ACCC queries inaction over future NBN split and sale

The ACCC has raised concerns about government inaction over how NBN Co will be split up for sale once the network is complete.

The competition watchdog's final communications market study [pdf] - released today - raises fresh concerns about how privatisation plans for NBN Co are progressing.

It reveals preliminary action is occurring on NBN Co’s side to prepare for the eventuality that it is broken up, in line with recommendations made in the 2014 Vertigan panel of experts review.

“We understand that NBN Co has introduced separate accounts for the different lines of its business, which it provides to the government,” the ACCC said.

“In addition, we understand a report was commissioned by NBN Co on OSS and BSS [operations support system/business support system] separation and provided to the government, but neither the report itself nor its findings have been released publicly.”

The ACCC worried, however, that similar activity was not taking place on the government’s side of the fence.

“In our view, it is imperative that actions be taken to provide further detail and planning for [NBN Co’s split],” the watchdog said.

“We are concerned that if measures to help facilitate separation are not put in place at an early stage, such as separate OSS and BSS, it will become more costly to implement later on, which could be used as a basis for not proceeding with the separation of NBN Co.”

The ACCC implored the government not to simply leave it to the Productivity Commission to model NBN Co’s disaggregation prior to privatisation, arguing "anticipatory actions" were needed well before.

The competition watchdog's new-found concerns over NBN Co's privatisation lean heavily on a submission former NBN Co CTO Gary McLaren made in response to the ACCC's draft study report at the end of last year.

In it, McLaren warned that any attempt to sell NBN Co as a “national monopoly with significant regulatory protection against competition” to boost its potential value would be a mistake.

It appears the ACCC agrees with that assessment.

“We consider that privatisation of the NBN following completion of the network rollout should not be undertaken in a way that limits competition in order to maximise the sale proceeds,” the ACCC said today.

“Rather, privatisation of the NBN will provide a unique opportunity to put in place a market structure with the potential to deliver effective infrastructure-based competition, such as through the horizontal disaggregation of NBN Co by different network technologies or areas of coverage.

“To achieve the competition objectives, the disaggregated parts would need to be able to contest each other’s customer base.

“In our view, this form of infrastructure-based competition would encourage ongoing investment in network upgrades and deliver price benefits and improved services to consumers over time.”