Australian government rules out NBN Co shake-up for now, despite Vertigan recommendations

2 Oct 2014

With the cost benefit analysis led by Dr Michael Vertigan into the National Broadband Network (NBN) project having now been completed, Australia’s federal government has reportedly rejected recommendations from the panel to sell off parts of the NBN and open it to competition. According to the Sydney Morning Herald, the state has claimed that following the suggestions of the panel would mean a severe financial burden on the budget and taxpayers.

In the Vertigan panel’s final report, which was released yesterday, it called on the government to radically transform the NBN for the long term interests of end users. Among the recommendations, it was claimed that NBN Co, the company overseeing the NBN project, should be split into separate entities based on the various technologies being used for the network rollout, with the resulting companies to compete against each other. Further, it was proposed that existing legislation which prevents alternative operators from openly competing with the NBN should be nixed. ‘Relying on NBN Co as an integrated entity to be the principal means of delivering [broadband] services is deeply problematic,’ the Vertigan report was cited as saying, adding that that company’s current mutli-technology rollout model ‘results in unacceptable risks to, and costs on, taxpayers and consumers.’

While communications minister Malcom Turnbull said the government would consider the matter after consulting with industry stakeholders, in a statement that accompanied the report he was said to have rejected the immediate introduction of Vertigan’s biggest changes as being too expensive for taxpayers and the budget. ‘Large losses for taxpayers and the budget … would result from implementation of several of the panel’s recommendations regarding the NBN,’ the state noted in its initial response to the panel’s report, adding: ‘While the [break up] of NBN Co’s business units (as the panel reccomends) after the network is complete cannot be ruled out, now is not the time … Breaking up NBN Co would distract its management and delay the provision of high-speed broadband to all Australians.’

Australia, NBN Co