Telstra fibre exempted from NBN laws

Communications Minister Stephen Conroy has granted Telstra exemptions from open wholesale-access laws governing fibre networks for the telco's South Brisbane and Velocity greenfields networks.

Legislation forcing fibre-network owners to offer open, wholesale layer-two bitstream services as NBN Co does comes into force on 12 April 2012. Any fixed networks "capable of providing carriage services where the download transmission speed is normally more than 25 megabits per second to residential or small-business users" will be affected by the legislation.

Telstra applied to have its South Brisbane and Velocity greenfields fibre networks exempted from this legislation in September last year, and Conroy has today approved these exemptions with a number of conditions.

The major condition is that Telstra's structural separation goes ahead. The undertaking for this is currently being reviewed by the Australian Competition and Consumer Commission (ACCC), with indications from the regulator that this is expected to be approved in the next couple of weeks.

If this does not go ahead, then the minister has the right to revoke this exemption.

According to an explanatory memorandum published with the announcement, Conroy decided that the networks predated the legislation, and that changes would result in "incurring significant unforeseen costs" for networks that were limited in scope. The exemption would only be for a limited time while the National Broadband Network (NBN) was rolling out.

As another condition in order to secure the exemption, Telstra will now offer a "Fibre Access Broadband Service" over these networks to access seekers on an "open and equitable basis" with ACCC oversight, according to Conroy.

"Provision of the wholesale service will support competition between service providers on these networks, and offer greater choice for end users," Conroy said in a statement.

"Importantly, the Telstra wholesale-broadband service will still be subject to the ACCC's scrutiny."

Telstra's South Brisbane Exchange was dismantled to make way for a new hospital, and the regulated copper was replaced with an unregulated fibre network. The network went live in June last year, and TPG, Internode and iiNet all currently offer products over the fibre network.

However, as the network is unregulated, the telcos are lumped with higher access charges, and Telstra will not let the telcos offer products that they already offer on ADSL2+ — such as IPTV — to the 18,000 premises in the area.

The companies involved have previously lobbied the ACCC to regulate South Brisbane, although that call was rejected by the ACCC. NBN Co has hinted that it may purchase this network from Telstra as part of the $11 billion definitive agreement with the company.

iiNet's chief regulatory officer Steve Dalby said that the announcement is a welcome first step, but he expects Telstra to game the process for its own advantage.

"Given Telstra's ham-fisted and manipulative behaviour in South Brisbane, we will be very cautious until we see the detail in any amended commercial offer following on from this exemption," he said.

"We doubt Telstra's version of 'open access' will match ours. The existing wholesale service offered in South Brisbane is not aligned with NBN service offerings, so some significant changes will need to be made."