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ACCC gives draft approval for Optus, NBN HFC deal

The Australian consumer watchdog has given draft approval for Optus' HFC migration and transition deal with NBN.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has granted draft approval for a revised agreement covering the transition of Optus' hybrid fibre-coaxial (HFC) customers onto the fixed-line National Broadband Network (NBN), and the progressive integration of parts of the telco's network with the NBN.

In Thursday's draft decision, the consumer watchdog said that the revised agreement would bring advantages to the public, with very few perceivable drawbacks.

"The ACCC acknowledges the revised arrangements form part of a broader proposal for NBN Co to acquire Optus' HFC network assets, and that utilising existing HFC infrastructure in rolling out the NBN is likely to generate cost savings," ACCC chairman Rod Sims said.

The ACCC also said that the agreement would allow for more choice between broadband products and service providers, and would increase the efficiency while decreasing the disruption of customer migration onto the NBN.

"Optus would cease to be a network competitor to NBN Co in any event and so little, if any, additional public detriment is generated by the revised arrangements," the ACCC concluded.

NBN welcomed the draft decision, agreeing that it will ensure the easy and efficient transition of customers to the NBN.

"Today's decision is yet another significant step that enables NBN to deliver better broadband to every Australian as soon possible and at the least possible cost," NBN CEO Bill Morrow said.

"The agreement between NBN and Optus delivers clear benefits to families and businesses. We are pleased to see that the initial view of the ACCC is the same."

The original deal between NBN and Optus was approved by the ACCC in 2012. Optus and NBN entered into a revised AU$800 million deal in December last year, allowing NBN to take ownership of Optus' HFC network. The modified agreement came as a result of the Coalition government's decision to move away from a full fibre-to-the-premises rollout to the present so-called multi-technology mix (MTM) network incorporating fibre to the node, fibre to the building, and HFC.

An estimated 3.27 million premises could be serviced by the HFC networks being taken over from Telstra and Optus, with customers beginning to be connected from March 2016.

Last month, the ACCC approved Telstra's customer migration plan, seven months after Telstra and NBN entered into a revised AU$11 billion deal allowing NBN to take ownership of Telstra's copper and HFC network assets. On Monday, the government released its draft Migration Assurance Policy detailing the process for customers to be migrated from Telstra's legacy copper network to the NBN.

However, over the past day, both Telstra and the Department of Communications have argued that the ACCC's draft decision to slash Telstra's wholesale fixed-line prices by 9.6 percent could hamper customer migration, as retailers would "have a profit motive to keep their customers on the higher-margin copper network for as long as possible".

"This would make migration to the NBN even harder to achieve, and put important revenue to NBN Co at risk. In this way, a cut to prices on the legacy network poses a serious danger to the success of the NBN policy," Telstra warned in a blog post on Wednesday.

The federal government mirrored this perspective, saying, "The department is concerned that the proposed price decrease for fixed-line services will discourage migration throughout the migration window, and could lead to a significant number of customers remaining on the old network in the lead-up to the disconnection date."

The ACCC is accepting submissions on its draft decision on Optus' HFC before making a final determination in August or September.

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