NBN committee calls for bigger greenfields probe

By James Hutchinson on Jul 5, 2011 8:13 AM
Filed under Communications

Awaiting results of Productivity Commission investigation before recommending action.

A joint parliamentary committee has called for a bigger investigation into alleged breaches of competitive neutrality rules by network wholesaler NBN Co in new housing estates.

However, the committee, chaired by independent MP Rob Oakeshott, said it would await the result of an existing investigation into the issue by the Productivity Commission before passing judgment on what impact NBN Co's entry into new housing estates had had on existing fibre builders.

"The committee believes the Government should examine these issues with a view to ascertaining whether there is any negative impact on competition in the fibre provider market or service outcomes for the end user in the longer term," they said.

In its first official report [PDF] since being established last year, the committee backed crucial amendments that legislate structure around the network fibre rollout in new developments.

In 13 submissions from industry and two public hearings held last month, the committee heard complaints from a section of the greenfield operators industry, which took particular exception to key elements of the legislation including ministerial powers over pit-and-pipe specifications and the application of NBN Co as "provider of last resort" in greenfields of 100 premises or more.

Complaints from industry, represented by the Greenfield Operators of Australia (GFOA), had sparked the Productivity Commission investigation into whether NBN Co's greenfields operations breached competitive neutrality rules for government business enterprises.

The result of that investigation was expected in July or August.

'Missed opportunity'

The committee also stopped short of siding with calls by a greenfields lobby for greater purview into NBN Co's practices in estates, a move that was criticised by opposition MPs on the 16-person committee.

The opposition's dissenting report labelled that a "missed opportunity" to control NBN Co's actions.

The coalition echoed claims made by industry that NBN Co's actions in greenfields were tantamount to a monopoly player.

It called for a free market in which housing developers would be able to choose a third-party operator to build pit, pipe and fibre in new estates at an equal or lower cost to NBN Co.

Shadow communications spokesman Malcolm Turnbull used the public hearings to suggest a coalition-backed amendment that would require NBN Co to buy out the networks of private fibre operators built under a tender-like process in new developments.

NBN Co would have to commercially agree on a price per house. Pit-and-pipe often ranged from $500 to $1,000 a lot, while with fibre could be up to $3,500, although it was usually about half that.

Turnbull's amendment was met with tentative support by greenfields operators including TransACT and Opticomm.

Ross Yelland, market development manager for greenfields operator Comverge Networks, told iTnews the committee's decision came as a result of its "awkward position" due to Oakeshott's previously-held beliefs on monopolies.

"From reading the report, and from attending the hearings, you do not get the impression they are comfortable with it," he said. "Let's hope the Government's conscience is pricked."

Industry moves on

The legislation came shortly after a ceasefire was brokered between NBN Co and previous greenfields incumbent Telstra over discussions around ownership of pit-and-pipe infrastructure in new housing estates.

The negotiations, which had caused developer uncertainty, led Conroy to clarify the Government's policy statement on greenfields reponsibilities and later led Telstra to agree to hand over ownership of infrastructure it had been contracted to build in greenfields estates.

The refined policy also left the door open for NBN Co to purchase fully deployed infrastructure from third parties, as suggested by Turnbull.

Unlike the proposed coalition amendment, however, it would purchase the infrastructure on commercially-agreed terms and at the company's discretion.

As the greenfields fibre builder industry has attempted to come to grips with its possible extinction under the NBN, Yelland told iTnews many operators' concerns had shifted from attempting to compete directly with the wholesaler to instead attempting to adapt to the changing industry.

"Industry has now accepted that the bigger challenge now is to try and work towards righting that greater wrong," he said.

 
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