ACCC commences first public consultation on NBN Co Special Access Undertaking

The Australian Competition and Consumer Commission today released the first consultation paper on the Special Access Undertaking (SAU) lodged by NBN Co on 28 September 2012.

If accepted by the ACCC, the SAU will be a key part of the framework that governs the price and other terms upon which NBN Co will supply services over its fibre, wireless and satellite networks to telecommunications companies. It will also build upon the role for the ACCC in resolving disputes between NBN Co and its customers.

“The proposed SAU appears to set out a workable overall regulatory framework for the supply of NBN Co’s services for the next 30 years. Yet there are many complex issues of detail and drafting to be assessed and debated before the ACCC can determine whether it is reasonable and promotes the long term interests of end-users,” ACCC Chairman Rod Sims said.

“The consultation paper seeks the views of consumers and industry and is the first step in what will be a thorough assessment by the ACCC of the undertaking.”

Some of the aspects of the SAU that the ACCC is seeking views on include:

• Whether the commitments that NBN Co is proposing to make to retailers to enable them to provide core or ‘reference’ services to end-users over the NBN, at a comparable price and quality to today, will ensure a smooth transition to the NBN. The ACCC will be considering whether the right products are offered at the right price, the implications of the commitment for reference products’ prices to fall in real terms over time, and whether these prices are likely to appropriately anchor the prices of NBN Co’s ‘non-reference’ products.
  
  
• The commitments around NBN Co’s proposed ‘usage’ based charge (the ‘connectivity virtual circuit), and in particular its implications for how NBN Co’s customers and end-users take up services and for NBN Co’s ability to recover the costs of its investments. The ACCC will consider whether more binding pricing commitments to lower the usage based charge are required.
  
  
• The commitments NBN Co is making around its development and withdrawal of products, particularly given the 30 year term of the SAU and the new and innovative ways in which the NBN could come to be used over that time period. Similarly, whether there are appropriate constraints on NBN Co’s ability to withdraw products as they become obsolete, such as notice periods, in order that investment and competition in retail markets is promoted, and end-users’ interests are protected.
  
  
• Whether the commitments to meet particular levels of service quality will ensure access to the same quality as is received on today’s networks and create incentives to improve that quality over time. The ACCC will be considering whether the service levels are appropriately defined, address the most relevant aspects of service delivery and include effective penalties for non-compliance.
  
  
• The relationship between the SAU and other ACCC powers, and in particular whether the SAU allows for appropriate issues that may arise in future contract negotiations between NBN Co and its customers to be resolved by the ACCC at that time if necessary.
  
  
• The processes that take place in moving from one regulatory period to the next, including whether it is appropriate for NBN Co’s regulatory cost base to be rolled forward based on the actual expenditure it has incurred in the previous regulatory period, or whether only the costs that it had forecast to incur should be included. This can have important implications for NBN Co’s incentives to keep costs to efficient levels.
  

The ACCC re-iterates that it expects parties to agree to short term arrangements for the continuing supply of NBN Co’s services until assessment of the undertaking concludes and the regulatory framework is established.

The ACCC will host a stakeholder forum on the SAU in December 2012. The ACCC will shortly advise of forum details on its website.

The SAU is available at http://www.accc.gov.au/content/index.phtml/itemId/1080594. Interested parties have until 11 January 2013 to make submissions to the consultation paper. The ACCC expects to release a draft decision on the SAU in March 2013.