are concerned that these latest Bills continue to undermine the Government’s repeated reassurances that NBN Co will provide ‘wholesale only’ services, and will not compete in any way whatsoever with retail service providers,” Fisher said.

Fisher said the bills would allow NBN Co to directly service the internal needs of utilities such as water and electricity suppliers — “thereby cutting other retailers out of bidding for that potential market”, and would also allow NBN Co to directly service the internal needs of licensed carriers.

Speculation has abounded in the telecommunications industry over the past week on the issue of whether large companies such as banks would be able to qualify for a carrier licence, and thus buy telecommunications services directly from NBN Co.

“We remain concerned that the bill is operationally ambiguous, and in several aspects so vague in a new telecommunications framework, as to fail to prevent the NBN from engaging in ‘mission creep’ — that is, from extending beyond the wholesale market,” the Coalition senators said in their statement.

The Opposition also recommended that the so-called ‘cherry-picking’ components of the bills — which require other telcos wishing to build networks open those networks up to rivals — be removed.

In addition, the Opposition objected to clauses in the legislation which require the Communications Minister of the day to declare the NBN was complete and fully operational, and the Finance Minister of the day to declare market conditions were suitable, before NBN Co itself could be privatised.

“We also think the milestones set for future privatisation of the NBN are deliberately so onerous as to stop it ever being sold,” Senator Fisher said. “It’s hypocritical for the Government to require a Productivity Commission review of NBN Co should the company be privatised in the future, whilst continuing to evade a similar level of scrutiny before committing the Australian taxpayer to the most expensive single project in the country’s history.”

Image credit: Office of Senator Mary Jo Fisher


  1. Law is meant to be written ambiguously. Without that you find you either need a specific law for every case or the law is unable to stand up to changes to the environment to which it refers!

    Also, removing cherry picking laws? What are they on? Do they not study their history or something (thinking about the HFC wars)?

  2. I don’t see any problem in closing this “loop hole”. Quigley himself has stated that he has no interest in NBN Co entering the retail space, so I’m sure he’d have no problem closing this loop hole also.

    Just a bit of opposition chest beating I think.

  3. Perhaps, although this may be getting a little excited, it was always intended that this loophole would be included in the legislation as a way of educating the public to the true nature of the NBN and why it AINT Telstra no. 2….what a stupid, uninformed, or at the very least FUDdy, thing to say. But then again, that would perhaps be giving far too much credit to ppl……how could they have foreseen the levels of invective and rhetorical FUD that the NBN would be subjected to from day dot?

    But, given the alternative (or rather the nearly complete lack of!), credit should be given where credit is due.

    Overall the NBN is a beautiful thing, and I for one am focused on that.

    Keep on Truckin’ NBN…

  4. Of course the NBN will be a retailer once the Coalition is finished cutting corners and chopping up the NBN into another Telstra 2.0.

  5. It’s not retail services; its layer 2 access for private networking – which for mission critical infrastructure such as power generation, is entirely needed.

    For internet access, they will have to go to an ISP just like everyone else as the NBN does not provide this service.

    Wouldn’t mind seeing carrier license provisions tightened to only apply to ISP’s; but removing cherry picking laws just isn’t going to work in Australia. Large space + small population = controlled monopoly’s are needed. Technically, there was nothing wrong with Telstra – they just over reached their scope and became too greedy.

    • What the exemption for utilities (electricity, gas, etc) allows is actually not specifically different to what the current regulatory framework allows for right now.

      You are quite right that effectively NBN Co would only be supplying them with Layer 2 services.

      The utilities argue that they will still be required to deal with retail carriers for upstream service provision – (such as for internet or telephony connectivity) – and their wholesale relationship with NBN Co would be for Layer 2 only and “network management” functions.

      The Telstra’s and Optus’s of this world fear that chopping them out of the market for delivering re-sold wholesale services to utilities – (by allowing the utilities to go directly to NBN Co) – will hurt their bottom lines.

