Consultation recommences on future regulation of the NBN

13 January 2023

The ACCC has today published a consultation paper on NBN Co’s proposed variation to its Special Access Undertaking and is inviting submissions from interested parties.

The undertaking provides a framework for the economic regulation of the NBN until 2040, including rules for setting the maximum prices and service standards that NBN broadband providers could expect to receive.

The variation would make the undertaking the principal regulatory framework for all NBN connections through the proposal to incorporate fibre-to-the-node and other copper-based networks, and would also implement important changes to its provisions to apply from July 2023.

“Before we decide whether to accept NBN Co’s proposed variation, we want to hear from the retailers who sell NBN services, the households and businesses that rely on the NBN for their broadband and telephone calls, and all other stakeholders,” ACCC Commissioner Anna Brakey said.

The variation would result in significant changes to NBN Co’s product and pricing commitments, including the staged introduction of flat rate access prices with the removal of most bandwidth variable charges by July 2026. It would also set a cap on the average price per consumer that retailers pay for access, which could provide more certain access costs and allow retailers to better compete in supplying services to consumers.

Under the proposal, NBN Co would also move towards efficient cost recovery before ultimately achieving a stand-alone investment grade credit rating by paying down some of its debt. While average prices across all customers will increase through the remainder of this decade in line with inflation, some speed tiers would initially be cheaper and others more expensive. This includes price reductions for voice-only access and speed tiers of 100 Mbps or more, but price increases at the most popular speed tier of 50 Mbps.

The entry level broadband access offer would be moved from the 12 Mbps tier to the 25 Mbps tier, with an access price that sits between the current prices for those tiers.

The variation would introduce a framework for setting benchmark service standards for the first time; however, NBN Co has proposed to initially continue with many of the existing service standards that do not currently address certain issues raised by the retail providers.

“While NBN Co’s proposal appears positive in most respects, it is not presently clear how specific aspects would promote the long-term interests of the consumers and businesses that rely on the NBN. We understand that NBN Co is committed to continuing to work constructively with us and stakeholders in this consultation process to consider and address these issues,” Ms Brakey said.

“Our current concerns relate to the apparent limitations on the ACCC’s ability to make regulatory determinations that would encourage NBN Co to invest and operate more efficiently over time, and the robustness of the proposed processes for making these determinations. We also want to test with stakeholders the suitability of the initial benchmark service standards for addressing ongoing quality issues within a reasonable time.”

“We will continue to consider NBN Co’s proposal, applying the statutory test and having regard to stakeholder submissions, before making our decision,” Ms Brakey said.

The ACCC published the proposed undertaking on 30 November 2022, and extensive supporting materials in December 2022 when received from NBN Co. The ACCC accepted a small number of redactions made by NBN Co for commercial in confidence reasons. However, the ACCC will continue to assess what information is required to be publicly consulted on to ensure a robust and transparent process, and to ensure the ACCC can perform its statutory functions of assessing the variation.

The ACCC invites feedback from interested parties on the proposed variation by 17 February 2023.

The variation to the undertaking and related documents are available at NBN Co SAU variation 2022

Background

NBN Co’s services are taken to be declared under Part XIC of the Competition and Consumer Act (CCA), which enables the ACCC to regulate the terms and conditions of access, such as price, to apply where the terms of access cannot be agreed.

The CCA allows NBN Co to submit to the ACCC a variation to a Special Access Undertaking currently in operation. The ACCC must then decide whether to accept or reject the variation to the undertaking, in accordance with criteria set out in section 152CBD(2) of the CCA.

The CCA requires the ACCC to publish a proposed variation to an undertaking and invite and consider submissions on it.

The current undertaking provides a long-term regulatory framework for the supply of NBN Co’s services. It has been in place since 2013 and is scheduled to operate until 2040. However, the current undertaking only applies to a subset of network technologies, namely fibre-to-the-premises, fixed wireless and satellite. This accounts for approximately one quarter of NBN’s services assets. Extending the undertaking to cover the other technologies would bring the majority of NBN assets into this regulatory framework.

In March 2022, NBN Co proposed a variation to its undertaking following extensive pre-lodgement engagement with its customers and other stakeholders that the ACCC facilitated. NBN Co withdrew this proposal in July 2022.

Since that time the ACCC has helped to facilitate NBN Co’s consideration of a revised proposal, including by convening an additional industry forum in August 2022.

The ACCC must either accept or reject the variation to the undertaking. The ACCC must not accept a proposal to vary an undertaking unless it is satisfied that it meets the statutory criteria, which includes assessing whether certain aspects will promote the long-term interests of end users, and whether the terms and conditions are reasonable.

If accepted, the transition to the new pricing arrangements under the variation to the undertaking would commence by the later of 1 July 2023 or three months after acceptance.

Release number: 
02/23
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