Australia: National Broadband Network (NBN) - What next for Australia?

Last Updated: 7 March 2012
Article by Martyn Taylor


Four important recent developments illustrate just how quickly the regulatory, commercial and political landscape is changing for Australia's National Broadband Network (NBN):

  • First, a leadership challenge occurred within the Australian Labor Party resulting in renewed industry speculation as to the future of the NBN if the Government were to change.
  • Second, the Australian Competition and Consumer Commission (ACCC) accepted a Structural Separation Undertaking, and approved a Migration Plan, proposed by Telstra Corporation Limited.
  • Third, the ACCC issued a detailed consultation paper that expressed reservations regarding the acceptability of a Special Access Undertaking proposed by NBN Co Limited and NBN Tasmania Limited.
  • Fourth, the ACCC applied access regulation to two new wholesale services, namely wholesale asymmetric digital subscriber line (ADSL) broadband services and non-NBN local bitstream access services.

This commentary briefly summarises each of these important developments and their practical implications. We also cut through the alphabet soup of NBN acronyms and provide an overview of the evolving landscape for the NBN. Finally, we identify key developments that we can expect in the coming months.

This commentary is the eighth in our series of NBN Updates.

What will happen to the NBN if the Government changes?

As anyone in Australia will be aware, a formal leadership challenge occurred within the Australian Labor Party (ALP) on 27 February 2012 resulting in renewed industry speculation as to the future of the NBN if the Government were to change. The next Australian federal election must occur before 30 November 2013.

The following comments summarise (without political bias) what could happen if a Liberal-National Coalition were to form Government in Australia. If the ALP continued in Government we assume there would be no change in NBN policy.

The current policy of the Liberal Party of Australia is that a Liberal-National Coalition Government (Coalition) would cancel the NBN rollout and promote a private sector solution.

Importantly, the Coalition still has the objective of delivering a uniform NBN that provides 97 per cent of Australian premises with speeds between 12 and 100 Mbps. The fundamental difference between Coalition and ALP policy is that the Coalition would give primacy to a private sector solution, supported by selective Government funding directed at areas of market failure. A new National Broadband Commission would oversee the allocation of this funding under a competitive tender.

Recent comments indicate that the Coalition would adopt a pragmatic approach when implementing this policy. The Coalition would seek to transition from existing NBN arrangements in the most cost-effective and rational way. A first step would involve a public inquiry, probably via the Australian Productivity Commission, to identify the most cost-effective way to achieve Coalition objectives.

When identifying the optimal NBN solution to give effect to Coalition policy, the Coalition will need to solve for many policy variables. Many of these variables are inherently uncertain and some of them are beyond the Coalition's control. Some of these variables are as follows:

  • NBN Co may be contractually committed to incur future expenditure
    • Implementation of Coalition policy will require an analysis of existing contractual commitments by NBN Co Limited and NBN Tasmania Limited (together 'NBN Co'). At this stage, the relevant commercial contracts are confidential to NBN Co so the nature and extent of such obligations is unknown. On the one hand, for example, key NBN contracts could already provide for NBN cancellation. On the other hand, NBN may be contractually obliged to incur expenditure to an extent that requires continuation of aspects of the current NBN.
  • The Senate may not be controlled by the Coalition
    • Implementation of Coalition policy may require significant legislative change. As of today, the ALP and the Australian Greens control a majority of the Australian Senate. The Coalition may need to negotiate a legislative compromise to receive Senate endorsement. Political pragmatism could be a feature of any alternative NBN solution.
  • Alternative commercial arrangements may be required with Telstra
    • The 'Definitive Agreements' between Telstra Corporation Limited (Telstra), NBN Co and the Government contemplate compensation that is payable to Telstra if the NBN is cancelled. However, this compensation is based on a 20 per cent fibre rollout threshold that will not be achieved by NBN Co before the next Federal election. A more relevant policy issue is the extent to which alternative NBN solutions may require access to Telstra infrastructure such as duct, fibre, or copper. Alternative commercial arrangements with Telstra may be required.
  • Private sector solutions may face higher financing costs
    • Under the current NBN model, taxpayers ultimately assume the NBN investment risk. The Government has sought to mitigate some risks within its control. Regulatory risk has been reduced by increasing certainty in NBN cost-recovery. Take-up risk has been reduced by creating disincentives for competitive superfast network build and by coercing Telstra to migrate customers from copper to fibre. An alternative NBN solution may require similar or analogous policy measures to reduce investment risk and hence reduce private sector financing costs.

Given the number of variables and their uncertainty, the precise NBN outcome if the Coalition were to form Government is inherently difficult to predict. The Coalition's objective, in essence, is a more cost-effective NBN that maximises the role for the private sector. The Coalition is likely to determine the optimal NBN outcome only once an entity such as the Australia Productivity Commission has carefully analysed all relevant information and made policy recommendations.

