NBN Co faces a period of “close monitoring” by the government over lingering concerns that the company could abuse more flexible rules in how it competes for work in new housing developments.
The company received much of its wishlist back in May when a draft of the government’s telecommunications in new developments (TIND) policy granted it more flexibility in the way it priced builds for new estates and potentially overbuilt the networks of rivals in such areas.
The formal TIND was released today, with the government acknowledging “residual concerns that NBN Co may take advantage of its government ownership or position in the market to compete unfairly or to undermine the value of past investments.”
Private rivals like Uniti-owned OptiComm have been watching closely to see what impact the new TIND will have on their businesses.
In the first instance, the government is relying on NBN Co’s commercial imperatives to neutralise bad behaviour.
“NBN Co is required to operate commercially and this places an inherent discipline on any charging or overbuilding decisions, particularly in lower density, residential markets,” it said in the new policy.
“However, it is possible that NBN Co could consider it in its long-term interest to seek to exclude competition.
“The possibility of such anti-competitive conduct is a significant concern, however there are powerful and long-standing tools to deal with it and these should be preferred.”
In the event that failed, NBN Co would be subject to the usual regime of competition and breach notices from regulators.
“The government considers these established legislated and policy mechanisms, administered by dedicated regulators, are better and more appropriate protections against anticompetitive conduct than proscriptions in this policy,” it said.
NBN Co has faced these kinds of sanctions in the past with respect to its business sector dealings.
However, the sanctions alone did not lead to behavioural change in that instance; it took concerted pressure from the industry over the following six months to bring about change.
NBN Co will have to publish information on its charging strategy in new developments in advance and then stick to it, the government said.
The network builder will also face close monitoring.
“Given the concerns raised, NBN Co’s conduct in the market will be closely monitored by the government as policy maker and it reserves the right to adjust this policy or take other remedial steps if needed,” the government said.
“The government also expects the Australian Competition and Consumer Commission and the Australian Government Competitive Neutrality Complaints Office (AGCNCO) will be equally vigilant.”