Govt urges telcos to team up against NBN Co

The Department of Broadband, Communications and the Digital Economy has urged Telstra and the other telcos to join forces in their access negotiations with NBN Co.

NBN Co's special access undertaking (SAU), submitted to the Australian Competition and Consumer Commission (ACCC) late last year, sets out the pricing and regulatory framework on which the National Broadband Network (NBN) will operate for the next 30 years. The SAU gives the ACCC the powers to intervene in disputes between access seekers and NBN Co over pricing and non-pricing conditions on the network.

The document is designed to work hand in hand with the wholesale-broadband agreement (WBA), which sets out arrangements between NBN Co and access seekers over a shorter period of time; at this point, one year.

Telcos, such as Internode, Vodafone and Telstra, have said that these agreements need to be signed in order for them to continue providing services and signing up new customers on the NBN, and they are therefore compelled to sign WBAs that have limited oversight from the ACCC. The telcos argue that the watchdog should be able to intervene if there is a dispute between a service provider and NBN Co over the WBA, and that this power should be given to the ACCC in the SAU.

But speaking in Budget Estimates last night, Department of Broadband, Communications and the Digital Economy secretary Peter Harris said that the SAU and the WBA are designed to get the regulator out of the negotiations for the benefit of the telcos.

"We can move away from 'the regulator settles everything' to 'the industry is capable of negotiating', and NBN Co is capable of listening and responding to that negotiation in the manner expected of a neutral wholesale provider who has no reason to discriminate between the providers," he said.

He said that the benefit of structurally separating Telstra is that it will now be on the same side as the other telcos in negotiating with NBN Co.

"One of the factors [is that] Telstra has just swapped sides. So it's a very big change. The industry is no longer split in its negotiations. This is actually going to be Telstra plus the rest of the industry negotiating with NBN Co. You should be able to expect that the incentives have shifted significantly enough to possibly allow a mature negotiating strategy to develop over time."

Harris rejected suggestions from Liberal Senator Simon Birmingham that it would be unfair for the smaller telcos, because there would be two elephants — NBN Co and Telstra — negotiating with the mice — the rest of the industry.

"If NBN Co has very, very limited ability to discriminate, it can't actually negotiate a deal with the elephant that it can't offer to the mice," he said. "Logically, when it comes to dealing with NBN Co, the industry will have the ability, because of non-discrimination to settle issues among themselves if it chooses."

NBN Co's head of product development and industry relations Jim Hassell told the hearing that NBN Co is currently consulting with the industry, and amending to improve the SAU and the WBA, with the intention of having both finalised by November this year.

Although the telcos have been critical that the SAU's 30-year timeframe is too long for such an undertaking, Harris said it is necessary if NBN Co is to get private funding down the track.

"If NBN Co is to raise the debt, it will need to be able to provider surety to the people who provide the debt on the likelihood of return, which means you do need a pricing agreement structured to provide that level of certainty."