NBN Co may need to prove it isn't cross-subsidising enterprise play

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NBN Co may need to prove it isn't cross-subsidising enterprise play

Faces renewed attention on its transparency.

NBN Co is facing calls to prove it is not using income from its regulated activities - supplying residential broadband - to subsidise its entry into the enterprise and government market.

The Australian Competition and Consumer Commission (ACCC) said late last month that additional “reporting and transparency requirements” may be imposed on NBN Co to address cross-subsidisation concerns.

The ACCC noted NBN Co “has been increasingly expanding into the contestable enterprise market” and that this “expansion is likely to continue over the coming years.”

“The ACCC considers that NBN Co’s continued expansion into the enterprise services market may result in concerns about cross-subsidisation between products,” it said.

“This could in turn create a need for further transparency on costs and revenues of individual services in future.”

In the past, the ACCC said it had imposed similar transparency requirements on Telstra and Australia Post to better understand how they - as regulated entities - also operated in “contestable markets”.

The ACCC said it continued to watch NBN Co’s enterprise and government play closely for any signs that its presence is “distort[ing] competition”.

It said Telstra had specifically raised concerns with the ACCC over the potential for cross-subsidisation of enterprise and government connections.

“Telstra indicated that there is a lack of transparency around NBN Co’s costs and revenues and that cross subsidisation towards contestable areas such as enterprise services is a concern,” the ACCC said.

“It also highlighted the potential for a more detailed regulatory accounting framework to alleviate these concerns.”

In October last year, NBN Co was sanctioned by the ACCC over its behaviour in the enterprise and government market. 

As iTnews reported last month, considerable industry concerns remain that the sanctions have not had a material impact on curbing aspects of NBN Co's approach to securing enterprise and government customers.

NBN Co continues to maintain it has addressed industry concerns and that the behaviours that drew regulatory and industry attention have been addressed.

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