NBN Co to charge developers for fibre

NBN Co will hit developers and owners of new residential apartment blocks and estates with fees ranging into the thousands of dollars to connect fibre to their developments, under a new policy released by the Government today.

As part of its response to the 53 recommendations made under the Vertigan review, the Government today announced an update to a 2011 Labor-authored policy which outlined how NBN Co was to approach the provision of fibre to new developments [pdf].

The old policy stipulated that NBN Co will meet the cost of providing fibre to new developments within or near its fibre footprint, among other things. 

The Government today released a replacement version [pdf] of the approach, which it said had “unduly tilted the playing field against private infrastructure providers”.

“While the Government supports NBN Co’s participation in the new developments market, this should not be at the expense of competition,” the new policy states.

As such, NBN Co will now be able to charge developers for connection, deployment and backhaul under the new policy, while retaining its position as infrastructure provider of last resort.

The new policy retains a requirement for developers to ensure pit and pipe infrastructure - of a certain standard - is installed and fibre-ready before NBN Co begins construction on the premise, and that they meet the cost of doing so.

Developers will also still need to transition ownership of the infrastructure to NBN Co in exchange for fibre.

But the new policy also allows NBN Co to charge a one-time connection fee of $300 - which the Government expects will be passed on to the retail service providers and then end-users.

NBN Co will similarly be able to charge developers for connections - $600 for single-dwelling units, and $400 for multi-dwelling units.

For new developments in the fixed wireless or satellite footprint, developers will need to pay a "co-contrbution" of $1100 for multi-dwelling units and $1300 for single-dwelling units. 

The Government said the old policy had undermined private providers by not charging developers for NBN services - meaning private providers would only win contracts in areas where the NBN rollout was delayed, or when they could offer a service on top.

"NBN Co has been able to provide ‘free’ infrastructure in part because it recovers these costs later from access charges, but also because it is supported by taxpayers," the new policy explains.

"While NBN Co’s size and reach will always be advantageous, the measures in this policy update will significantly level the playing field. Developers and end-users will both need to make larger upfront contributions.

"At the end of the day, it will be up to providers to compete on their merits."

Developers will no longer be able to assume that a provider of last resort will come along and service their development, the Government said, meaning they will need to make a proactive decision as to the provision of telecommunications and contribute to the cost - which the Government argued would increase competition.

NBN Co will also now be able to charge developers as much as half of any costs up to $1000 it incurs where it doesn’t have backhaul available to connect to a new development.

Developers will be liable to foot the entire bill if backhaul costs incurred by NBN Co go over $1000 per lot.

"If developers do not contribute to backhaul costs, there is no incentive for them to factor in the real cost of providing telecommunications to a new development – the cost is ‘externalised’ and borne by the network operator," the Government argued in its new policy.

"In the case of NBN Co this means the cost is borne, in the short term at least, by taxpayers and in the longer term by both taxpayers and consumers. Equally, if developers meet the entire expense of providing backhaul, it may add significantly to the costs of the development (and of the housing it provides)."

Charges for deployment and backhaul are expected to apply for all applications received after March 1 2015.

The $300 end-user connection charge will be introduced "as soon as practicable" and no later than March 1 next year, the policy states. 

The Government's new multi-technology mix has replaced FTTP as the default access technology with fibre-to-the-node. NBN Co has however committed to continue rolling out fibre to greenfields of over 100 lots.