      This is where it is murky for me.

      Utilities can do this now, but their wholesalers are currently the Telstra’s and Optus’s and AAPT’s. NBN Co effectively undercuts them out of the potential of maintaining that market. The utilities want it, because due to the fixed-price, wholesale only nature of NBN Co, they’ll make a saving.

      The government’s position is that the Telstra’s and Optus’s of the world – (in fact, any RSP) – should be adding value on top of wholesale services to deliver better retail services – to home consumers, businesses – INCLUDING utilities.

      Telstra in particular is up for HUGE operational cost savings – quite simply, they don’t have to manage and maintain the predominant wholesale network anymore. The loss of direct wholesale revenues would be largely offset by this.

      The cost savings for utilities that the exemption for utilities provides will decrease pressure on the retail pricing they offer to consumers. I think that’s a valuable outcome.

      The Coalition feels/fears the exemption is providing for NBN Co to offer retail services to the utilities, who might then offer retail services to consumers over that infrastructure. I guess to a certain extent, they might have some point with that, but I think they are in fact missing the point.

      To draw wholesale services from NBN Co, you must fall under the provisions of the Telecommunications Act 1997 that classify you as a “carrier” or a “carriage service provider”. The licence conditions don’t have to be the same from holder-to-holder.

      All that has to happen is that the carrier licence offered to the utilities be claused that they cannot offer services to consumers. That provision exists now, and will continue to exist in the future. The NBN legislation makes only a couple of tiny changes to the Telecommunications Act 1997.

      Such variations could (and would) easily prevent the services wholesaled to utilities from being “retailed” later.

      The power already exists in existing legislation to ensure the “feared” behaviour can be prevented. It is now up to the Government to make sure that such variations to carrier licences are made where necessary.

      The committee acknowledges this in their report. It might require a new classification above “carrier” and “carriage service provider”, but that wouldn’t necessarily be so.

      NBN Co does not appear to have the power in the legislation to sell direct retail services to consumers.

  6. Anyone who heard Mary Jo Fisher’s appalling rant in the Senate the other night, riddled with a veritable showbag of famous errors and half-truths from Malcolm Turnbull’s playbook (and he DOES know better), can have little faith in her latest assertions until she she climbs down from some of her laughable earlier falsehoods on the NBN. (I don’t need to recite the litany of errors – everybody around here has heard them fifty times this year.)

    As to competing for retail services to utilities, NBNCo will be flat out for the next decade building fibre, optimising local wireless solutions and launching two satellites. What it may or may not do after that can wait for further legislation should the need arise.

    The thing now is to get the legislation passed so that Telstra can finalise its May 28 advice to shareholders, get their support in June, and allow the full rollout to get underway. As I noted last November, Telstra’s share price will quickly double to $5 after shareholdes approve this deal and give certainty to Telstra’s investment plans for IPTV and other massive revenue streams.

  7. OK. Where is the news? Liberal senator repeats liberal FUD despite overwhelming evidence to the contrary. The only reason for NBNCo to go retail is when the libs get in and privatise them for a dime. God…. if these politicians are the best we have, it’s time to move planet I think.

    • If you actually read the committee report – (I just did cover to cover over a couple of cups of Earl Grey) – the committee she has been so vocal inside of, recommends the passage of each of the two bills (the Company Bill and the Access Bill) without amendment.

      They make one stipulation that the passage of the Access Bill is dependent on the passing of the FOI amendment.

      So to release a fairly straight forward report recommending the passage of the bills, and immediately – (like within minutes) – jumping up and down and declaring they’ll seek six amendments – casts a bit of a cloud over her participation in the committee and why the report so meekly recommends the legislation pass as is.

      Just chest beating and delaying tactics.

      I do note however that Telstra have just – (in the last few minutes) – declared that the July 1 shareholder meeting is likely to be delayed until a later date – citing “a number of matters [that] are yet to be finalized” with the government.

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