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Telcos call for NBN Co to price discriminate

Telstra, Optus and other stakeholders agree that the Federal Government should allow the NBN Company to differentiate between its customers on price.
Written by Liam Tung, Contributing Writer

Telstra, Optus and other stakeholders agree that the Federal Government should allow the NBN Company to differentiate between its customers on price.

Minister for Communications Stephen Conroy today released the 34 submissions from the telecommunications industry and stakeholders on the legislative framework to govern the sector once the National Broadband Network (NBN) Company has arrived.

"Key themes put forward in submissions include the need for effective access, equivalence and control arrangements. Submissions also discuss the types of services the National Broadband Network should provide, the role of the Australian Competition and Consumer Commission (ACCC), ownership caps and related issues, and sell-down provisions," said Conroy in a statement.

Telstra's five-point submission approached the issue of the NBN Co differentiating by price or terms cautiously, but was silent on what role the ACCC should play in an NBN world.

"The NBN Company should be afforded the flexibility to enter into contracts that efficiently differentiate between its customers, but safeguards need to be established to ensure the government's equivalence objectives are preserved," said Telstra.

Telstra suggested that the NBN Company could enter in to risk-sharing contracts with its customers, which it said would deliver more efficient risk-sharing arrangements between the operator and retail providers.

Optus' submission also acknowledged a role for price differentiation, but it raised concerns over the potential for the NBN Co to award Telstra better terms than others.

"The rationale for separation is to remove the incentive for an access provider to discriminate and thereby create an environment in which all access seekers can compete on their own merits. This principle would be wholly compromised if NBN Co were able to give its largest customer (likely to be Telstra Retail) more favourable terms than other access seekers," Optus said.

Optus' preferred price differentiation model would see the NBN Co offer a set of equal "reference prices" to access seekers, which could deviate depending on where the network of a retail telco was connected to the NBN, the volume, and the length of a service contract. It also wanted the ACCC to remain a key regulatory power.

"Any such price differences would need very careful scrutiny and approval by the ACCC," said Optus.

Channel Seven in its submission supported differentiation so long as it was applied consistently. "It must not be allowed to favour a dominant market participant disproportionately because of its size and therefore, buying power."

"The government is giving careful consideration to the submissions, which, along with the advice of the Implementation Study Lead Advisor, will help shape the legislative arrangements for the National Broadband Network," Senator Conroy said.

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