Top 10 Influential 2011: Telstra's $11b NBN deal approval by the ACCC
- 09 December, 2011 09:00
This year has been nothing if not significant when it comes to progress of the Federal Government’s $43 billion National Broadband Network (NBN), following the completion of several milestones in relation the structural separation of Telstra, earning its status as one of the top ten influential stories for 2011.
The telco entered into an $11 billion financial heads of agreement deal with the company charged with the rollout of the network, NBN Co, which will involve the decommissioning of Telstra’s copper network to make way for a new fibre infrastructure.
Under the deal, NBN Co will lease Telstra’s existing fibre, ducts, pipes and other infrastructure for $9 billion over an undisclosed amount of time.
In line with the agreement, the telco has been required to structurally separate its wholesale and retail arms which to date, remains hinged on the approval of its Structural Separation Undertaking (SSU), originally lodged with the Australia Competition and Consumer Commission (ACCC) back in August this year.
The deal came under fire in the weeks to follow, with the watchdog itself stating the SSU could not be accepted in its current form and needed important changes to legislative requirements. In addition, ACCC chief executive, Rod Sims, new about arrangements between Telstra and NBN Co which include the parties’ ability to vary the arrangements without further scrutiny by the regulator.
However, the ACCC’s concerns did not faze Telstra’s chief executive David Thodey, who said the objections were merely preliminary assessments of Telstra’s SSU and not cause for concern.
“The ACCC has raised a number of concerns but they do not really come as a surprise to us at all,” Thodey said at the time.
Communications Minister, Senator Stephen Conroy, also weighed in , noting he was confident the watchdog’s fears would be quelled as negotiations continued with the telco.
After receiving feedback, Telstra in November, responded to the ACCC with a discussion paper detailing changes to the SSU. The changes proposed “parallel” resolution powers to both the ACCC and the Independent Telecommunications Adjudicator (ITA) to alleviate concerns the latter would favour Telstra.
A number of the country’s major ISP’s made submissions to the ACCC on the SSU, with Vocus Communications in particular coming out swinging with claims the deal with NBN Co would hamper competition by evicting competing telcos from Telstra’s ducts.
“There is potential for both Telstra and NBN Co to engage in discrimination in relation to facilities access, including Telstra’s ducts where space is frequently scarce,” the telco’s submission reads.
Vodafone Hutchison Australia (VHA) also joined the chorus of criticism again with claims the proposed plan failed to prevent Telstra from hampering competition as it lacked the self-enforcing features it needed in order to be credible and effective.
In October Telstra shareholders voted almost unanimously, with 99 per cent in favour of the deal, which hinged on the vote, following two years of negotiations. This major win for the incumbent telco enabled it to move forward with the ACCC.
As the final weeks of 2011 draw to a close, the race is on for the number one telco to finalise a deal with the regulator over its participation in the NBN which will mark the last step in the$11 billion deal.
NBN Co chief executive, Mike Quigley, said any delay in the approval of the deal would be of concern to the wellbeing of the NBN.
"Of course, it would cause some concern" if Telstra and the Australian Competition and Consumer Commission (ACCC) failed to agree on the undertakings,” he said.
So, do you think the rise and fall of LulzSec ranks as one of the biggest stories of the year? Comment below on how high you’d rank the story, and what else should be included in the Top 10.