Reseller News

Oz telcos dispute National Broadband Network regulation

The Australian telecommunications industry remains split over the need for structural separation in the National Broadband Network (NBN), after submissions to government from ISPs and consumer advocacy groups failed to agree on a suitable regulatory framework.

Submissions by Telstra, the Terria consortium and the Australian Telecommunications User Group (ATUG) were divided over the need for the NBN builder to have horizontal structurally separated retail and wholesale arms, a point which has been a bone of contention for the entirety of the tender process.

Telstra has staunchly refused to accept any form of structural separation, favoring share-holder interests, while its rivals argue it is essential to avoid handing the contract winner a network monopoly.

Proponents claim the government's promised A$50 (US$48) NBN access prices will be impossible if retail and wholesale operations are contained in the same company.

Optus government and corporate affairs director Maha Krishnapillai attacked Telstra's refusal to make wholesale NBN access independent in the event it would build the network.

"The structural separation of Telstra and the upgrade of regulatory settings will finally break the multi-year cycle of Telstra litigating and undermining competition by creating fear, uncertainty and delay," Krishnapillai said.

"The focus of this submission is deliberately directed at the reforms that would need to be made to the regulatory framework should Telstra be chosen to construct and operate the NBN. That is, it consciously contemplates the "worst case scenario" for competition.

"Structural separation must be at the core of any regulatory reform."

Such regulation, Optus argues, will reduce involvement from the Australian Competition and Consumer Commission (ACCC) and future-proof proceeding fiber (FttX) deployments.

Structural separation is necessary for the NBN, according to ATUG's submission, although an organizational split of the operator is not essential.

Managing director Rosemary Sinclair said access to the fiber-to-the-Node (FttN) network could be sold through a functionally separated structure.

"It's open to bidders, but structural separation is the best. The absolute bottom requirement is functional separation where there is a clear delineation between the wholesale provider and the retail unit," Sinclair said. A group dubbed NBN Australia would ensure the wholesale prices remain competitive, under ATUG's plan.

Professor Martin Cave, adviser to the European Union on broadband regulation, wrote in Telstra's submission that the functional separation of British Telecom (BT) will not work if applied to Australia's NBN operator.

The split between BT and its wholesale arm Openreach, he argues, is stifling the migration to an NBN access regime because it applies to the Unbundled Local Loop (ULL), which fellow contributors claim is fair in Australia.

Telstra Wholesale group managing director Kate McKenzie said the entire network should be run by a single provider without functional or structural separation.

"If this network is going to be built, the builder needs up-front certainty that its investment will not be undermined or given away by regulatory changes once a decision to invest is made," McKenzie said.

The company's submission stated a Telstra NBN will provide "equivalent" access to competitors based on that provided to its own business units, using "automated processes".

It further argued for the removal of regulations for "legacy networks" and provisions in the tender that require a mix of old and new technologies.

The Regional Telecommunications Independent Review Committee (RTIRC) was unable to discuss their submission to government on NBN regulation.