Given the above, anyone contracting in the context of the NBN faces significant and continuing political risk. If the Government were to change, there is much uncertainty regarding the precise manner in which any NBN would proceed. Contracts should be drafted with such risks in mind.

Telstra will undertake Australia's largest ever network migration

On 28 February 2012, the ACCC accepted Telstra's 'Structural Separation Undertaking' (SSU) and approved Telstra's Migration Plan.

Under the SSU, Telstra will achieve structural separation of its fixed network by 1 July 2018 via the progressive disconnection of premises from Telstra's copper access network and their connection (or 'migration') to the NBN fibre access network. Telstra will also cease to supply broadband Internet access services over its hybrid fibre coaxial (HFC) network, but will continue to provide subscription television (or 'pay TV') services such as Foxtel. In this manner, Telstra will undertake Australia's largest ever network migration.

The adoption of the 'migration' model of structural separation was the Government's preferred model, but will take time to implement given that it requires NBN fibre rollout. As an interim measure, the SSU specifies transparency and equivalence measures that will apply to Telstra during the NBN rollout period.

The combined practical effect of the SSU and Migration Plan is therefore twofold.

First, end users will be migrated from copper to fibre under a defined migration process:

  • The Migration Plan sets out the manner in which migration will occur, consistent with various principles pre-determined by the Minister. Key features of the Migration Plan include:
    • the use of existing standardised Telstra disconnection systems and processes;
    • Telstra is prohibited from supplying a new copper service to a premises (except for special services) once NBN is capable of supplying fibre to that premises; and
    • where end users are customers of another provider, the provider has some timing flexibility so as to align copper disconnection with NBN fibre connection.
  • Importantly, those end users that do not voluntarily migrate from copper to fibre will ultimately be involuntarily required to migrate (known as 'managed' or 'forced' migration) under a mandatory disconnection process. Once NBN fibre has passed 90 per cent of premises in a region, NBN Co will announce that the region is 'ready for service' (RFS). Voluntary migration will occur until a date 18 months after the RFS. From that 18 month cut-off date, Telstra will have 10 business days within which to disconnect all remaining premises from copper in that region. A number of exceptions apply that may delay disconnection of premises in certain circumstances.

Second, Telstra is subject to stricter operational ring-fencing before migration:

  • An interim equivalence regime applies in the period prior to migration. Telstra is subject to transparency and equivalence obligations that apply to regulated services that it supplies to wholesale customers over its copper access network. These obligations are directly enforceable by the ACCC, including:
    • an overarching commitment to ensure equivalence of outputs for wholesale customers for relevant wholesale regulated services via a vis Telstra's retail businesses;
    • specific commitments to price equivalence and transparency, including supply of relevant regulated services under a default 'rate card' at regulated prices. Telstra must equivalently allocate costs between wholesale and retail and regularly report on key service input costs, including comparable unit costs and wholesale yields;
    • specific commitments to non-price equivalence and transparency, including the operational and technical quality of services, systems support and information flows. If certain equivalence metrics are contravened, rebates are payable to wholesale customers; and
    • continued operational ring-fencing of Telstra Wholesale to protect the confidential information of wholesale customers, supported by information security measures.
  • A new dispute resolution procedure for wholesale customers has also been adopted, including an accelerated investigation process and an independent telecommunications adjudicator.

The ACCC's acceptance and approval of the SSU and Migration Plan was a key condition for the commencement of Telstra's 'Definitive Agreements' with NBN Co and the Government. Fulfilment of the remaining conditions is procedurally straightforward and within the Government's control. Once the Definitive Agreements have legal effect, Telstra will be contractually obliged to implement copper-fibre migration as the NBN is rolled out.

ACCC reservations regarding the acceptability of NBN Co's SAU

On 14 February 2012, the ACCC published a detailed supplementary consultation paper regarding NBN Co's proposed Special Access Undertaking (SAU). The SAU is intended to provide NBN Co with regulatory certainty regarding cost-recovery over a 30 year term, thereby underpinning NBN Co's business case. The SAU also sets out key commercial, technical and regulatory parameters for the NBN.

Initial criticism was directed at the SAU by the industry on the basis that it provided NBN with excessive discretionary power. The ACCC identified these issues in its consultation paper. Other key issues highlighted by the ACCC in the consultation paper include:

  • concerns regarding the 30 year duration of the SAU, including the reasonableness of a proposed SAU review mechanism;
  • a need for greater ACCC oversight over NBN Co's ability to amend its Wholesale Broadband Agreement (WBA) as NBN Co's key commercial agreement for the supply of NBN services;
  • an absence of service level commitments by NBN Co; and
  • insufficient detail regarding NBN pricing and an insufficient ACCC oversight role in relation to NBN Co's determination of pricing.

A second round of consultation is currently occurring with submissions due to the ACCC by 30 March 2012. Once the ACCC has considered those submissions, it has the option of either outright accepting or rejecting the SAU, or issuing a notice identifying amendments that would make the SAU acceptable under the current review procedure. At this stage, it seems unlikely that the SAU may be accepted outright by the ACCC, hence amendments by NBN Co may be required.

