New Home Owners Should Pay For Their NBN Connections: Report

The Vertigan panel has handed down its final report into the National Broadband Network this week, and some of the recommendations are grim. Alongside the recommendation to split up NBN Co's business units and have them compete against each other, and the suggestion of scrapping the rural broadband cross-subsidy, is a recommendation that says developers and new home builders should be made to pay the cost of fibre installations in greenfield estates. Communications Minister Malcolm Turnbull, however, has called for calm over the recommendations.

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The Vertigan review, run by its namesake and former Victorian treasury official Dr Michael Vertigan, was set up explicitly to examine the cost of the NBN versus the benefit it would bring to Australia's people and her economy. The report found that Australia would see a significant benefit from having fast broadband, deployed as a multi-technology mix (MTM). As we've previously covered, that MTM would include fibre to the home (FTTH), fibre to the premises (FTTP), satellite, fixed wireless over 4G mobile networks and an upgrade of existing HFC cable networks from Optus and Telstra.

Recommendation 6 of the Vertigan panel also details how the committee thinks NBN Co should charge for new greenfield fibre installation:

Recommendation 6: Nothing should prevent a developer from requesting any provider (whether it be NBN Co or some other provider) to supply infrastructure in, and to service, their estate. The Government should create a fair and effective market for this work by implementing the following arrangements:
a) the costs of provision of broadband telecommunications infrastructure in new developments should be borne by developers and customers through connection charges, thereby facilitating competition in the supply of these services; b) providers servicing new developments should have freedom in setting their charges for developers and connection charges for customers; NBN Co’s charges should be competitively neutral and established through its ACCC-approved broadband connection service undertaking; and c) to ensure developers meet the cost of providing telecommunications infrastructure, the Commonwealth should use Council of Australian Government processes to secure changes to State and Territory planning laws to require the provision of such infrastructure as a condition of development approval and occupancy; the Government should also further explore its ability to legislate to achieve the same outcome.

Ultimately, the recommendation to recover costs is born out of a desire by the Vertigan panel to level the competitive playing field between NBN Co and other fibre operators that have recently been feuding with the network.

Shadow Minister for Communications Jason Clare has said in a statement that homeowners should not be charged what Labor is calling an "NBN tax" on new homeowners.

Turnbull watered down the cost recovery recommendation on ABC Radio's AM program this morning, hinting that the Government and the NBN Co have a plan to spread the costs out that won't involve hitting new home builders with the full charge.

"We're not looking for full cost recovery," Turnbull specified to AM. "We're looking at other ways, without recovering costs, to level the playing field. In a dynamic, responsive way, you'd get something better for developers and home buyers."

The Vertigan panel also believes the NBN Co should operate in a fundamentally different way if it is to achieve maximum efficiency.

The recommendations are made with a view to restore balance between the private sector and the NBN Co, which could be viewed as a massive monopoly subsidised by the taxpayer. Communications Minister Malcolm Turnbull has acknowledged that fact, but said that the recommendations won't be adopted in full.

Speaking to the ABC's AM program this morning, the Minister admitted that he wishes he "wasn't starting from here" with the NBN — a sentiment echoed in the Vertigan panel's recommendations — but acknowledges that his job at the moment is to build the fast network quickly and cheaply with as little distraction as possible.

Turnbull said that he wouldn't immediately pursue a breakup of NBN Co's business so that different technology units (FTTN, satellite and wireless) could compete against each other, saying that the build phase of the project needs to be completed first.

"It's not something we will do at this time," the Minister said. "The project clearly has to be completed. What the panel has said has a lot of merit from a theoretical point of view, but I've got to get the thing done. It's a big enough challenge doing it to distract the management in terms of building separate companies — we don't need it."

Turnbull added that "there's an option in future for restructuring" NBN Co, but said that it must come down the track.

You can read the full Vertigan panel report here (PDF).

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