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Thursday, 01 December 2011 20:07

NBN Co 'behaving like only a monopolist can'

By

NBN Co yesterday published the final executable version of the Wholesale Broadband Agreement (WBA) that sets out the commercial arrangements and obligations between NBN Co and its customers - and drew immediate criticism from the body representing some of its largest potential customers.

The WBA will allow providers to enter into a commercial agreement with NBN Co while the ACCC considers the longer-term regulatory framework for the National Broadband Network. It locks in, for 12 months, existing prices, confirming information about the products NBN Co is supplying and detailing service level agreements as well as providing a process for the further development of the contract.

Because NBN Co will have a monopoly on the NBN the services it provides will be 'declared' by the ACCC which means they will be subject to rules on pricing and non-price terms and conditions designed to ensure that NBN does not exploit its monopoly to charge high prices and that it does not discriminate between wholesale customers. Such a regime has applied to several Telstra monopoly services since industry liberalisation in 1997.

However, according to the Competitive Carriers Coalition (CCC) the WBA as it stands protects NBN Co - and the terms and conditions of its wholesale offerings - from the full force of ACCC oversight.

"As currently drafted, the NBN Co WBA has opened up situations where the ACCC can make a determination and NBN Co is not obliged to pass on the decision to wholesale customers who have signed the WBA," a CCC spokesperson said.
 
"Retailers have for months been asking for these clauses of the contract to be changed and NBN Co has flatly refused. We recognise that NBN Co has introduced improvements to the WBA, but it hasn't fixed this fundamental loop hole."
 
The spokesperson added: "The question must now be asked; 'Why is NBN Co so determined that it will not allow retailers access to the full suite of the ACCC protections?' Comments by NBN Co CEO Mike Quigley yesterday make clear that he has no intention of listening to the concerns of his customers and is presenting them with a take it or leave it deal. Only a monopolist can behave like this."
 
There is, however, still scope for the situation to be addressed. The legislation provides two mechanisms to ensure that NBN Co does not exploit its monopoly power. It can publish a Standard Form of Access Agreement (SFAA) for a service - the WBA - or it can lodge a Special Access Undertaking (SAU) with the ACCC. Contracts with individual access seekers will be governed by the terms of these documents.

CONTINUED

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NBN Co head of product development and industry engagement, Jim Hassell, confirmed that NBN Co would shortly be lodging its SAU with the ACCC. "The WBA and SAU have been drafted to operate together," Hassell said. "It will take some months for the SAU to be reviewed by the ACCC, in consultation with industry. So we have shortened the length of our initial WBA to 12 months, down from five years, so it can be aligned with the outcomes of the regulatory process. If the SAU is approved in less than 12 months, we can also amend the short-term WBA if there is a need to update it to align with the SAU as accepted."

He maintained that there would be a mechanism to ensure that the ACCC had the last word on terms and conditions of NBN Co's contracts with its customers. "We are'¦including a provision in the SAU that should address the concerns of industry regarding recourse to the ACCC, while still maintaining the certainty of our contractual arrangements," Hassell said.

"Where commercial agreement can't be reached on non-price terms not covered in the SAU, or where NBN Co introduces new prices after the SAU commences, the ACCC can be called upon to settle an outcome. Once the ACCC has made its decision, NBN Co will make the outcome available to all our customers."

Hassell's comments, have not reassured the CCC. The spokesperson said: "We hope that NBN Co will work with industry to come up with a workable solution. If not, then we will be calling on the Government to step in to give effect to its policy intent. This may require shutting out some loop holes in the legislation that have allowed NBN Co to assert this unreasonable position."

The CCC said it would be writing to members of the Government, the Opposition, the Greens and Independents and other interested parties asking for their support for these amendments in the New Year.

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