Rogue NBN pricing risks economy: Optus

Rogue NBN pricing risks economy: Optus

Summary: NBN Co's pricing scheme may be a "detriment to the Australian economy", unless the ACCC gets stronger powers to set pricing, according to Australia's second largest telco Optus.


NBN Co's pricing scheme may be a "detriment to the Australian economy", unless the Australian Competition and Consumer Commission gets stronger powers to set pricing, according to Australia's second largest telco Optus.

Optus' comments came in a submission to NBN Co's revised special access undertaking (SAU) to the Australian Competition and Consumer Commission, provided to ZDNet Australia today. The SAU sets out how the company will operate in the regulatory environment for the next 30 years.

Optus argued that the undertaking favours commercial negotiations between NBN Co and the retail service providers over any considerations the ACCC might have about wholesale broadband agreements the telcos sign to access services on the NBN. Optus argued that while NBN Co has proposed methods to cap the prices it charges — such as freezing wholesale product prices for five years and limiting price rises to half of the yearly consumer price index (CPI) — these methods would not be enough to prevent rises above CPI because of the discretion the SAU gives NBN Co to create wholesale broadband agreements.

Optus proposed that NBN Co should be forced to get approval for all pricing outlined in the agreements up front by the ACCC "following detailed scrutiny of all the forecast cost inputs", and these prices should be locked in based on NBN Co's long-term forecasts of its "efficient costs and revenues". Optus has argued that prices should only be allowed to change if the ACCC has examined NBN Co's case for making a change.

"If NBN Co is unwilling to voluntarily make the changes required to its SAU to lock-in ACCC oversight, then Optus submits that the ACCC should consider an alternate direct means to regulate access to the NBN," Optus said.

A failure to make this change would be a danger to the Australian economy in the long term, Optus argued.

"There is a clear risk that the SAU arrangements will enable NBN Co to operate on an inefficient cost-plus basis, and these costs will be passed on to end users, to the ultimate detriment of the Australian economy as a whole. It is therefore critical that ACCC oversight of NBN is at least as rigorous as equivalent regulatory oversight of other forms of monopoly publicly-owned infrastructure."

Topics: NBN, Broadband, Government, Government AU, Telcos, Optus


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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  • Ah good old private enterprise.

    The government does their job (as they refuse) so in return they demand minimal access costs, so that they can maximise their retail price...

  • You would expect Optus or should I say Singtel (Singapore Telecom being the parent company) to complain about pricing & drive a harder bargin, this is how business is done in Asia.
    Optus should never have been sold to a foreign company - specially when critical Australian infostructure depends upon this service.
    • fibretech, Optus has had foreign ownership since its inception. The first owners included Bell South and Cable & Wireless.
      I agree it is expected Optus would push for lower prices. That is a good thing agreed? I dont think bargining for a better price is limited to Asia. Dont we all try and get the best price for any goods or services we wish to purchase?
      I see already NBN Co is able to increase prices by the half the CPI per annum after the first 5 years.
      Knowledge Expert
  • A severe case of withdrawal symptoms, no more lucrative Telstra cherry picking and Graeme Samuel nowhere in sight.

    Life's though, so touch luck Optus or octopus as is was known in its hay days.
    Vasso Massonic
    • LOL, known as octopus by whom, VasMas?

      A few mouthy hurting TLS stakeholders from NWAT, a lovely place from yore, where a handful of bitter, poor me, greedy individuals could gather to **** complain and tell out and out lies. All encouraged by the former disgraceful Telstra management?

      Thankfully Telstra (under Thodey) and 99.9% of their stakeholders, have now seen the errs of their previous ridiculous ways and have finally moved on (except 2 - typically the two top posters from NWAT).

      You know, Telstra had it pretty easy, but in saying that I also believe those who accessed Telstra's network had it pretty easy too. I guess that's the price Telstra had to pay for accepting the $b's in profit each year, access for competitors and the endless litigation

      Funny one would think that with the NBN ridding Telstra of the above monkey on it's back, compensating for their copper and ridding them of the USO and Telstra embracing the NBN, those who call Optus octopus would finally be happy and stop the *&^%$#@ whinging? But no.

      After all this, the fact that they are lifelong conservatives means that they will never be able to embrace the NBN, unless it is firstly embraced by their masters, the Coalition.
      • Beta,
        In fairness to Vasso the term Octopus seems to be widely used in Whirlpool.
        • Thanks chapo, I gave up reading Whirlpool many moons ago.

          Being so, my apologies Vasso.
    • Vasso, I am guessing you mean Rod Sims who is the chairman of the ACCC?
      Knowledge Expert
      • Doubt,

        I did mean Graeme Samuel, the rogue regulator who set in motion the dilemma in our telecommunications. Here's the latest episode :

        NBN labelled a waste to set Labor back years

        Peter Martin

        April 5, 2012.

        "IT MAY be popular now, but Labor's $36 billion national broadband network is shaping up to be a financial disaster that will set Labor's image back decades, rebranding it the party of waste and extravagance.

        That's the view of Percy Allan, president of the Australian Institute of Public Administration and a former head of the NSW Treasury under premiers Wran, Greiner and Fahey.

        Releasing a report card on "public policy drift", he told the Herald that Kevin Rudd came to office in 2007 promising "evidence-based" decision-making, but never spelled out what the term meant.........."

        Vasso Massonic
        • Please refer above to my previous reply to you VasMas and just replace Optus octopus with rogue regulator (you did love Dr. Phil?).

          Thanks too for the typically conservative "economic" experts views.
  • only one question: how many of you have had your ISP raise prices due to CPI?
    • Timoid, at this probably no ISP is raising prices. I suspect many are seeking market share. Let's fast forward to the time when NBN implementation is complete. The ISPs will only have one wholesaler (NBN) who will have no pressure to reduce expenses or increase efficiency. They will be able to increase the wholesale price over time, the ISPs will have little choice other than pass this cost to the public.
      Knowledge Expert