ACCC asks NBN Co to rethink undertaking again

The Australian Competition and Consumer Commission has asked NBN Co to make additional changes to the document that outlines how the company will operate for the next 30 years.
Written by Josh Taylor, Contributor

The long-awaited draft decision from the Australian Competition and Consumer Commission (ACCC) on NBN Co's Special Access Undertaking (SAU) has outlined a number of changes to give the ACCC better oversight into how NBN Co prices its products over the next 30 years.

The SAU sets out the pricing and regulatory framework for the operation of the National Broadband Network (NBN) for the next 30 years, 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 and 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 today again asked NBN Co (PDF) to make a number of changes to the document, in response to concerns from internet service providers (ISPs) about the lack of oversight of the agreements entered into with NBN Co, and the ability for NBN Co to withdraw products and create new ones.

The ACCC said that the product withdrawal divisions diminish the prospect that the price caps in place would incentivise NBN Co to invest and operate efficiently, and the document creates uncertainty over whether the ACCC can intervene and declare prices, terms, and conditions.

The regulator has suggested that NBN Co change its SAU to ensure that it must comply with determinations from the ACCC, and include the ability for the ACCC to periodically review NBN Co's price structures and price levels. The watchdog should also be given a say in when NBN Co wishes to withdraw product offerings, and be able to declare services on the NBN.

ACCC chairman Rod Sims did praise the modular design of the SAU, which allows certain parts to be locked in for shorter periods of time, allowing for greater flexibility on the scope of the overall document. He also said that the current wholesale prices set by NBN Co would allow for a smooth transition for customers over from the current copper network to the NBN.

"Despite these features, however, the ACCC's preliminary view is that it is not satisfied that the SAU meets the relevant criteria for acceptance," Sims said.

"The SAU is a complex undertaking that NBN Co proposes will operate until 2040. It is therefore important that the rights or obligations the SAU imposes on NBN Co, access seekers, and the ACCC are reasonable, in the long-term interests of end users, and clearly expressed so that they are well understood by all parties."

Sims said that if NBN Co accepts the variations proposed by the ACCC, it would provide certainty to NBN Co in being able to recover its costs, and would also ensure competition on the NBN.

The ACCC has called for feedback on the proposed changes, and it will then issue a formal notice for NBN Co to make those changes in May. After obtaining a three-month extension, the final deadline for the ACCC to either accept or reject the SAU is now July 19, 2013, but the ACCC couldn't say when it will make its final decision.

"It is not possible to give a definitive date by which the ACCC will make its final decision on the SAU. However, the ACCC intends to make its decision as soon as it is practicable to do so," the commission said.

In a statement, NBN Co said it was committed to working with the ACCC to finalise the SAU as soon as possible.

The announcemend was welcomed by Communications Minister Stephen Conroy.

"I encourage NBN Co and access seekers to engage constructively in the coming weeks to finalise the SAU," Conroy said in a statement.

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