Competition watchdog the ACCC has rejected a draft proposal by the Optus-led G9 consortium on building Australia's fibre-to-the-node network, despite giving the plan a cautious thumbs-up.
The draft proposal, lodged in April this year by the G9 consortium, saw it propose the creation of an open access fibre-to-the-node (FTTN) network to be run by a separate company it created, named FANOC.
The proposed system would see FANOC offering wholesale broadband and voice telephony services over the FTTN network, without itself participating in any retail activities.
While the ACCC noted it has no technological favouritism, it says it is satisfied with the pricing structure and the "vertically separated" approach used by the G9.
"The ACCC also considers that a vertically separated ownership model could reduce incentives for the access provider to discriminate between downstream users of the access service and, therefore, facilitate strong and effective competition between access seekers in retail markets. Where such an ownership model is in place, the ACCC considers the need for regulatory oversight of non-price terms and conditions of access, in particular, could be relatively low," the ACCC said in the document responding to the draft.
The SAU (Special Access Undertaking) projected monthly pricing for FANOC is in the range of AU$25 for voice-only services and AU$29 to AU$50 for various voice and broadband packages.
"The ACCC is generally comfortable with FANOC's proposed long-term approach to pricing, which would provide a high degree of regulatory certainty for significant new investments, and notes the initial prices for the first three-year access period may be in the appropriate range," the draft decision says.
However, the decision voices concerns that G9 may have too much freedom to set access prices during the last 12 years the SAU covers, without sufficient regulatory constraints; as well as having too much discretion to change the product line-up or non-price access conditions.
As a result, the document has been rejected by the ACCC and the G9 group is now expected to rewrite the document to make it more amenable to the regulator.
Despite the rejection, members of the G9 consortium, which includes ISPs such as Optus, Internode, iiNet, Primus and AAPT, welcomed the ACCC's comments.
"We always knew that obtaining regulatory approval would be a process involving a number of steps over many months," iiNet chief executive Michael Malone said in a statement. "Today's decision by the ACCC is an important milestone in that process. We now have a clear direction in which to proceed as we work to resolve the ACCC's remaining issue."