Back to the drawing board with the access agreement
NBN Co has unsurprisingly decided to return to the drawing board with its Special Access Undertaking (SAU) given that the Australian Competition and Consumer Commission (ACCC) was almost certainly going to reject it. The final regulatory hurdle for the NBN was always going to be a tricky one and given the fact that the wholesale broadband agreement (WBA) had to go through five rewrites, a revised SAU from NBN Co was always on the cards.
What’s interesting here is that NBN Co has managed to soften the blow of an outright rejection from the competition regulator by reading the signs quickly and indicating that it is more than willing to listen to the concerns of the telco industry. This is an important consideration because there are far too many people out there who reckon that NBN Co is going to be an even more uncompromising beast than the Telstra of the past.
NBN Co’s revised approach will see it move away from plans to lock in access regulation for 30 years and see the company take a more staged approach. The access undertaking will be broken up into seven modules that will be subject to a ten-year term. After that NBN Co will continue to submit revisions to the ACCC with regards to pricing, dispute regulation every three to five years.
The amendment should altogether be more palatable for the telcos given that it gives the ACCC stricter regulatory oversight. The retail service providers weren’t enamoured with the 30-year regulatory framework or the cost of the connectivity virtual circuit (CVC), which the pipe that connects multiple customers in fibre service area to the point of interconnect (POI).
NBN Co Head of Product Management and Industry Relations, Jim Hassell said in a statement yesterday that CVC costs will go down as demand increases, so there are plenty of sweeteners here to appease the retail service providers. However, there is good chance that the revised SAU is not going to pass the muster before existing commercial contracts between NBN Co and the ISPs expire at the end of this year. So the telcos and NBN Co may have to hammer out new arrangements.
Although NBN Co boss Mike Quigley would have no doubt preferred locking in access terms for 30 years, it would seem that the company had the modular approach up its sleeve for a while. The extensive WBA negotiations, which may now have to be revisited, should have been an eye opener for NBN Co and it certainly won’t want to make the same mistake with the SAU.
The revised undertaking, which provides greater balance between providing certainty on NBN Co’s long term cost recovery arrangements and regulatory flexibility, should do the trick but don’t expect the retail service providers to make it easy.
Ramping up greenfields rollout
Meanwhile, NBN Co is ramping its efforts to get the fibre onto new developments as quickly as possible with Visionstream and Service Stream now brought in to lend a helping hand.
The Leighton Holdings subsidiary Visionstream has been awarded a $102 million contract to roll out fibre into new developments in Victoria and Queensland. Meanwhile, Service Stream has been awarded a $81 million contract with for works in NSW, South Australia, Western Australia and the Northern Territory.
The greenfields rollout has been a sore spot of sorts for NBN Co and has prompted the company to streamline the approach. NBN Co boss Mike Quigley says the focus now is to move to a structure that provides greater flexibility, control and potential synergies with the wider brownfields rollout.
The new contracts covered different provisions that would see Visionstream and Service Stream only take care of the fibre rollout in the greenfields estate themselves, rather than the management of fibre provision back to the nearest point of interconnect.
The company that has so far been intrinsically linked to the greenfields rollout is Fujitsu which won an exclusive $100 million one-year contract last year. While there is some talk that NBN Co’s latest move leaves Fujitsu out in the cold we will presume that it already has its hands full to take on any more work.
NBN tower support
Finally, it’s rather good to see that there are people in regional and rural Australia who have something good to say about the NBN towers.
NBN Co suffered its latest rejection last week when the Moorabool Shire council in central Victoria said no to a tower. It has also faced protests from the neighbouring Ballarat and Golden Plains councils.
The presence of the towers may be a contentious issue but Golden Plains shire resident Scott Weston has told The Courier that he is surprised by the string of rejections in the area and an NBN tower could be ‘a godsend for the community.”
As I pointed out a couple of weeks ago the majority of these objections are driven by misconceptions and fuelled by a small albeit very emotional minority.
There is a silent majority out there that is very much in favour of the towers and are frankly in desperate need of better broadband.
In other news, local communities around Cairns are gearing up to jump on board the fixed wireless portion of the NBN.
Residents across the Aurukun Shire Council, Cairns Regional Council, Cook Shire Council, Tablelands Regional Council, and Yarrabah Aboriginal Shire Council areas are all in line to get connected. Up to 5000 premises are expected have access to the service in stages starting from mid-next year, while the fibre rollout in Cairns is scheduled to start shortly.