Telecommunication Reform Package
The Australian Government is reforming the telecommunications market to promote competition and to improve access to broadband services for all people in Australia, especially those in regional, rural and remote areas.
The Government has announced reforms that will enable people in Australia to access high-speed broadband, provide sustainable funding of high speed broadband services in regional and remote areas and promote competition among network providers.
Statutory Infrastructure Providers
The Government is committed to ensuring people in Australia have access to reliable high-speed broadband, regardless of where they live.
The Statutory Infrastructure Provider (SIP) obligations ensure that all Australian premises are able to access superfast broadband services (25 Mbps or better), and makes NBN Co the default ‘infrastructure provider of last resort’. There will be a requirement on NBN Co to connect premises and supply wholesale broadband services on reasonable request. NBN Co will become the SIP for areas as it rolls out its network and it will be the default SIP for all of Australia after the NBN is declared built and fully operational.
Other network providers can also be SIPs where appropriate, for example where they have contracts to service premises in a new real estate development.
While SIPs will be able to offer a range of products, they will have to offer a standard broadband service with peak speeds of at least 25 Mbps download and 5 Mbps upload. On fixed line and fixed wireless networks, SIPs’ standard services will also have to support voice services for consumers.
The Minister for Communications will be able to make standards, rules and benchmarks that could set out more detailed requirements, such as timeframes for providing access and rectifying faults. SIPs have to comply with these standards, rules or benchmarks.
The Australian Communications and Media Authority will monitor and enforce the SIP arrangements. It will also maintain a public register of SIP areas and SIPs.
Regional Broadband Scheme
The Government is establishing a Regional Broadband Scheme (RBS) to ensure there are long-term sustainable funding arrangements in place to provide broadband services to Australians in regional and remote areas.
nbn’s fixed wireless and satellite networks provide broadband access to almost a million homes and businesses across regional Australia. However, these networks are very expensive and are estimated to incur losses of $9.8 billion over 30 years. Currently these losses are funded from an opaque internal cross-subsidy from nbn’s profitable fixed line networks.
The RBS makes this cross-subsidy transparent and requires other competing fixed line networks to contribute to the cost of funding broadband for regional Australia.
The RBS does not impose a new cost on NBN users – the cost is already built into existing NBN pricing. By the time the NBN is completed in 2020, 95% of the RBS will continue to be paid for by NBN, whereas today it is 100%. The remaining 5% will be paid for by competing NBN-comparable wholesale networks. This establishes a competitively-neutral funding mechanism for broadband services in regional and remote Australia.
The RBS is a long-term solution that ensures essential broadband services will continue to be provided to regional Australia well into the future, regardless of who owns the regional networks and who is the dominant fixed line provider in profitable metropolitan areas.
New wholesale and retail rules to encourage competition
The changes to separation rules (requirements for network owners to have separate wholesale/retail businesses) ensure that all new superfast broadband networks operate on a level playing field, providing competition and choice for consumers and investment certainty for network builders.
Since 1 January 2011, new high-speed broadband networks have been required to be wholesale-only. The Government is amending these rules to make them clearer and more effective, and allow network providers to run separate wholesale and retail businesses on a ‘functionally separated’ basis. This will create new commercial opportunities for providers and encourage them to invest and compete to offer better services for consumers. Network providers will need to obtain the approval of the Australian Competition and Consumer Commission (ACCC) by submitting a functional separation undertaking to it. The ACCC will consider undertakings based on whether they promote the long-term public interest.
The reform package will also remove rules that required networks servicing small businesses to be wholesale-only. Small businesses will benefit because competition will promote investment in networks and services to meet their specific needs.
The ACCC will also be able to exempt very small operators from the rules. This is expected to encourage new entrants into the market.
We consulted on the Telecommunications Reform Package between December 2016 and February.
Where to from here?
The Government introduced the legislation on 22 June 2017. The SIP arrangements and new arrangements for networks servicing small businesses will commence once the legislation is passed by the Parliament. Arrangements for networks to have wholesale and retail businesses, and the RBS, will start on 1 July 2018.
The Government will be consulting stakeholders closely on the implementation of the arrangements.