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NBN Co (2022)

Competitive neutrality investigation report

This investigation report was released on 29 November 2022.

The report investigates a complaint from OptiComm Limited alleging that NBN Co is not complying with its obligations under competitive neutrality policy and is benefiting from competitive advantages simply as a result of its Government ownership.

Further details can be found in the report.

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  • Contents
  • Preliminaries: Cover, Copyright and publication detail, Transmittal letter, Contents, Acknowledgements and Competitive neutrality policy
  • Overview
  • Recommendations and findings
  • 1. About the complaint
    • 1.1 Nature of the complaint
    • 1.2 About NBN Co
    • 1.3 Jurisdiction of the AGCNCO
    • 1.4 Why competitive neutrality matters
    • 1.5 Scope and conduct of the investigation
  • 2. Debt neutrality
    • 2.1 A summary of NBN Co’s debt portfolio
    • 2.2 The Australian Government $19.5 billion loan
    • 2.3 Private debt
    • 2.4 Addressing current and future debt neutrality
  • 3. Tax neutrality
    • 3.1 NBN Co’s exposure to taxes and charges
  • 4. Regulatory neutrality
    • 4.1 Part 8 of the Telecommunications Act
    • 4.2 The Regional Broadband Scheme levy
    • 4.3 The Telecommunications in New Developments policy
    • 4.4 The Telecommunications (Low-impact Facilities) Determination 2018
    • 4.5 Allocation of spectrum
  • 5. Competitive disadvantages
    • 5.1 Fixed-wireless and satellite network services
    • 5.2 Obligation to connect all premises within its fixed-line network
    • 5.3 Line-of-business restrictions
    • 5.4 ACCC-determined Points of Interconnect
    • 5.5 Requirement to prioritise regional areas
    • 5.6 Requirements for uniform national wholesale pricing and uniform national price caps
    • 5.7 Status as Infrastructure Provider of Last Resort and Statutory Infrastructure Provider
  • 6. Earning a commercial rate of return
    • 6.1 What is an appropriate commercial rate of return?
    • 6.2 Has NBN Co earned a commercial rate of return on assets? — an ex post assessment
    • 6.3 An ex ante assessment of the commerciality test and its relevance to policy solutions
    • 6.4 Reformulating the commerciality test in competitive neutrality policy
  • 7. Other competitive neutrality issues
    • 7.1 Full cost attribution
    • 7.2 Additional guidelines would assist the future implementation of competitive neutrality policy
    • 7.3 Lack of transparency about and accountability for competitive neutrality
    • 7.4 Inadequate monitoring of competitive neutrality compliance
    • 7.5 Tax deductibility of competitive neutrality payments
  • A. The cost of capital
    • A.1 Introduction
    • A.2 Building up NBN Co’s weighted average cost of capital from its components
    • A.3 Alternative views about NBN Co’s WACC
    • A.4 The relationship between the IRR and the WACC suggests a non-commercial rate of return
    • A.5 The implications of the fair value of NBN Co
    • A.6 A failure to pay debt neutrality payments affects commercial returns
  • References

Printed copies

Printed copies of this report can be purchased from Canprint Communications.

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