Commpete welcomes ACCC’s rejection to NBN Co’s proposed variation to SAU

Thursday, 08 June 2023 09:08

Commpete welcomes ACCC’s rejection to NBN Co’s proposed variation to SAU

The Australian Competition and Consumer Commission (ACCC) in a draft decision has rejected NBN Co’s proposed variation to its Special Access Undertaking (SAU), the framework outlining pricing and service standards through to 2040—a response commended by telco alliance Commpete.

Commpete praised ACCC’s progress in identifying amendments to expedite regulatory approval while noting on other areas that could challenge providers on occupying more market share.

In May, the ACCC decided to reject NBN Co’s revised SAU, which was submitted to the regulator in November 2022, claiming that aspects of the proposal were not in the long-term interests of Australian consumers, particularly the claim of no service level improvements before 2026.

Commpete chair Michelle Lim lauded the ACCC’s draft decision and its significant progress towards achieving a suitable outcome.

“The ACCC has shown admirable leadership in helping the industry distil and resolve many of the larger issues involved in the regulation of monopolies, which is critical for the long-term operation of infrastructure of national significance,” she said.

“Commpete is pleased with the progress the industry has made towards the resolution of many of the major issues identified. For its part, NBN Co has indicated it’s prepared to make further amendments should the ACCC reject the current proposed SAU variation.”

“This is the kind of progress we need to bring affordable and reliable broadband access to Australians. For instance, we applaud the work with the government to reach a resolution regarding the recovery of costs incurred in building the NBN. This has now shifted from 100% to 28%, and is capped at 12.5b.”

Lim is pushing for more action to make the playing field even for smaller providers.

“Around the time of NBN Co’s inception, a JP Morgan report for government claimed with an effective competition policy and a healthy advanced economy, smaller businesses would move to occupy 30% of market share. While it is encouraging industry challengers occupy 22.5% of market share, making certain changes, such as removing administrative taxes levied each time an end-user switches retail providers, would steer us faster towards achieving this goal.”

NBN Co’s 50Mbps price ceiling falls short
Commpete has also acknowledged NBN Co’s offer to “cap” wholesale prices for 50Mbps users, meaning this service wouldn’t cost more than the proposed $55 tariff.

Lim said while Commpete did not advocate for a change in this price point, any movement in Connectivity Virtual Circuit (CVC) pricing is better than none.

“Now the initial rollout and take-up of service is complete, NBN Co’s prices and revenues must be a function of its efficiently incurred costs and not indexed to matters—such as capacity—that are not drivers of those costs,” she said.

“The original proposal to retain a CVC component for speed tiers <100 Mbps, while removing it for those tiers ≥100 Mbps, was unlikely to promote the efficient use of the Long-term Interests of End Users (LTIE) test, as it will tend to force end-users to move up speed tiers and potentially well beyond their actual usage requirements.

She said the tinkering is “better” but still fall short. “However, it’s Commpete’s position that it comes a time when we need to accept, at least for now, the balance on these matters that the ACCC is prepared to accept.”

Lim concluded the charges that should be removed include the “Service Transfer” and “Non-Infrastructure Transfer” fees that NBN Co. levies on each AVC transfer between RSPs.

“These charges negatively impact smaller providers,” she said. “They are unjustified taxes relating to electronic, zero cost transactions for end users switching retail service providers. The reduction in network-to-network interface fees supports new market entrants, however now the NBN is built, we believe retail competition across small and larger players will be enhanced by removal of these switching fees.”

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