43049a13_nd_Network_Companies_Bill_2011__4
[0] (D) Include, in the Companies Bill, a definition of an NBN corporation as a company in which NBN Co holds a controlling stake [1] Regulation (broadening the current bill). [2] Partial. NBN Co can invest and divest but any company that will be deemed as “controlled” by NBN Co is subject to the NBN obligations. Any companies in which NBN Co has a non-controlling interest would not be covered by NBN Co obligations. [3] Largely. Option D would apply to ownership scenarios in which NBN Co invests in retailers, or sells shares in its subsidiaries to other carriers or service providers. It would also cover joint ventures between NBN Co and another carrier or service provider. Under the draft NBN Companies Bill, NBN Co’s obligations only flow through to wholly-owned subsidiaries of NBN Co. Industry commented that NBN Co could sell shares in a subsidiary to another carrier, thereby allowing that subsidiary to avoid the NBN Co obligations. Option D ensures that corporations that are controlled by NBN Co are subject to NBN Co’s obligations. These are entities in which NBN Co is in a position to ensure its wider obligations can be applied. NBN Co would not be in a position to ensure its wider obligations are met by an entity it did not control. Option D provides a strong incentive to NBN Co to divest itself of any retail assets as soon as possible. Once NBN Co controlled a retail provider, if that provider continued to supply retail services NBN Co would be in breach of its obligations and subject to penalties for breach of its carrier licence conditions. A carrier is required to comply with conditions of a licence (section 68 of the Tel Act) and breach of this requirement constitutes a breach of a civil penalty provision. The pecuniary penalties for breach of civil penalty provisions are further set out in Part 31 of the TA and set a maximum pecuniary penalty on a body corporate of $10 million for each contravention. Consequently, to avoid this, NBN Co is likely to structure any acquisitions so that retail activities are ring-fenced and divested before NBN Co purchases a controlling stake [5] Industry is likely to welcome this option as it ties NBN Co more stringently to its obligations by ensuring entities that NBN Co controls are subject to NBN co’s wider objectives. Transactions that resulted in NBN Co not having a controlling interest could also be monitored by Shareholder Ministers if necessary. [4] 
Allows NBN Co to purchase retail providers to reduce the overall cost of the NBN build. Does not add to existing regulatory authorisation mechanisms and is efficient, and therefore would not add to costs for NBN Co, access seekers or end-users. Provides a strong mechanism to deliver a fundamental goal of the NBN policy and the Commonwealth’s significant investment (non-conflicted, open and equivalent access).
ParlInfo - National Broadband Network Companies Bill 2011