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NBN Ditch Access Plan After Pricing ‘Concerns’

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The Australian competition watchdog, ACCC, says it is suspending its assessment of the Special Access Undertaking (SAU) lodged by NBN Co after receiving a “number” of complaints from NBN Co’s ‘future customers’ – i.e. Telstra, iiNet and Co.

The undertaking was lodged in December and outlines telco access to the National Broadband Network and the regulatory framework under which it will operate.

The telcos in particular were said to have issues with the pricing model and the powers of the NBN Co over pricing as demand increases over time, as well as the power held by the watchdog and the ‘level of flexibility’ associated with the 30-year long regulatory plan.

“The ACCC has indicated that the SAU is unlikely to be acceptable in its current form,” the NBN Co confirmed yesterday.

This means approval for the NBN’s regulatory framework (by the ACCC) will now be delayed until the end of 2012 or possibly even beyond if the NBN Co are delayed in the development of a revised SAU.

The NBN Co are currently working on an amended SAU and has provided an outline of its proposed amendments to the ACCC, under which the watchdog may have a bigger role in regulating pricing on the high speed network.

The revised SAU will strike “a better balance between providing certainty on NBN Co’s long term cost recovery arrangements and flexibility for the other regulatory terms to evolve as required over time,” NBN Co said in a statement yesterday.

The broadband company also “acknowledges the significance of the feedback from the ACCC and industry, and has revised its approach accordingly,” Jim Hassell, NBN Co Head of Product Management and Industry Relations, said.

Hassell also made reference to¬† NBN Co’s role as “a wholesale-only provider” and the need to “develop solutions that will work for our customers.”

He also reiterated its “commitment to maintain the affordability of our prices.

“The (revised) approach continues to lock-in the prices of key products for five years, maintains price controls over all products, and in addition now confirms NBN Co’s intention to decrease the price of the Connectivity Virtual Circuit (CVC) as demand increases.”

The revised SAU will use a building block model to determine revenue constraints on NBN Co, appears to provide some “reasonable constraints on NBN Co’s pricing over time,” the ACCC confirmed.

The watchdog also says it sees “merit in the (revised) proposal.”

“NBN Co has taken a step forward in developing this proposal in response to feedback on its original SAU. It is a constructive move towards establishing reasonable access arrangements for the NBN,” ACCC Chairman Rod Sims said.

“The proposed modular design balances NBN Co’s requirement for certainty on long-term cost recovery with the need to undertake regular reviews of the detailed terms of access.”

The ACCC will make further announcements about the revised SAU in due course.