Australia: National Broadband Network

Exposure Draft Bills begin to fill in the gaps
Last Updated: 15 March 2010
Article by Hamish Fraser and Kathryn Edghill

The Department of Broadband, Communications and the Digital Economy quietly released Exposure Drafts of the next round of NBN legislation on 25 February 2010. There are two Exposure Draft Bills:

  1. National Broadband Network Companies Bill 2010 (NBN Companies Bill); and
  2. Telecommunications Legislation Amendment (National Broadband Network Measures - Access Arrangements) Bill 2010 (Access Bill).

The draft Bills, which were released with a set of explanatory notes, can all be found at: and programs/national broadband network/nbn company legislation and access regime

The Bills should also be read in conjunction with the draft Competition and Consumer Safeguards Bill released in September last year that outlines some of the mechanisms for establishment of the NBN (CCS Bill). Our discussion of the CCS Bill can be found at: Article 3.

The drafts have been released for public comment, which can be provided up until 15 March 2010.

The NBN Companies Bill

The NBN Companies Bill sets out provisions for the governance, ownership and operating arrangements for NBN Co (including its subsidiaries, if any). In large part the Bill begins the process of integrating NBN Co into the existing Australian telecommunications landscape and is not remarkable.

However, one aspect of the Bill that has attracted considerable media and commentator interest, is the broad discretion left to the Minister regarding what activities NBN Co will and will not be able to carry out. NBN Co has always been flagged as a "wholesale only" proposition. NBN Co CEO, Mike Quigley has often been quoted as saying that "NBN Co will not compete with its customers". The NBN Companies Bill, and some comments made in the Explanatory Notes put a question mark over that mantra.

The NBN Companies Bill states clearly that NBN Co is a wholesale only provider and can only sell its services to other carriers or service providers. However, the Minister has reserved the right to exempt certain services from this restriction on retail offering. On its own perhaps, this is a typical reservation of power at a time when the telecommunications market is undergoing such fundamental change and is consistent with other such reservations, including in the CCS Bill. However in the Explanatory Note, the statement is made that this reservation could perhaps be used to offer services directly to certain end users " for example government agencies". The Minister is obliged in making any such decision to exempt services from the retail restriction to consult with the Australian Competition and Consumer Commission (ACCC), but is not bound to follow such advice.

A standard reservation of power - perhaps? It would certainly fly in the face of much of the Government's stated policy if it were intended to be anything more. One curious suggestion has been that this is perhaps intended to give the Government an added stick in its negotiations with Telstra over acquiring some or all of Telstra's assets to form part of the NBN. After all, an NBN that competes with Telstra significantly weakens Telstra market power.

The NBN Companies Bill also provides that once the network is complete, the Government must sell its stake over the next five years. That five year period can be increased by one year in certain circumstances and the Government can sell down up to 49% of its interests, if conditions are right, prior to completion. The NBN itself is intended to be complete in eight years, but that can be extended in one year increments.

Much of the Bill is then taken up with the provisions necessary for the sell down of the Government asset, similar to the earlier Telstra or Medicare sell downs.

The Access Bill

The Access Bill, among other things provides that NBN Co, a business that will ultimately have significant market power (if not a monopoly), will be subject to a modified form of access regime under the Trade Practices Act (TPA).

The devil is in the detail in the Access Bill but, importantly, the Bill provides for the circumstances in which the ACCC can declare a specified eligible service provided by NBN Co to be a "Declared Service" within the meaning of the TPA, and for the consequences which flow from such a declaration.

The Access Bill attempts to juggle the potentially competing interests of service providers with existing access to services, those with requests for access and the needs of the NBN Co to acquire sufficient of the service to meet its requirements. Perhaps the most interesting aspect of the relatively complex Access Bill is that NBN Co must not discriminate between access seekers, unless it is on grounds of creditworthiness, specified in a legislative instrument or where such discrimination would aid efficiency and all access seekers with like interests would have the opportunity to benefit from such discrimination.

CCS Bill to be introduced to the Senate

At the same time as the issue of these draft Bills, the Government is likely to introduce the CCS Bill (released in September 2009) to the Senate this week, where it is expected to receive a healthy debate prior to a vote later in March. The Coalition appears now to be voting as one and opposed to the Bill, at least until further information is made available. Therefore the Government will need the support of all the Greens and Independents. Rumours abound as to the changes these Senators may seek to the legislation, although it seems inevitable some compromise will be needed.

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.

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