No free lunch: Communications Minister Malcolm Turnbull wants developers and home owners to carry some of the NBN costs. Photo: David MariuzWould-be rivals to the government’s NBN wholesale broadband services will face a cap on the charges they can reap from internet retailers under new rules unveiled on Thursday.
The rules were flagged in the government’s response to the Vertigan Review of NBN and will buttress the state-owned business from private sector attempts to cherry pick highly profitable locations such as inner-city apartment buildings.
The government is also doing away with cross-subsidies, which currently part of NBN Co’s wholesale pricing, and will force owners of high-speed networks, targeting residential and small business customers in commercially viable areas, comparable to NBN, to make contributions to help fund the less viable areas, such as regional and rural Australia.
Under a new carrier licence condition that will come into effect on January 1, 2015, internet service providers (ISPs) providing superfast broadband to residential customers will be forced to split their retail and wholesale businesses.
Those companies will need to “operate their networks and retail operations at an arm’s length”.
ISPs will also be able to charge no more than $27 a month for 25/5 megabits per second, 25 Mbps download, 5 Mbps upload, to other retail providers through their wholesale business. This licence will remain in place for two years as a transitional measure.
The move is aimed at preventing ISPs such as TPG, which is building its on fibre-to-the-basement network in more profitable metropolitan areas, from cherry picking retail customers and locking out other providers.
NBN Co is required to provide broadband to all Australians, with emphasis on underserved areas.
TPG used a clause that allows networks built before 2011 to be extended by an extra kilometre to get around laws designed to stop NBN Co from having any competition.
TPG plans to connect 500,000 apartments and businesses to its FTTB network, offering similar services to the National Broadband Network.
The announcements are part of the government’s response to 53 recommendations made by the Vertigan Review in October.
At the same time proposed legislation was released that will see developers and home owners in new premises bear some of the costs of NBN installation.
The proposal would see the introduction of a $300 connection charge, which the government expects to be passed on to end-users, as well as a deployment charge on developers for infrastructure; $600 for single-dwelling units and $400 for multi-dwelling units.
The government is also proposing that property developers pay for pit and pipe infrastructure and a trial process where developers will sell the infrastructure back to NBN Co at “a pre-determined price”.
“NBN Co has been able to provide ‘free’ infrastructure in part because it recovers these costs later from access charges, but also because it is supported by taxpayers,” the government said in the draft policy paper.
“While NBN Co’s size and reach will always be advantages, the measures in this policy update will significantly level the playing field. Developers and end-users will both need to make larger upfront contributions.”
Communications Minister Malcolm Turnbull and Finance Minister Mathias Cormann said in a joint statement that the charges were consistent with other charges for the provision of infrastructure in new developments.
“It will foster competition, which will benefit developers and consumers by increasing choice and putting downward pressure on costs,” the said.
Opposition communications spokesman Jason Clare said the move was an unfair hit to new home buyers.
“It means that if you buy an existing home you don’t have to pay anything extra for the NBN,” Mr Clare said. “Your taxes pay for it. But if you buy a new home, you have to pay for it twice.”
The infrastructure policy would come into effect on March 1, 2015.