ACCC acts to ensure NBN won't cost more than current servicesBY:MITCHELL BINGEMANN From:The Australian April 04, 2013 12:47PM
THE competition watchdog has again rejected the NBN Co's regulatory undertaking to set the long-term pricing and access arrangements to the $37.4 billion fibre network.
In another blow to the progress of the government's National Broadband Network, the Australian Competition & Consumer Commission said it was unable to accept the NBN Co's "special access undertaking" (SAU) until better regulatory oversight and more flexible reviews of broadband pricing changes were included.
The SAU is a crucial regulatory filing that will govern the NBN Co's pricing and access arrangements for the next three decades.
In its draft decision the ACCC said that while a number of features in the SAU "have merit" - including its modular design and a commitment to cap price increases to the inflation rate, minus 1.5 per cent - the regulator stressed the importance that obligations on access seekers like Telstra, Optus and iiNet were reasonable.
"The ACCC's preliminary view is that it is not satisfied that the SAU meets the relevant criteria for acceptance," ACCC chairman Rod 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."
The ACCC has proposed that it have greater control over the introduction and withdrawal of new products to ensure it can enforce price caps. It also wants to be able to periodically review usage charges and allow wholesale customers to negotiate directly with NBN Co over non price terms. The ACCC has set a May deadline for the changes to be made by the NBN co.
Mr Sims said the proposed changes would not affect NBN Co's ability to recover its costs or generate returns for the government, provided it builds the network efficiently.
"An SAU varied in line with the ACCC's proposals would provide considerable certainty to NBN Co that it will be able to recover the prudent costs of its investment, subject, of course, to demand for its services meeting expectations," he said.
"NBN Co's assets would not be subject to re-valuation once the NBN is built, and any changes to price structures would be revenue neutral."
The NBN Co welcomed the draft decision by the ACCC, saying it sets out a clear path towards a final SAU.
"We appreciate that the ACCC has a challenging task in balancing the views of a range of stakeholders in order to achieve a framework that is in the long-term interests of end users," said Caroline Lovell, NBN Co head of regulatory affairs and industry analysis.
"We will continue to engage with industry and the ACCC as the remaining issues are resolved to ensure that an appropriate balance is achieved."
The rejection is the third time the ACCC has knocked back the NBN Co's SAU and comes after more than 18 months of negotiations. The rejection has already been hailed by the likes of Optus, which described the decision as a "victory" for the telco sector.
"The ACCC's decision on NBN Co's SAU is a victory for common sense. We can't predict the shape of technology or the thinking of NBN executives for 27 years, such agreements need real reviews periodically. This is an important step towards reaching viable regulatory arrangements for the NBN," said Optus corporate and regulatory affairs boss David Epstein.
"Optus is pleased the ACCC understands concerns raised by industry and suggested some important changes that need to be made to NBN Co's SAU for it to be accepted. If adopted, these changes should provide for greater balance and independent oversight in the process of setting access terms to the NBN. They will also provide stronger incentives for NBN Co to invest efficiently and respond to changing market circumstances and customer requirements over time."
Communications Minister Stephen Conroy said in a statement that he welcomed the ACCC's approval of NBN Co's initial pricing structure, despite the commission's long-term concerns.
"The commission's draft decision clearly demonstrates that NBN Co is subject to effective regulatory oversight," he said.
"The SAU model is exactly the type of transparency and rigour the government had in mind when the legislative framework around the National Broadband Network was established."
