Broadband agreement, but more changes lie ahead

The telecommunications industry is bracing for more changes to the regulations surrounding the national broadband network, after the company overseeing construction proposed a significant rethink of the $41 billion project.

The telecommunications industry is bracing for more changes to the regulations surrounding the national broadband network, after the company overseeing construction proposed a significant rethink of the $41 billion project.

After more than two years of negotiations, the competition watchdog on Friday accepted the key regulatory document underpinning access and pricing to the network for the next 27 years.

The Special Access Undertaking is a vital document setting out the prices and access conditions for any company seeking to sell services over the broadband network.

But the approval came just one day after the federal government released a strategic review of the project, revealing significant changes to the way the network would operate, and foreshadowing a need for additional regulatory approvals.

Optus vice-president of corporate and regulatory affairs David Epstein said the telco was largely happy with the final document but warned it could change under the proposal.

"We could well be in an environment where the whole thing has to be revisited but at this stage I think most people can live with it," he said. "It may well be that this is so fundamental that we move onto another conversation very quickly."

NBN Co's review on Thursday proposed to significantly change the technologies and structure of the network meant it could seek to revise the undertaking in coming years, or withdraw it completely.

The mix of technologies would mean NBN Co creates new product types to sell over the network, while a change in the mix of government equity and debt funding needed to build the network would also change the regulated price increases the company had lobbied for in order to pay back its capital cost.

A risk is NBN Co's proposal to purchase access to the cable hybrid-fibre coaxial (HFC) broadband networks, which pass a combined 2.7 million homes in capital cities. The networks are now owned by Telstra and Optus and not open to other internet service providers.

Attempts to purchase the HFC networks could introduce greater complexity, due to agreements with Foxtel for pay television services, and existing agreements between NBN Co and the major carriers to move customers over to the new broadband network.

But Australian Competition and Consumer Commission chairman Rod Sims said any regulatory changes needed as a result of the revised network introduction would not be significant. "It's obviously completely a decision for government but if the HFC were to become part of the NBN and run by the NBN on a wholesale-only basis, then I think it fits happily and neatly into the SAU," he told Fairfax Media.

A Telstra spokeswoman said the finalised undertaking provided certainty to the industry, which would now negotiate longer term contracts to sell services over the broadband network

"We're very confident this document can accommodate whatever is required," Mr Sims said. "What's been approved here is fairly largely technology-neutral ... and you've got change mechanisms in there."

The ACCC also proposed on Friday to continue regulating access to Telstra's existing copper network, which will be used as part of the NBN, until 2019 to facilitate existing telephone and broadband services.

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