Govt ditches uniform wholesale network pricing

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Govt ditches uniform wholesale network pricing

Responds to Vertigan recommendations.

The federal government will remove uniform national prices for wholesale telecommunications and will force carriers competing with the NBN to structurally separate their wholesale businesses, under a new policy aimed at boosting competition in the telco sector.

It today formally tabled its response to the 53 recommendations made under the Vertigan review on the rollout and operation of the national broadband network, endorsing most of the panel’s 19 major suggestions in the pursuit of “more competition-friendly settings”.

The Government will stick to its plans to introduce a new carrier licence condition that will enforce wholesale access to any commercial fibre connections competing with the NBN.

But it will also reqiure any NBN competitors to structurally separate their retail and wholesale arms from Janury 1 2017.

The Government plans to hand the ACCC the power to monitor such separation, and to adapt the requirement for carriers in certain conditions. 

In line with a recommendation in the Vertigan review, the Government will also repeal a hole in anti-cherry picking legislation which allowed the likes of TPG to extend its network and compete with the NBN as long as the extension didn't exceed 1km.

The proposed new carrier licence condition will be finalised "shortly", the Government said.

No more uniform wholesale pricing

Turnbull and his colleagues have also accepted a Vertigan recommendation to ditch uniform national pricing for wholesale telecommunications services.

NBN Co will instead implement a wholesale price cap, the policy states, which is not to exceed the current $24 for the 12/1Mbps speed tier set by the ACCC in its special access undertaking.

The Government argued that removing a uniform price would allow NBN to better compete in lucrative markets where it is under competition from private sector carriers.

According to the policy, the wholesale price cap approach may result in price reductions in certain markets - such as metropolitan areas - as a result of increased competition.

No split for NBN Co network technology units, yet

One of the more controversial suggestions contained in the Vertigan report was that NBN Co separated into competing functional units in line with its underlying network technologies.

The Government steered clear of making a decision on such a move for the short term, arguing that disaggregation posed too much of a threat to the rollout timeline and the stable operations of NBN Co management.

It signalled that it would begin considering restructuring the organisation along such lines once the rollout is complete and as it begins to consider privatisation. 

In the meantime, the Government will investigate the cost of separating the accounts and IT systems for each access technology-specific business unit. The approach is aimed at ensuring "financial and policy flexibility" for future governments, it said.

The review will be completed by July 1 next year.

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