Vodafone pushes to curb future NBN Co 'bad behaviour'

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Vodafone pushes to curb future NBN Co 'bad behaviour'

Why Telstra-era rules remain relevant.

Laws used to sanction Telstra for alleged anti-competitive conduct should be kept to stop NBN Co from trying anything similar, according to Vodafone.

The federal gvernment is pushing ahead with plans to repeal Part XIB of competition law, a telecommunications-specific provision created in 1997 mostly to keep Telstra in check.

Under Part XIB, the ACCC can issue competition notices and fine a telco up to $1 million a day until they comply. 

The last time it was used was in 2006; the government argues this is reason to repeal it, while supporters argue it remains an effective “deterrent” to bad behaviour.

However, it is no longer just Telstra that the industry is worried about.

As the baton for default telecommunications infrastructure is passed from Telstra to NBN Co, some believe Part XIB will prove why it exists once more.

“Part XIB applies not only to Telstra, but to any carrier or CSP,” Vodafone Hutchison Australia (VHA) said in a submission to a senate inquiry examining the proposed repeal.

“Going forward, NBN Co is likely to be as much … a dominant force in some Australian telecommunications markets as Telstra.

“Moreover, NBN Co has some statutory protections to preserve its monopoly status, conferring it with unassailable levels of market power.

“Part XIB remains relevant today not just to the conduct of Telstra, but also to the conduct of NBN Co.”

VHA urged “caution” on any repeal of Part XIB, pending the conclusion of two items.

Firstly, it wants to see the ACCC’s communications market study allowed to take its course. The study doesn’t finalise its report until November this year, and VHA wants XIB reforms “placed on hold” until then.

“It would simply make no sense to substantially reduce competition oversight in the communications sector without a serious examination of the state of competition in the communications sector,” VHA said.

However, VHA ideally wants to see Part XIB kept until after the NBN is completed in 2020.

It argues the “implications of structural change” as NBN Co emerges is “by no means clear, even in the short term”.

“Whether reforms to Part XIB are required could and should be identified only once a serious exercise has been undertaken to determine whether competition has in fact increased in the communications sector,” the telco said.

“This makes most sense once the NBN rollout is complete and the implications of the structural reforms are clearer.”

The timing of Vodafone's comments coincide with the company's plans to move into the fixed line market, primarily by reselling NBN services.

Optus also backed keeping telecommunications regulations of some sort while the full impact of the NBN remained unclear.

“One of the reasons identified for the sector specific market conduct rules [pre-1997] was that communications is a highly complex industry, with a fast pace of change and a high degree of innovation. Further, competition had not yet been fully established is some communication markets,” Optus said in a submission of its own.

“The prospect of firms with market power in one market cross-subsidising from non-competitive markets to markets in which competition exists or is emerging was considered a threat to the establishment of a competitive environment.

“Optus notes that these observations apply in today’s market and are likely to do so in the future – especially given the incentives to foreclose competition in the emerging market for NBN services.”

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