Up until recently, superfast fixed line broadband networks serving residential customers had to operate on a structurally separated basis – which means a strict separation between wholesale and retail arms of the business. Recent amendments to the Telecommunications Act allow networks to functionally separate, which is a less costly way of achieving similar outcomes. The ACCC role is:

  • to develop an optional standard functional separation undertaking for networks, as an alternative to networks developing their own;

  • to make determinations exempting small network operators from separating wholesale and retail parts of their business.

The ACCC’s consultation is about proposed requirements for functional separation, and criteria for granting exemptions.

ACCAN supports the nature of the proposed functional separation provisions and recommends using one undertaking to apply to all classes of corporation.

However, ACCAN recommends caution when granting exemptions to small network operators from the requirement to operate on a wholesale-only basis. We believe that the decision to grant exemptions should be assessed on a case by case basis, as the consumer outcomes of the exemption will vary depending on the location and the level of competition in an area.

In some instances, the exemption may encourage investment and create competition which is welcomed. However, we have concerns regarding exemptions which encourage small network operators into areas where they will have a monopoly, as small networks are not covered by price regulation.

In order to support retail level competition, ACCAN considers it important that non-discrimination compliance reporting be carried out for network operators who are exempt from supplying wholesale-only, as well as those which operate on a functionally separated basis.

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