Rogue NBN pricing risks economy: Optus

Summary:NBN Co's pricing scheme may be a "detriment to the Australian economy", unless the ACCC gets stronger powers to set pricing, according to Australia's second largest telco Optus.

NBN Co's pricing scheme may be a "detriment to the Australian economy", unless the Australian Competition and Consumer Commission gets stronger powers to set pricing, according to Australia's second largest telco Optus.

Optus' comments came in a submission to NBN Co's revised special access undertaking (SAU) to the Australian Competition and Consumer Commission, provided to ZDNet Australia today. The SAU sets out how the company will operate in the regulatory environment for the next 30 years.

Optus argued that the undertaking favours commercial negotiations between NBN Co and the retail service providers over any considerations the ACCC might have about wholesale broadband agreements the telcos sign to access services on the NBN. Optus argued that while NBN Co has proposed methods to cap the prices it charges — such as freezing wholesale product prices for five years and limiting price rises to half of the yearly consumer price index (CPI) — these methods would not be enough to prevent rises above CPI because of the discretion the SAU gives NBN Co to create wholesale broadband agreements.

Optus proposed that NBN Co should be forced to get approval for all pricing outlined in the agreements up front by the ACCC "following detailed scrutiny of all the forecast cost inputs", and these prices should be locked in based on NBN Co's long-term forecasts of its "efficient costs and revenues". Optus has argued that prices should only be allowed to change if the ACCC has examined NBN Co's case for making a change.

"If NBN Co is unwilling to voluntarily make the changes required to its SAU to lock-in ACCC oversight, then Optus submits that the ACCC should consider an alternate direct means to regulate access to the NBN," Optus said.

A failure to make this change would be a danger to the Australian economy in the long term, Optus argued.

"There is a clear risk that the SAU arrangements will enable NBN Co to operate on an inefficient cost-plus basis, and these costs will be passed on to end users, to the ultimate detriment of the Australian economy as a whole. It is therefore critical that ACCC oversight of NBN is at least as rigorous as equivalent regulatory oversight of other forms of monopoly publicly-owned infrastructure."

Topics: NBN, Broadband, Government, Government : AU, Optus, Telcos

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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