The Federal Government is set to sell its stake in the National Broadband Network (NBN) within five years of it being completed, according to a draft legislation.
The legislation states NBN Co is to be a wholesale only company, but it gives the communications minister significant powers of discretion.
These powers include allowing the company to offer services directly to certain end users and to purchase other communications companies, even if they have retail businesses.
"The government considers that NBN Co should not be prevented from purchasing telecommunications companies, even if they have retail businesses, if such an acquisition could support the early development and rollout plan of the NBN," the draft laws say.
This would allow it to compete directly with retail providers like Telstra and Optus.
Boosting competition
The government looks set to be committed to breaking up Telstra's retail and wholesale arms in an effort to introduce greater competition into the telecommunications sector.
A spokesman for Telstra said the company would review the legislation and give a detailed response before the March 15 deadline for public comment on the draft laws.
Communications Minister Stephen Conroy said the release of the draft laws was an important first step towards providing certainty about the NBN Co's obligations and how it would operate.
"Before we introduce the bills formally we are keen to seek further feedback from key stakeholders to ensure we get the details right," Senator Conroy said.
"We have an open mind on any amendments put forward that we believe can improve the bills."
Telecommunications analyst with Ovum, David Kennedy, said the conditions the legislation places on NBN Co look like the sorts of conditions needed to ensure it remained a wholesale-only operation.
Questions over wholesale operation
But he said there were still questions about what sort of level of wholesale operation that would be.
"There's quite a bit of discretion for the minister here and I think that just reflects the fact that operational details and the management details of NBN Co still aren't all that clear," Mr
Kennedy said.
"It's certainly true that the more information that's released the easier it is going to be ... for Telstra to make an assessment of how to protect its commercial interests in those negotiations."
The release of the draft laws was welcomed by other stakeholders with the Competitive Carriers Coalition saying it was important that the community had a chance to examine this legislation in draft form.
But the coalition's executive director, David Forman, also questioned whether the legislation went far enough in determining how NBN Co would operate.
"Competitors, for example, will want to know if the government has properly defined wholesale or if we believe there is room for improvement," Mr Forman said.
Under the draft laws, the communications minister would also be given the power to decide when the government's stake in NBN Co should be sold off.
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