No break-up of NBN Co – yet: Turnbull

Vertigan panel issues final report

The government has indicated in its initial response to the third Vertigan panel report, which was released last night and includes an assessment of competition settings for the telco market, that it has no short-term plans to break up NBN Co.

“While disaggregation of NBN Co's business units (as the panel recommends) after the network is complete cannot be ruled out, now is not the time,” a statement issued by Communications Minister Malcolm Turnbull said

“Breaking up NBN Co would distract its management and delay the provision of high-speed broadband to all Australians.”

The third report (PDF) of the panel, which is known as the Vertigan panel after its chair Michael Vertigan and was appointed by the government to conduct a cost-benefit analysis of the National Broadband Network, includes 19 top-line recommendations.

Those recommendations include the “the disaggregation and divestment of NBN Co’s transit, satellite and fixed wireless business units, along with associated obligations, including with ongoing subsidies if they prove to be necessary”.

The report also recommends having a non-NBN Co owner and operator for the HFC network.

“If NBN Co is successful in acquiring the network and the Government considers that full divestment is not achievable, it disaggregate NBN Co’s HFC network from its FTTx network to the greatest extent possible,” the report states.

The HFC networks are currently owned by Telstra and Optus, but are likely to be purchased by NBN Co as part of its commitment to a 'multi-technology mix' for the NBN. ADSL services over copper should remain available within the HFC footprint “pending upgrade to FTTN or FTTP,” the report said.

“[W]ere full disaggregation not to proceed immediately, the Government direct NBN Co to move to the transitional internal arrangements identified as a preparatory stage, with a further independent review of market structure being conducted in no more than five years’ time,” the report states.

Read more: In brief: NEC wins SA government networking contract

The report said that separate entities could operate the satellite network, the fixed wireless network and the HFC network, while NBN Co continued to operate the FTTx network.

“These more focused entities would have smaller, more manageable mandates, thereby reducing financial risks to taxpayers and improving the chance of efficient and timely network rollout,” the report stated.

“Additionally, divesting these assets to specialist operators with established track records would shift risk from taxpayers onto the investors best placed to gauge, bear and manage those risks.”

The government last night also provided initial responses to two other recommendations.

“Infrastructure competition be the guiding policy for the delivery of wholesale broadband services. This policy be implemented expeditiously to the maximum extent practicable,” the report recommended.

“Amending existing laws governing broadband networks that compete with NBN Co... so they are fair for all market participants will take time and inevitably involve uncertainty,” Turnbull’s statement said.

The minister is currently conducting an industry consultation that would create a carrier licence condition forcing carriers building superfast broadband infrastructure, such as TPG, to open their network to other retail service providers.

“The panel recommends that NBN Co recover its costs of deploying fibre in new housing developments in full, as a means of levelling the playing field with private sector infrastructure deployment companies,” Turnbull’s statement said.

“The government recognises that the private sector has been placed at a substantial competitive disadvantage by the current arrangement, where NBN Co provides fibre infrastructure to new developments at no charge while the private sector has to recover costs in the normal way.

“The government will consult with industry stakeholders with a view to finalising reforms in this area that address the imbalance in competition in a manner that is fair to all parties, including new home buyers.”

The statement said that the government intended to provide a full response to the report by the end of the year.

Follow Rohan on Twitter: @rohan_p

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