ACCC irons out NBN access terms
The undertaking will spell out the terms and prices that the NBN Co can impose on telcos that want to access the infrastructure, which will end Telstra's monopoly.
After lobbying from telcos, the commission's chair Rod Sims asked for greater pricing regulatory oversight over the NBN Co, including early review rights over pricing structure.
"The biggest change that is in the document now is increasing the number of price reviews we can do," he said. Consumers normally pay both a fixed access charge - a connection fee - and a usage charge. At present, the fixed charge is responsible for 90 per cent of the cost of access.
"The largest remaining controversy between NBN and access seekers [telcos] was the concern over the usage charges," Mr Sims said. "People are concerned when usage increases they will be too high. So we now have the ability to reset the relativity between fixed and usage - that is what access seekers have been asking."
The commission issued its final notice on the special undertaking on Tuesday after two years of extensive industry consultation. NBN Co has until November 19 to respond to the variation notice.
Under NBN Co's undertaking, prices will stay the same until 2017 and future increases must be below inflation. "Consumers will pay what they pay now for their internet services and prices should go down in real terms over time," Mr Sims said.
The key features of the undertaking are price controls, processes for developing and consulting with access seekers on new products, and a range of non-price commitments. Mr Sims said the special access undertaking could accommodate any new policy directives from the new government.
"The ACCC understands that the government will now provide new policy directions to NBN Co. However, most of the commitments in the SAU [special access undertaking] are technology neutral and will apply even with a significant change in network design," he said. "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."
Frequently Asked Questions about this Article…
The ACCC's special access undertaking (SAU) is a 27-year framework that sets the commercial and legal terms under which telcos can access the national broadband network run by NBN Co. For everyday investors, the SAU matters because it defines pricing controls, access conditions and consultation processes that will shape competition in the broadband market and influence revenues and pricing dynamics for companies involved in the sector.
According to the article, the SAU will end Telstra's monopoly by spelling out standard terms and prices that NBN Co can impose on other telcos wanting network access. That change is intended to increase competition among access seekers and level the playing field for service providers.
After lobbying from telcos, ACCC chair Rod Sims increased regulatory oversight in the SAU by giving the commission more rights to review pricing. The biggest change is an expanded ability to conduct price reviews, including early review rights over pricing structure, which aims to keep usage and fixed charges in check.
The article explains consumers normally pay a fixed access charge (a connection fee) plus a usage charge. At present, the fixed charge accounts for about 90% of the cost of access. The ACCC has added the ability to reset the balance — or relativity — between fixed and usage charges to address concerns that usage charges could become too high as data use grows.
Under NBN Co's undertaking, prices are set to remain the same until 2017, and future price increases must be below inflation. The ACCC expects consumers to pay broadly what they pay now and for prices to fall in real terms over time, thanks to the SAU's price controls.
The SAU includes processes for developing and consulting with access seekers on new products and a range of non-price commitments. These measures are designed to improve transparency and give telcos a clearer say on product development and access conditions.
The ACCC says most commitments in the SAU are technology neutral and would still apply even if there is a significant change in network design. If the government issues new policy directions, the SAU can accommodate those changes and NBN Co can seek to vary the undertaking in the future.
The ACCC issued its final notice after two years of industry consultation. According to the article, NBN Co has until November 19 to respond to the variation notice issued by the commission.
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