As foreshadowed in the September Telecommunications Regulatory Update, on 15 October 2014 the Government released a draft carrier licence condition relating to next generation broadband networks supplying high-speed carriage services to residential customers.

The new licence condition would require owners of high-speed networks servicing residential customers to functionally separate their wholesale and retail operations, and to provide access to competing service providers on the same non-discriminatory terms as those provided to their own retail operations. The carrier's wholesale company would also need to supply a Layer 2 Wholesale Service to other carriers and service providers, at a wholesale price of $27 per month.

The new carrier licence would support Part 7 and 8 of theTelecommunication Act 1997 (Cth) (which require certain superfast broadband networks to be wholesale-only, with operators offering a layer 2 bitstream service on an open-access and non-discriminatory basis) in the promotion of competition and is intended to allow NBN Co to compete with other comparable networks. The proposed condition is in response to the concern that any rollout by a carrier of vectored VDSL2 re-opens the competition concerns that the NBN and the structural separation of Telstra were intended to address.

The licence condition would remain in place for two years from 1 January 2015, while the Government considers long term arrangements.

Carriers and other interested parties are invited to provide submissions on the draft carrier licence condition by 14 November 2014.

The media release and draft condition can be found here.