26 Feb 2010

Government seeks comment on National Broadband Network Company draft laws

The National Broadband Network is one step closer with the release by the Federal Government of exposure drafts of legislation for the ownership and governance of the National Broadband Network Company (NBN Co) and access to the wholesale services it will provide.

The Federal Government's intention in releasing the drafts is to garner feedback and, where necessary, refine the legislative scheme for the National Broadband Company, so this is an important opportunity for the sector to influence the future shape of the National Broadband Network and its operations.

Key features of the ownership, governance and sale arrangements for NBN Co

Under the exposure draft of the National Broadband Network Companies Bill 2010:

  • the Government's previously stated policy that NBN Co will only supply services on a wholesale basis is implemented by restricting NBN Co (as a condition of its carrier licence) to supplying 'eligible services' to carriers and carriage service providers. However, flexibility is retained by giving the Minister the power to exempt a specified eligible service from this restriction, to allow the company to sell to certain end-users such as government agencies;
  • NBN Co can acquire telecommunications companies, but must divest any retail operations;
  • the Government will retain majority ownership until the network is built and fully operational, and then must sell that majority ownership within five years (involving a declaration by the Finance Minister that conditions are suitable for the sell down). The declaration that the network is built and fully operational will be made by 30 June 2018, but the Minister may extend that deadline. A broad range of mechanisms for the transfer, or progressive transfer of the Commonwealth's equity are provided (based on legislation for ealier sales of Commonwealth companies, particularly Telstra and Medibank Private); and
  • post-Government divestment, the ACCC to be able to declare an unacceptable private ownership or control situation (with the details of this to be fleshed out in regulations).

Access arrangements for supply of wholesale services by the National Broadband Company

The access arrangements in the Telecommunications Legislation Amendment (National Broadband Network Measures – Access Arrangements) Bill 2010 are intended to build upon, and be read with, the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009.

Basically NBN Co could only supply services if the service has been declared by the ACCC, or there is a Standard Form of Access Agreement (SFAA) or a Special Access Undertaking (SUA) in place in relation to that service.

Other features of the access regime are:

  • services would be offered on a non-discriminatory basis, although differentiation that aided efficiency would be permissible, on the condition that all access seekers with like circumstances have an equal opportunity to benefit from the discrimination;
  • the ACCC would not be obliged to make an access determination in relation to a Standard Form of Access Agreement offered by the company but can do so if the ACCC considers it to be necessary;
  • the current Standard Access Obligations would be split into Category A (those currently applying to access providers other than the company) and two Category B SAOs applying to NBN Co (ie. a requirement to supply a declared service, and another requiring NBN Co, if requested to do so by a service provider, to permit interconnection of the facilities it owns or controls with those of the service provider);
  • the new SAOs would be qualified, so that NBN Co would not be obliged to supply a service it is not supplying, or if that supply is not technically feasible. On the other hand NBN Co would not be allowed to withdraw services already being supplied simply because it does not have sufficient capacity to supply the service to other access seekers;
  • NBN Co would be able to negotiate with access seekers to vary the terms and conditions set out in a SFAA, SUA or an access determination if this aided efficiency, or on grounds or in circumstances specified by the ACCC in a legislative instrument. Where NBN Co does so it must publish a statement on its website identifying the parties and describing the departures from the SFAA, SUA or access determination. The full agreement reached is to be lodged with the ACCC;
  • provision is made for the possible establishment of a uniform wholesale pricing obligation for NBN Co, via Ministerial pricing determination of principles dealing with price-related terms and conditions relating to the Standard Access Obligations.

Deadline for submissions on the exposure drafts

Your comments on the drafts must be received before 15 March 2010. The Government is currently planning to introduce the legislation into Parliament soon, most likely in the Winter sittings which start on 11 May and end on 24 June.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.