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Ministers for the Department of Communications and the Arts

New rules to protect customers of new superfast broadband networks

14 December 2014

The Government has today released a new carrier licence condition declaration for owners of superfast fixed line broadband networks targeting residential customers.

The Carrier Licence Conditions (Networks supplying Superfast Carriage Services to Residential Customers) Declaration 2014 requires affected carriers to offer wholesale services on a non-discriminatory basis and to functionally separate their wholesale and retail businesses.

This is designed to support fairer and more effective retail competition by ensuring competing service providers can access new residential broadband networks and provide alternative offerings.

Competition will give residential consumers choice about who they want as their Internet retailer and creates the conditions for reduced prices, better service standards and greater innovation in the services being offered.

Without providing competing providers with infrastructure access, consumers face the real possibility of a single retail provider and potentially higher prices.

The new rules also mean that carriers like NBN Co, Telstra and others who either operate, or will operate, as either wholesale-only or retail–only providers in the residential market are not disadvantaged by having to compete with vertically integrated firms that can favour their own downstream operations.

The new rules are not intended to stop private sector investment in new infrastructure. They will ensure that such infrastructure is operated in a manner that encourages service-level competition among retailers, particularly where there is a single infrastructure provider.

The declaration addresses the long-standing competition concern that vertically integrated carriers can favour their own retail operations. This is the very reason why NBN Co has been established as a wholesale-only company and Telstra is being structurally separated.

The new rules are an important part of providing regulatory symmetry for all carriers, so they all operate under the same rules.

To assist industry transition to the new arrangements, from 1 January 2015 carriers who operate such access lines will only need to offer wholesale services on a non-discriminatory basis.

From 1 July 2015, affected carriers need to have separate wholesale and retail companies with separate directors, management, staff and operational support systems.

The wholesale company will have to supply services to other service providers on the same terms (including price) that it supplies them to its own retail company.

The Australian Competition and Consumer Commission (ACCC) will monitor compliance with the new rules.

The rules are forward-looking and affect only a small number of existing networks.

The rules do not affect the supply of services to existing customers.

As part of its response to the Vertigan Review, the Government announced that, beginning in 2017, new high-speed broadband networks will be required to be structurally separated. However, the ACCC will be able to authorise functional separation. The measures in the declaration are the first step in the transition to these new rules.

The declaration has been finalised after extensive consultation with industry. The Government wrote to all carriers in October 2014, giving them 30 days to provide their views. The draft was also published online for public comment. Eighteen submissions were received on the draft.

The declaration and explanatory statement are on the Federal Register of Legislative Instruments available at: www.comlaw.gov.au/Details/F2014L01699

14 December 2014

Media contacts:
David Bold – 0427 784 451
Jon Dart – 0457 646 749

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