NBN special access undertaking variation rejected by regulator

The Australian Competition and Consumer Commission (ACCC) has made a draft decision to reject the National Broadband Network (NBN) company's proposed variation to its regulatory documents, saying one of the amendments may provide the company with too broad a power, causing uncertainty over whether it is reasonable and protects users.

Through its amendment to the Special Access Undertaking (SAU) -- a document originally submitted to the ACCC in 2013 that governs the pricing and regulatory terms facing the NBN until 2040 -- NBN was looking to have its multi-technology mix (MTM) taken into account.

The MTM, adopted by the Coalition after being elected at the end of 2013, involves a mix of technologies including fibre to the premises (FttP), fibre to the node (FttN), fibre to the basement (FttB), fibre to the distribution point (FttDP), and hybrid fibre-coaxial (HFC); the former SAU took into account only FttP, satellite, and fixed-wireless services.

NBN had applied to have the pricing, rollout information, service descriptions, and co-existence and remediation categories updated or added to reflect this change in network technologies.

However, while the ACCC found many of the changes to be "appropriate", it said it remains unconvinced on the last category.

"The ACCC's view is to reject the SAU variation on the basis that a limited number of proposed changes to specific non-price terms and conditions do not meet the legislative criteria for assessing the variation," the ACCC said in its Variation to NBN Co Special Access Undertaking: Draft decision [PDF], adding that this could be fixed with "minor amendments".

Co-existence and remediation provisions would allow NBN to provide FttN and FttB services at lower data rates for nodes where NBN services are provided simultaneously with exchange-fed legacy services or where legacy lines require remediation, respectively.

"The proposed co-existence provision would allow NBN Co to apply a power back-off to its downstream services to accommodate the simultaneous supply of services during the co-existence period," the ACCC explained.

"The remediation provision would allow NBN Co to conduct remediation to the acquired copper network if the line is not able to meet the Peak Information Rate (PIR) objective. In both cases, NBN Co would be allowed to supply services at lower data rates than otherwise provided for by the SAU."

The regulator said it remains unsatisfied that the co-existence and remediation provisions would be reasonable and promote the long-term interests of end users out to 2040, especially given the absence of information commitments to both access seekers and consumers about services subject to these provisions would lead to reduced information on what data rates could be expected across them.

The ACCC is also concerned about granting too broad a power to NBN over the circumstances and period of time for which the co-existence and remediation provisions would apply.

"The ACCC is concerned that the proposed provisions are likely to give NBN Co broad discretion over the circumstances in which an FttN or FttB node is placed into the co-existence period or when a line is placed into remediation and the period for which these provisions would apply," the ACCC said.

"Although NBN Co is likely to initially have strong incentives to end the co-existence period and remediate copper lines in a timely manner in order to increase uptake of higher-value services and promote increased traffic on the NBN, the ACCC recognises that NBN Co's incentives are likely to change over time, and it may not face the same incentives later in the SAU period."

The ACCC said that overall, it agrees the new network technologies should be added to the SAU -- but as it does not have the power to amend a variation, it can only reject it in its entirety.

"While the ACCC agrees with the overall approach that NBN Co has taken to incorporate the additional technologies into the SAU, it has concerns about some of the specific terms and conditions that NBN Co proposes to vary," ACCC chairman Rod Sims said.

"As the ACCC can only accept or reject an SAU variation, our concerns mean that our draft decision is to reject the variation. However, we have provided clear guidance in the draft decision on how NBN Co can address these concerns and introduce these new technologies into the SAU."

The ACCC is also inviting submissions on NBN's proposed changes on its service descriptions, pricing terms, and the provision of "timely and granular" network rollout information, as well as to any modifications that could be made to the co-existence and remediation provisions.

Submissions are open until April 21, with a final decision due midyear.

The ACCC published NBN's proposed variations at the end of May, when the broadband company said it already offers FttN, FttB, and HFC technologies in an SAU-consistent manner, with the SAU variation to simply formalise the process. The regulator then released a consultation paper in July.

In its submission to the ACCC in November last year, NBN recommended that the ACCC should accept the SAU variation to take into account revenue and expenditure for its other network technologies.

"None of the changes which NBN proposes alter the underlying regulatory principles, structure, and incentives embedded in the SAU, which the ACCC has previously accepted as being reasonable, including being in the long-term interests of end users," NBN said last year.

"NBN's changes are limited in scope and mechanical in nature; they represent an incremental change to reflect current policy settings.

"Fundamentally, the change to the MTM model does not change the underlying regulatory principles, structure, or incentives embedded in the SAU, and they apply equally to the MTM as they do currently to the services and products under the SAU."