NBN Co fires back at SAU critics

NBN Co fires back at SAU critics

Summary: NBN Co has fired back at suggestions from Telstra and other telcos that it will introduce new products at high prices solely for the purpose of recouping the cost of building the National Broadband Network (NBN) under its special access undertaking (SAU).

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NBN Co has fired back at suggestions from Telstra and other telcos that it will introduce new products at high prices solely for the purpose of recouping the cost of building the National Broadband Network (NBN) under its special access undertaking (SAU).

The debate between NBN Co and its access seekers has raged on in submissions to the Australian Competition and Consumer Commission's (ACCC) discussion paper on NBN Co's SAU, which sets out how the company will operate in the regulatory environment for the next 30 years.

On 10 February, the ACCC released a supplementary consultation paper outlining concerns that telcos have in regards to regulatory oversight and pricing controls for the NBN contained in the SAU.

The current version of the SAU restricts NBN Co from raising prices on the services it offers by any more than half of the yearly consumer price index (CPI) rate. In its submission, Telstra questioned whether this control would give NBN Co the power to increase the price of the products, even if the cost of offering those packages did not go up. In addition, Telstra said that NBN Co has the power to introduce new products that fall outside of the scope of the SAU, meaning that NBN Co could set whatever prices it wants for these products.

In response, NBN Co said that any new products will be constrained by the "anchoring" effect of its existing products, and added that if a product isn't covered by the wholesale-broadband agreement that NBN Co signs with the telcos, then the ACCC can intervene to resolve disputes over the price of the new product.

In regards to the relation between costs and prices, NBN Co also said that it "has had to strike a balance across a range of competing priorities in setting its pricing strategy". It said that trying to recover the cost of a product within that product would affect its flexibility to ensure broad uptake, affordability of services and uniform national wholesale prices.

One of the major criticisms from Optus and Macquarie Telecom is that the SAU was written in a way that would prevent the ACCC from having oversight of the role that the agreement plays in the products and services offered to access seekers.

"It is concerning that the SAU seeks to place restrictions and limitations on the ACCC's powers to regulate access to the NBN. Such an outcome is likely to compromise the ability for the ACCC to regulate access to the NBN in a manner that is consistent with the long-term interests of consumers," Optus said in its submission.

According to NBN Co, the SAU "does quite the opposite", as the powers given to the ACCC in the SAU are in addition to the existing powers that the ACCC already has. NBN Co said that the ACCC would also be able to review NBN products every five years if NBN Co is sold.

Submissions on the latest paper are due by the end of March. The ACCC has until May to accept or reject the SAU, but the ACCC can extend this review by another three months.

Topics: NBN, Broadband, Telcos, Optus, Telstra

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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4 comments
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  • "In its submission, Telstra questioned whether this control would give NBN Co the power to increase the price of the products, even if the cost of offering those packages did not go up."

    Thats pretty rich coming from a Telco who has been overcharging for decades....
    rtfmoz
    • Indeed, NBNCo need to be on the ball, as Im sure Telstra know all the tricks in the book (and then some) from previously having pretty well been in NBNCo's shoes.

      Now they just do everything they used to, but in reverse.
      Beta-9f71a
    • Telstra has overcharged it's customers in order to recoup the losses due to wholesaling at prices lower than they require to maintain the network. You want a functional network, you must maintain it. Cables age under the ground or go faulty and must be replaced. Doing this, dependent on the size of the cable can be a large undertaking in both material and manpower. It all costs.
      figjam12
  • NBN Co has fired back at suggestions from Telstra and other telcos.
    Manasy