ACCC seeks comment on NBN Co's SAU

The ACCC is seeking feedback on how the controversial Connectivity Virtual Circuit (CVC) charge impacts on the take-up of NBN services by end users and retail service providers.

The Australian Competition and Consumer Commission (ACCC) has released a consultation paper (PDF) on NBN Co’s Special Access Undertaking (SAU).

NBN Co lodged a revised SAU in September this year after the ACCC suspended its assessment of the initial SAU NBN Co lodged in December 2011, which was criticised by ISPs as having limited scope in pricing controls.

The revised SAU lodged by NBN Co freezes wholesale prices of the National Broadband Network’s (NBN) products for five years. For the next 25 years, annual price rises on all products and services would be limited to 1.5 per cent less than inflation, with the goal of wholesale price reductions over time.

“The proposed SAU appears to set out a workable overall regulatory framework for the supply of NBN Co’s services for the next 30 years. Yet, there are many complex issues of detail and drafting to be assessed and debated before the ACCC can determine whether it is reasonable and promotes the long-term interests of end users,” Rod Sims, ACCC chairman, said in a statement.

“The consultation paper seeks the views of consumers and industry and is the first step in what will be a thorough assessment by the ACCC of the undertaking.”

The ACCC has listed 71 questions in its consultation paper, covering the ACCC’s powers in resolving disputes between NBN Co and its customers; the operation of the SAU; services covered by the SAU; product development and the withdrawal of obsolete products; pricing; and non-pricing matters.

The consultation paper includes questions on whether commitments for retailers to NBN Co will allow for the smooth transition to the NBN and whether these commitments allow for products to be offered at a suitable price and for prices to fall in real terms over time.

The ACCC is also seeking feedback on how the controversial Connectivity Virtual Circuit (CVC) charge impacts on the take-up of NBN services by end users and retail service providers and NBN Co’s ability to recover its investment costs. The ACCC will look at whether introducing more binding prices to lower the CVC are required.

The CVC cost for RSPs is a $20 charge for every megabit per second of capacity an RSP purchases at a point of interconnect (POI). NBN Co introduced a credit on the CVC after industry backlash to its initial pricing, offering a rebate on the wholesale charge for the first 150Mbps per month until NBN Co pass 30,000 premises in a connectivity serving area.

The ACCC will hold a forum in December for stakeholders, with submissions on the consultation paper closing 11 January, 2013.

A draft decision on NBN Co’s SAU is expected in March next year, with the ACCC to invite further submissions to the draft decision.

The ACCC is required to make a decision on whether to accept or reject the SAU within six months of NBN Co lodging the SAU with the ACCC.

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More about: ACCC, Australian Competition and Consumer Commission, CVC
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