ACCC draft decision on NBN Co Special Access Undertaking

From the ACCC, the DBCDE and the Australian Financial Review:   The Australian Competition and Consumer Commission (ACCC) has issued its draft decision on the the revised Special Access Undertaking (SAU) lodged by NBN Co.  The SAU is to form a key part of the framework to determine the cost and other terms under which NBN Co will provide services over fibre, wireless and satellite networks to telecommunications carriers.

There are many proposed variations to the SAU provided by NBN Co to the ACCC in the ACCC’s draft.  The most important amendments include:

  • Specific drafting amendments to provide certainty about how NBN Co will comply with its obligations under the telecommunications access regime; specifically any ACCC regulatory rulings;
  • Allowing for periodic price re-balancing through review by the ACCC – the outcomes of these reviews would be constrained on the basis that any changes to price structures or relative prices must be revenue neutral in their effect;
  • Amendments to clarify that the ACCC could have a role in overseeing the withdrawal of products and the introduction of new products and their prices, should the need arise, mainly to support an effective price cap regime;
  • Amendments which allow a greater degree of flexibility in the approach that will be adopted at various points in time throughout the SAU, to mirror usual regulatory practice and so encourage efficient investment in and operation of the network; and
  • The removal of a number of proposed non-price terms from the SAU, including those relating to service levels, in order to facilitate effective commercial negotiation

However, some aspects of the original SAU will remain the same, including the following:

  • The ‘modular’ design of the SAU allows for different matters to be ‘locked in’ for different periods of time. This means a balance can be struck between providing certainty about long term cost recovery and allowing for flexibility to respond to changing circumstances; 
  • The initial prices set out in the SAU are generally likely to allow for a smooth transition from existing telecommunications networks;
  • The revenue constraint provides NBN Co with the opportunity to recover its prudent costs over the term of the SAU;
  • Long term commitments not to raise prices above the CPI-1.5% price control provide significant price certainty, and have the potential to create incentives for NBN Co to efficiently operate and invest in the National Broadband Network; and
  • Commitments to consult with customers on various matters have the potential to reduce information asymmetries between NBN Co and its customers.

Says ACCC Chairman Rod Sims:

The SAU is a complex undertaking that NBN Co proposes will operate until 2040. It is therefore important that the rights or obligations the SAU imposes on NBN Co, access seekers and the ACCC are reasonable, in the long-term interests of end-users and clearly expressed so that they are well understood by all parties.

Major telcos have welcomed the ACCC’s decision as ‘a victory for common sense’.  David Epstein, Optus’ director of corporate and regulatory affairs has stated that:

We can’t predict the shape of technology or the thinking of NBN executives for 27 years, such agreements need real reviews periodically.  This is an important step towards reaching viable regulatory arrangements for the NBN.

Optus is pleased the ACCC understands concerns raised by industry and suggested some important changes that need to be made to NBN Co’s SAU for it to be accepted.

The Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, issued the following statements:

The ACCC’s draft decision demonstrates that the fundamental framework of NBN Co’s SAU is acceptable to the Commission.  The ACCC is generally satisfied with NBN Co’s proposed long term cost recovery arrangements. This will enable NBN Co to recover the government’s investment and earn a fair rate of return.  The ACCC is also satisfied with a range of mechanisms that provides certainty for NBN Co’s customers and end-users.  In particular, I welcome the ACCC’s support for NBN Co’s initial prices and its ongoing price cap that will ensure prices decrease in real terms until 2040.

You can read more about the ACCC’s draft SAU here, the telco industry’s response to it here, and the Government’s response here.


Contact Matthew Nicholls (ph: +61 3 8376 7131) to discuss your requirements.