The Australian Competition and Consumer Commission has today released a Notice to Vary (variation notice) formally seeking changes to the Special Access Undertaking (SAU) offered by NBN Co in December 2012.
The SAU will form 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, up until 2040. It will ensure that prices for each of NBN Co’s products do not increase by more than CPI minus 1.5 per cent per year, over the term of the SAU.
ACCC Chairman Rod Sims said, “The variation notice sets out changes to the SAU that would be required to address concerns that have been raised by the ACCC.”
“It includes a number of changes from the draft version released in July this year, following our consideration of submissions by NBN Co and access seekers.”
Key changes in the variation notice include:
- Extending the number of price reviews the ACCC may undertake (in which it may review CVC charges, for example) during the NBN roll-out period from one to two.
- New provisions preventing NBN Co from making variations to an existing product that reduce the functionality, performance or features of the product.
- Further changes relating to the ACCC’s assessment of the prudency and efficiency of NBN Co’s capital expenditure during the roll-out period.
“Finalising the SAU will provide the regulatory certainty that access seekers are requesting before they enter into longer term commercial contracts with NBN Co,” Mr Sims said.
“The ACCC understands that the government will now provide new policy directions to NBN Co. However, most of the commitments in the SAU are technology neutral and will apply even with a significant change in network design.”
“In addition, if NBN Co wishes to vary the undertaking in the future in light of any new directions from the government, this can be accommodated,” Mr Sims said.
The key features of the SAU are price controls, a methodology for determining NBN Co’s allowable revenues over the SAU term, processes for developing and consulting with access seekers on new products, and a range of non-price commitments.
NBN Co has until 19 November 2013 to respond to the variation notice. If NBN Co submits a varied SAU in response to this notice, the ACCC will consult with stakeholders. However, if the varied SAU is in accord with this variation notice, the ACCC expects that subsequent consultations will be very brief given the extensive consultation that has already occurred. Following that, the ACCC will make its final decision on NBN Co’s varied SAU.
If NBN Co does not respond by 19 November 2013, the ACCC will make its final decision on the SAU that was lodged in December 2012.
The ACCC has also extended the statutory timeframe for making a final decision on the SAU. This is to provide sufficient time for NBN Co to prepare a revised undertaking and for the ACCC to consider and consult on the revised undertaking.
The ACCC’s variation notice is available at NBN Co - special access undertaking 2012 - Notice to vary.
Background
The ACCC first indicated its intention to issue a variation notice in April 2013, when it made its preliminary decision that the SAU did not meet the relevant criteria for acceptance.
In July 2013, the ACCC issued a draft variation notice, in which it proposed a wide range of amendments to the SAU lodged by NBN Co in December 2012. The key changes the ACCC proposed related to the setting of revenue constraints, NBN Co’s rate of return, the scope of ‘fixed principles’ within the SAU, mechanisms relating to product introduction and withdrawal, and how tax changes should be treated.
The draft variation notice also incorporated other amendments that the ACCC had previously foreshadowed, including the introduction of periodic price reviews by the ACCC and the removal of a number of proposed non-price terms from the SAU, in order to facilitate effective commercial negotiation.