Telcos seek ACCC veto on NBN contracts

Internet service providers (ISPs) have used the competition regulator's review of NBN Co's special-access undertaking (SAU) to call for more oversight of the company's one-year contracts.

The company's SAU, submitted to the Australian Competition and Consumer Commission (ACCC) late last year, sets out the pricing and regulatory framework on which the National Broadband Network (NBN) will operate for the next 30 years. The SAU gives the ACCC powers to intervene in disputes between access seekers and NBN Co over pricing and non-pricing conditions on the network.

The document is designed to work hand in hand with the wholesale-broadband agreement (WBA), which sets out arrangements between NBN Co and access seekers over a shorter period of time; at this point, one year.

While 25 telcos have reached an agreement with NBN Co to sign the WBA, they remain concerned that if NBN Co and the telcos disagree over something in the WBA during the course of the contract, the ACCC will not be able intervene and make a binding ruling against NBN Co.

In law firm Herbert Geer's submission on behalf of iiNet, Internode, TransACT and Adam Internet, "the problem" with the WBAs is described as:

NBN Co is able to provide services under terms and conditions that have not been approved by the ACCC, and, in the event that the ACCC concludes that it is necessary to make regulated terms that are applicable to NBN Co, the WBA will override those regulated terms.

In a rare moment of agreement with its rivals, Telstra also pointed out this problem in its submission.

"Retail service providers [RSPs] will not be able to acquire services over the NBN under the terms of the NBN Co SAU alone, and must first enter into a WBA with NBN Co, the terms of which may be determined solely by NBN Co without any regulatory oversight by the ACCC. This is unreasonable," Telstra said.

The company noted that the WBA can only be overridden by the SAU if the agreement allows it to be overridden. Telstra said that there is an "inherent weakness" with the way the SAU and the WBA interact, and the SAU does not address this.

The NBN Co SAU does not provide any assurance that the WBA cannot, and will not, be used to deprive retail service providers of the benefit of the NBN Co SAU and/or be used to exclude the ACCC from ongoing regulatory oversight," Telstra said.

Herbert Geer noted that once the NBN is up and running as a fixed-line monopoly, ISPs will have little choice but to provide services over the network, and this can only be done by signing a WBA. In order to ensure that access seekers can complain to the ACCC over issues in the WBA, the law firm suggested changing the SAU to include a "pass-through clause" that would allow the ACCC to pass access determinations and binding rules of conduct on NBN Co that would override the WBA.

Vodafone Hutchison Australia (VHA) said that it also seeks a similar change to the SAU.

"VHA is concerned that the current drafting of the SAU not only ignores the potential for AD and BROC [access determinations and binding rules of conduct], but also renders them of no practical effect.

"An SAU cannot simply disapply the role of AD and BROC and render these regulatory instruments redundant. Parliament intended that AD and BROC should be important instruments in the ongoing regulation of NBN Co."

In addition to the regulatory oversight for the WBAs, Telstra also took issue with the 30-year length of the undertaking, noting that technology advances and industry changes could impact on companies operating on the NBN in that time span. The company also called for better price controls for new products and services above the basic wholesale packages on the NBN.

Telstra has yet to sign a WBA with NBN Co; however, it is understood that the company will sign up when the ACCC accepts Telstra's structural separation undertaking (SSU), expected to be approved sometime in February.

Earlier this month, NBN Co published a Synergies Economic Consulting Report recommending the ACCC accept the company's SAU.