Communications Minister Paul Fletcher has ruled out any chance of Telstra buying the National Broadband Network and nixed hopes of a cut to wholesale prices to ease pressure on the listed telco's profits.
Telstra has been battling falling profits amid fierce competition in both the mobile and fixed line markets. As part of a broader turnaround effort, it last year created a division called InfraCo, which houses the infrastructure it leases to the NBN including pits and ducts.
The move positioned Telstra to strike a significant deal with the taxpayer-funded network, or even acquire it. Telstra chairman John Mullen said at the time it would provide the government a possible "solution" should it choose to privatise the NBN Co once the rollout was finished.
But the plan has now been dealt a blow with Mr Fletcher saying the policy structure of the NBN Co meant a business like Telstra would not be able to own the wholesale network.
"A clear feature of the policy structure is that NBN cannot be owned by a vertically integrated telco. In other words, somebody who delivers retail telecommunications services cannot own NBN. That's baked into the legislation," Mr Fletcher said, adding the rules were there for "good public policy reasons".
"I don't see any scenario"
He said the government needed to ensure the owner of a wholesale network did not also supply retail services.
"I don't see any scenario in which the very clear legislative restriction on the NBN being owned by a company which is also a retailer of telecommunications services is changed. I don't see any prospect of that restriction being changed."
The managing director of telco and digital consultancy Venture Insights, Nigel Pugh, said he was "surprised the Minister made that comment" as there were several steps to be followed in order to sell the NBN, including a Productivity Commission review.
While the network rollout will complete next year, in my judgment we're still quite some way away from looking at any change to ownership.Paul Fletcher
While the legislation does limit retail service providers, he said InfraCo would not necessarily fall into this category.
"As a combined company it might not be allowed but as a separate standalone business it might work," he said. "Why should there be [any] concern if InfraCo is a completely separate company?"
Mr Fletcher, a former Optus executive, moved to cool suggestions the NBN could be quickly sold by the government when the rollout of the $51 billion network is completed next year.
"While the network rollout will complete next year, in my judgment we're still quite some way away from looking at any change to ownership," he said.
Mr Fletcher, also poured cold water on Telstra chief executive Andy Penn's hopes for a reduction to the prices the NBN Co charges retail service providers.
Mr Penn said in February that a Labor government, which had been widely expected to win the Federal Election, may bring a "more sensible" approach to NBN pricing and help relieve pressure on profit margins. Telstra and other telcos have complained it is difficult to make a profit reselling the NBN.
"I believe that there is an opportunity with a change of government to try and see if we can get some policy change on the economics of NBN and ultimately give the opportunity for a more sensible pricing regime," Mr Penn said at the time.
The comments were met with scepticism from rival network bosses and renewed analyst speculation about whether the government would need to writedown its investment in the network if lower prices were charged.
But Mr Fletcher vowed to leave pricing decisions up to the taxpayer-funded network's executives.
"What I think is the sensible approach is for the board and management of NBN Co to make pricing decisions having regard to, first of all, the regulatory requirements on them, which are designed to ensure that they don't misuse monopoly power," Mr Fletcher said.
"If you're building out a monopoly fixed line broadband network ... you need to make sure there's a regulatory framework which controls the pricing that can be set, and indeed there is. So the first thing they need to do is comply with those regulatory requirements," he said.
Ensuring the business was sustainable and keeping a close eye on the take-up of broadband services were the main considerations of the NBN Co when deciding on pricing, he said. The NBN is currently reviewing its prices with a focus on attracting households which have chosen not to connect.
Telstra declined to comment.
- SMH/The Age