Senator the Hon Mathias Cormann

The Government has today set out a roadmap for reform in the telecommunications sector which will see several restrictive aspects of existing market regulation gradually replaced with more competition-friendly settings.

A policy paper released today outlines the proposed reforms and the Government's response to 53 recommendations for regulatory changes proposed earlier this year following a review carried out by an independent panel of experts chaired by Dr Michael Vertigan AC.

Reforms to encourage a more competitive, responsive telecommunications market complement the Government's goal of completing the National Broadband Network as quickly as possible to ensure all Australians have access to affordable high-speed broadband.

The policy paper proposes a phased implementation of more competitively neutral regulation, ensuring it is introduced in a way which does not delay or derail the NBN.

The Government believes regulation of the telecommunications market should be consistent with three overarching principles:

• Regulation should encourage both retail and infrastructure competition.
• To the greatest extent possible industry players should be treated consistently.
• New high-speed networks should be vertically separated – the underlying network must be operated at arm's length from the services sold over it.

The Government will implement the following reforms:

• Networks that compete with NBN Co will be required to provide wholesale access on a non-discriminatory structurally separated basis, ensuring the consumers they serve can choose from multiple retail service providers.
• Increased competition will be encouraged in the provision of telecommunications in new housing developments, by ensuring NBN Co charges developers up front for part of its costs. This will allow private contractors and network operators to compete with NBN Co on a more level playing field.
• Legislation will be introduced to make NBN Co the fixed line telecommunications infrastructure provider of last resort.
• NBN Co's current uniform national wholesale prices will be replaced with price caps, which will ensure the price of the NBN cannot rise in either urban or regional areas but NBN Co can respond to competition.
• The Bureau of Communications Research will assess NBN Co's internal cross-subsidies and recommend a model for replacing them with a more competitively neutral contribution mechanism to fund the NBN in uncommercial areas.
• NBN Co's business units operating different technologies will be required to have separate accounts and (subject to review) IT systems to ensure future governments have policy and financial flexibility.
• Minor changes will be made to fine-tune the access regime introduced in 2010.

Price caps will not lead to an increase in the wholesale access prices charged by NBN Co anywhere in Australia. There will be scope for reductions in particular markets, however, where this arises from more competitive arrangements.

NBN Co charging for infrastructure in new developments would be consistent with charging for the provision of other infrastructure in new developments. It will foster competition, which will benefit developers and consumers by increasing choice and putting downward pressure on costs.

Overall, the approach set out in the policy paper provides increased certainty for an industry that has been undergoing regulatory change since the original NBN was announced in 2007.

The Government's plan, including its response to each of the Vertigan panel's recommendations, is in the policy paper here: Telecommunications Regulatory Reform

In addition, a policy paper on the provision of telecommunications infrastructure in new housing developments has been released for comment and can be found at: Telecommunications infrastructure in new developments: policy update for comment

Comments should be sent to greenfields@communications.gov.au by 15 January 2015.

The Minister for Communications will finalise the proposed new carrier licence condition for new superfast networks shortly.

In December 2013 the Government appointed the Vertigan panel to undertake an independent cost-benefit analysis of the NBN and review of regulatory arrangements.

The panel's three reports are available here: Cost-Benefit Analysis and Review of Regulation