New regulated services to assist the transition to the NBN

The ACCC has recently applied access regulation to two new wholesale services by 'declaring' them under the telecommunications access regime in Part XIC of the Competition and Consumer Act 2010 (Cth). The key practical implication of declaration is that the ACCC may now determine default pricing and terms and conditions for these services that will both guide commercial negotiations and apply if negotiations were to fail.

  • Declaration of wholesale ADSL service

The ACCC has now declared a wholesale ADSL service. Wholesale ADSL services are primarily acquired by internet service providers to enable them to supply Internet access services over Telstra's copper access network to retail customers. As such, wholesale ADSL services are primarily supplied by Telstra, although they can also be supplied by any entity that acquires access to the underlying Telstra copper access line (via a spectrum sharing or unbundled local loop service).

In its decision, the ACCC commented that Telstra retains a dominant position in the markets for both retail and wholesale fixed-line broadband internet access services. Regulation is intended by the ACCC to remove impediments to competitive internet service providers gaining access to Telstra's ADSL services in the period prior to NBN deployment. As such, the declaration of ADSL is intended by the ACCC to increase competition between internet service providers in the period before NBN migration. Declaration is also intended to facilitate the effective operation of the new equivalence and transparency obligations set out in Telstra's SSU.

  • Declaration of non-NBN local bitstream access service

The ACCC has declared a non-NBN local bitstream access service (LBAS) with effect from 14 April 2012, as required by recent amendments to the Telecommunications Act 1997 (Cth). The LBAS is the basic wholesale access service for the use of fibre network infrastructure. Most jurisdictions have favoured the supply of LBAS as a means to provide competitors with access to fibre infrastructure, rather than requiring that access is provided to the unlit or 'dark' fibre itself.

The declaration of LBAS only applies to fixed fibre local access infrastructure that is not owned by NBN Co where the download transmission rate is greater than 25 Mbps. The declaration is intended to ensure that the small number of fibre networks that are not owned by NBN Co, such as fibre in new housing estates, are subject to a wholesale 'open access' regime on a similar basis to NBN Co. The declaration complements the new 'superfast network obligations' as discussed below.

The ACCC is currently undertaking public consultation on proposed access determinations that will establish the default pricing and non-price terms and conditions for these declared services.

What developments can we expect in the coming months?

There are a number of further developments that we can expect in the coming months:

  • New criminal prohibitions relating to competing superfast networks

    On 14 April 2012, the so-called 'superfast network obligations' will take legal effect, but with retrospective application from 1 January 2011. The obligations are intended to deter the deployment or upgrading of fixed infrastructure that is competitive with the NBN by requiring all fixed superfast networks to operate on the same wholesale only 'open access' basis. All fixed broadband infrastructure owners and controllers in Australia, as well as related entities, will need to ensure they are compliant. The obligations have broad application and involve criminal penalties.

  • ACCC approval of NBN Co's Special Access Undertakings

    We anticipate that the SAU proposed by NBN Co may ultimately be accepted by the ACCC, following further amendments (and potentially resubmission) by NBN Co. Once the SAU is accepted, the regulatory parameters for the pricing of the NBN services will effectively be set. The technical features of the NBN will also be locked in place as well as the NBN wholesale contracting structure. Importantly, the revised SAU may also give the ACCC a greater degree of oversight over NBN Co's current contracting arrangements in order to resolve current industry concerns regarding aspects of those arrangements.

  • Commencement of the Definitive Agreements

    The 'Definitive Agreements' document a commercial agreement between Telstra, NBN Co and the Government that underpins the business case for the NBN. Telstra has agreed to implement copper-fibre migration in return for compensation payments. Telstra has agreed to provide NBN Co with access to key infrastructure necessary for NBN rollout, such as ducts and dark fibre. The Government has agreed to reform the funding of Australia's universal service obligation and legislation to achieve this is currently before Parliament.

    Now that the SSU has been accepted, the last remaining conditions for the commencement of the 'Definitive Agreements' should be quickly satisfied. The Minister will need to waive a legislative requirement for Telstra to divest its HFC network and Telstra's interest in Foxtel. NBN Co will also need to obtain formal approvals from its shareholding Ministers. Once the Definitive Agreements have full legal effect, NBN Co is intending to accelerate its fibre rollout.

  • Acceleration of NBN fibre rollout

    NBN Co will continue to deploy the NBN in accordance with its rollout programme. As at the end of 2011, around 18,000 premises were passed by NBN fibre and around 4,000 premises were connected to the NBN, primarily for trial purposes and to receive interim satellite services. By the end of 2012, the number of premises passed by NBN fibre should exceed 500,000, comprising roughly 4 per cent of the 12 million Australian premises to be ultimately served by NBN fibre.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Martyn Taylor
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.