More delays for NBN Co's pricing and service structure

More delays for NBN Co's pricing and service structure

Summary: The ACCC has again delayed making a decision on whether to accept or reject NBN Co's special access undertaking.

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The Australian Competition and Consumer Commission (ACCC) will first consult with the industry about proposed changes to NBN Co's special access undertaking (SAU) before making a final decision on whether to accept or reject the document.

The SAU sets out the pricing and regulatory framework for the operation of the National Broadband Network (NBN) until 2040, and is designed to work hand in hand with the wholesale-broadband agreement (WBA). The WBA sets out arrangements between NBN Co and access seekers over a shorter period of time; at this point, one year.

NBN Co has submitted the document to the ACCC twice so far. The latest document was put in to the authority in September, and included a five-year freeze on prices for the current set of wholesale products. It also limited NBN Co's ability to raise the prices after that to 1.5 percent less than the rate of annual inflation.

The ACCC has largely agreed to the current document, but has suggested a few slight variations to ensure that the regulator has better oversight over the products on offer and the agreements between NBN Co and internet service providers (ISPs). In a lengthy submission to the ACCC earlier this month, NBN Co supported most of the proposed changes, and outlined draft amendments to the SAU that the company believed would achieve those changes.

The telcos then accused NBN Co of trying to push out the decision from the ACCC by compiling such a large document.

The ACCC today said that it will hold a final round of consultations with the industry before it issues a formal notice to NBN Co to vary the undertaking. NBN Co can decide whether to make those variations.

If NBN Co makes the changes, then the ACCC will go to further consultation. As a result, the ACCC has delayed making a decision on the SAU indefinitely, but will accept submissions on the draft notice sent to NBN Co until July 26.

The announcement of further consultation has been welcomed by Optus' vice president of corporate and regulatory affairs, David Epstein, who said that Optus would like to see more effective independent regulatory oversight of the SAU by the ACCC, and clearer commitments from NBN Co around supply and access terms.

"While NBN Co has committed to reducing prices in the context of its Corporate Plan, there is no obligation in the current SAU for this to be enforced and the SAU provides the latitude for prices to increase," he said.

"Under the current price-control mechanism, the average cost of using the Basic Access service would be allowed to increase by 32 percent in the real price over the next 10 years. This compares to broadband internet prices decreasing by 18 percent in real terms over the last five years."

Topics: NBN, Fiber, Networking, Australia

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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12 comments
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  • How is this possible?

    If the price increases are limited to 1.5% below inflation, how can "increase by 32 percent in the real price over the next 10 years" be possible? Real price I assume is the same as the "18 percent in real terms over the last five years". Because at 1.5% below inflation NBNCo price would decrease by 1.5% per annum at worst, giving a worst case a real terms drop of 7.2% over 5 years and 14% over 10 years.
    Pilfer-52cec
    • I suspect a typo; "retail" not "real"

      But the point is clear; rising nominal prices under a govt monopoly, real prices failing in competitive markets. Who would have thought it;?-)
      Richard Flude
      • Who would aginst all evidence?

        But a Liberal fluffer like yourself.
        Pilfer-52cec
        • Strange, the evidence was presented in the article

          But then...
          Richard Flude
          • Evidence?

            A vested interest say that prices will rise 32% is now evidence?
            So, let me see, wholesale prices drop in real terms. You then claim typo, they mean retail. Now, doesn't that mean if he is predicting a 32% rise in retail prices, that increase isn't due to wholesale pricing, but would in fact be applicable to ADSL2, FTTN, every broadband? I guess we will never know why he "claimed" 32%, because he presented no "evidence" for his claim.
            Pilfer-52cec
  • I guess forcing NBN Co to

    price increases lower than inflation forces the company to seek savings from its expense base, bad news for employees.
    Knowledge Expert
  • More on "obsolete" copper

    "The technology is not yet standardised, but Alcatel Lucent said it was a natural evolution of today's VDSL2 copper broadband service, and could be used to provide fibre to the premises (FTTP)-like performance from distribution nodes."
    http://mobile.itnews.com.au/Article.aspx?CIID=348820&type=News

    1gbps in lab conditions, however continues to show progress on copper. Unsurpising to many, exposes some claims though.
    Richard Flude
    • Not surprising at all

      I am sure they can whip and beat the copper to get more bandwidth, shorter runs, costlier solutions. Or you could just put in fibre now and save a heap on trying to flog a dead horse.
      Pilfer-52cec
      • Save heaps

        How's the fibre rollout going;-)
        Richard Flude
        • Badly

          What's your point? How the rollout is going and what technology is required are two different things. Rollout being slow doesn't make Abbott less of a tool either.
          Pilfer-52cec
    • More on "obsolete" copper

      "Speeds achieved were 1.1Gbps over 70 metres and 800Mbps over 100 metres"

      Yeah, that'll work....and we'll only need nodes every 140-200 metres!!!
      Tinman_au
  • Copper 1gb in lab

    Fibre already does 100gb in lab and starting 40gb in real life so no competition
    1gb in lab over how many meters 50?
    Only 6 houses around exchange can get it -:)
    SierraMan