NBN Co reduces telco contracts to 1 year

NBN Co reduces telco contracts to 1 year

Summary: The National Broadband Network Company (NBN Co) will cut its contracts with retail service providers from five years to one year following criticism from the Australian Competition and Consumer Commission (ACCC).

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The National Broadband Network Company (NBN Co) will cut its contracts with retail service providers (RSPs) from five years to one year following criticism from the Australian Competition and Consumer Commission (ACCC).

In what will be the fifth version of the proposed agreement between NBN Co and access seekers over the services that NBN Co will provide, the company has said that it will cut down the length of its wholesale contracts, citing feedback from telcos that were unhappy with being locked into the agreement for five years.

"NBN Co decided to move to a one-year [wholesale broadband agreement] based on feedback we had from access seekers. During our rounds of engagement, it became clear that some were not comfortable executing long-term supply agreements while aspects of our business are still being developed, and until such time as the ACCC has accepted a Special Access Undertaking (SAU)," NBN Co told ZDNet Australia.

The move comes after the ACCC's group general manager for communications Michael Cosgrave last week told a parliamentary committee on the NBN that the commission was concerned about the length of the contracts.

This change may not be permanent, however, with NBN Co indicating that it would look to having longer agreements in the future.

"Moving to a 12-month agreement allows us to continue to engage with our customers and develop the longer-term agreement, as well as continue work on things like the operations manual, which is a component of the WBA that will be developed as our systems and processes continue to develop."

In order for commercial services to operate on the NBN today, telcos such as Telstra, Optus, iiNet and Internode have all signed interim agreements with NBN Co. These had been extended to November, but NBN Co said today that these would now be extended until January to allow the wholesale broadband agreement to be finalised.

It is expected that NBN Co and the ACCC will have this completed by the end of 2011. NBN Co has already moved to "simplify" parts of the special access undertaking, by removing the controversial clause that would have allowed NBN Co to increase prices on all but the basic service on the NBN by CPI plus five per cent every year.

Although iiNet, Internode and Exetel have all published their commercial pricing on the basis of these interim arrangements, Optus director of corporate and government affairs Maha Krishnapillai said that Optus would not publish its pricing until the agreement was finalised.

Topics: NBN, Broadband, Government, Government AU

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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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