ACCC not sold on some changes to key NBN agreement

Competition regulator set to knock back some proposed changes to NBN’s SAU

The Australian Competition and Consumer Commission (ACCC) has issued a draft decision rejecting a number of changes proposed by NBN to the network operator’s Special Access Undertaking.

The SAU is a key document governing NBN’s operations as a wholesale provider of network access. The NBN last year submitted proposed changes to the agreement to take into account the shift from rolling out and operating an all-fibre (fibre to the premises or FTTP) fixed-line network to a ‘multi-technology mix’ that incorporates other types of connections such as fibre to the node (FTTN), fibre to the building (FTTB) and hybrid fibre-coaxial (HFC).

In its draft decision, the ACCC said that although most of the changes to the SAU proposed by NBN are appropriate, “a limited number of proposed changes to specific non-price terms and conditions do not meet the legislative criteria for assessing the variation”.

The competition regulator said it was concerned over three issues. The first is a change to how the NBN Co Network is defined in the SAU, which the ACCC said could have the effect of potentially eroding its oversight of new technologies.

“The effect of this proposed provision is that new services on new networks introduced by NBN Co would be subject to the SAU without NBN Co having to submit an SAU variation,” the draft decision states.

“Under this approach, key terms that would describe a new technology, such as User Network Interface and network definition, would not be set out in the SAU. Instead, many of these terms would be left to be specified in NBN Co’s Wholesale Broadband Agreement [WBA], which can be varied by NBN Co and is not subject to an ACCC assessment or consultation through an ACCC process.”

“The ACCC’s preliminary view is that this change is not reasonable as it will not provide a sufficient level of certainty to access seekers of the potential services to be provided over new technologies over the SAU term,” the ACCC argues.

A second sticking point for the ACCC is the removal of the definition of ‘network boundary point’ from service definitions.

“With this change, the definition of network boundary point would be set out in the WBA and may be subject to change,” the draft decision states.

“The ACCC considers that the current provision, which is locked in for the full term of the SAU, provides a high degree of certainty to access seekers and end-users about the service to be provided, especially in regards to maintenance responsibilities.”

The third concern of the ACCC relates to the co-existence period when FTTN and FTTB services are being delivered over copper phonelines in an area at the same time as legacy services — that is, when NBN and Telstra are both delivering services using the copper network. Linked provisions relate to cases where NBN has to conduct remediation on the copper network to boost the speeds available to end users.

“[T]he ACCC is concerned that the proposed provisions are likely to give NBN Co broad discretion over the circumstances in which an FTTN or FTTB node is placed into the co-existence period or when a line is placed into remediation and the period for which these provisions would apply,” the draft decision states.

“The ACCC is not satisfied that locking in these provisions for the remainder of the SAU term will ensure efficient and reasonable outcomes over that period.”

The SAU is intended to provide a regulatory framework for NBN’s operations until 2040.

“We need to be satisfied that the proposed changes are reasonable and in the long-term interests of end-users now, and will remain so over the term of the SAU,” ACCC chairperson Rod Sims said.

“While the ACCC agrees with the overall approach that NBN Co has taken to incorporate the additional technologies into the SAU, it has concerns about some of the specific terms and conditions that NBN Co proposes to vary.”

“As the ACCC can only accept or reject an SAU variation, our concerns mean that our draft decision is to reject the variation,” Sims said. “However, we have provided clear guidance in the draft decision on how NBN Co can address these concerns and introduce these new technologies into the SAU.