Simplification removes NBN price hike clause

The National Broadband Network Company (NBN Co) will no longer ask to be able to increase prices by consumer price index plus 5 per cent as part of a simplification process of its special access undertaking (SAU), CEO Mike Quigley has confirmed.

The National Broadband Network Company (NBN Co) will no longer ask to be able to increase prices by consumer price index plus 5 per cent as part of a simplification process of its special access undertaking (SAU), CEO Mike Quigley has confirmed.

The clause in NBN Co's SAU submitted to the Australian Competition and Consumer Commission (ACCC) in July had drawn criticism from Shadow Communications Minister Malcolm Turnbull, who claimed it would allow the government-owned company to increase prices for services above the basic 12 megabits per second package on the NBN by consumer price index (CPI) plus 5 per cent.

Quigley had indicated in Senate Estimates last week that the company intended to scrap this clause. On ABC's Inside Business yesterday, the chief executive confirmed that this "minor" clause had been removed.

"I can also tell you that the CPI plus 5 per cent has been withdrawn. It's not something we wish to proceed with," he said. "I have gone through an exercise now over the last couple of weeks of trying to simplify the special access undertaking, which my view is it was getting just too complex, and as part of that simplification, I have advised the ACCC that we won't want to proceed with the CPI plus 5 per cent. We'll be withdrawing that clause."

Quigley said it was never the intention of NBN Co to increase prices, and pointed to the corporate plan which indicates that prices on the NBN would go down over time.

"We gave a range of scenarios in our corporate plan, the most common of which in fact was keeping nominal prices flat, which means in real terms, prices would go down. And if usage in fact increased then we would expect to even decrease prices in real terms," he said.

The chief executive said he had not discussed alternate roll-out plans with Turnbull and although the government ultimately intends to privatise NBN Co, Quigley said that if the future government attempted to pick apart the NBN and sell off profitable parts of the network in the next two or three years, it would ultimately need to subsidise rural services in order to keep "good services" in those areas.

"This network is being built as a public good. It's not being built to maximise profit. The way in which we've approached the network design and the network build is to provide the Australian public with the best possible utility network we can at the lowest cost as a public good. It's not to maximise profits, which is why no commercial entity would ever build this network," he said.

Following the Telstra shareholder vote in favour of the $11 billion deal to retire its copper network, to lease ducts and dark fibre to NBN Co and migrate customers onto the new fibre network, the ACCC is the next biggest hurdle for the roll-out of the NBN. The competition regulator must accept the SAU and Telstra's structural separation undertaking. The ACCC indicated in Senate Estimates hearings last week that it was not facing any pressure from government to speed up its assessment of the undertaking, and said it was up to Telstra at this point to resubmit a modified undertaking.

Today NBN Co will appear in front of the joint parliamentary committee on the NBN headed by Independent MP Rob Oakeshott. Oakeshott has indicated that the committee hearings in Sydney over the next two days will focus on the $11 billion Telstra deal.

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