The ACCC shares its views on next generation telecommunications networks

The Australian Competition and Consumer Commission (ACCC) has issued for public consultation two papers related to next generation telecommunications networks.

The first is a draft decision on a 15-year special access undertaking given by the G9 for its proposed fibre-to-the-node network upgrade, with initial access prices of up to $29 to $50 per month (depending on the speed offered). This first paper also provides guidance on access to FTTN networks more generally.

The ACCC considers that reasonable access to a new FTTN network would normally include the following; a bitstream access service over the last mile bottleneck, which gives the access seeker as much control as possible over its own customer traffic, so that it is able to innovate and compete; access prices which reflect efficient costs (whether actual or estimated) and give investors a return that reflects their investment risk; and non-price terms and conditions of access that do not discriminate anti-competitively.

The ACCC would also expect a smooth migration to the new services for existing access seekers and their customers.
ACCC Chairman, Graeme Samuel said these requirements would be similar for any fibre-to-the-node upgrade, regardless of the network operator.

"The G9's prices for the initial three year period of up to $29 to $50 per month (depending on the speed offered) may be within the reasonable range of prices for this type of service and network," he said.

Samuel noted that demand forecasts for broadband services are more uncertain beyond a few years, making it difficult for any firm to set efficient prices upfront for a long period of time.

"The G9 has addressed this uncertainty by proposing a pricing approach widely used for long term new investments in other industries, including gas, electricity and rail," he said.

In these industries, a pricing methodology is agreed upfront to provide regulatory certainty, and the access provider need only update key inputs from time to time. These updates are subject to a form of review or audit by the regulator.

"The G9 also proposes a degree of vertical separation of the network owner from retail carriers and carriage service providers. Vertical separation can reduce the need for regulatory oversight,” he said. "However while the general pricing approach could be reasonable, the undertaking as it currently stands lacks effective independent audit of the key inputs.”

These undertaking also gives the network owner a high degree of discretion in unilaterally determining non-price terms and conditions for the 15 year undertaking period, without independent regulatory review, said Samuel.

"We could not accept so much discretion from a gas, electricity or rail firm. Access seekers would not know where they stood."

Accordingly, the draft decision is that the ACCC could not currently accept the undertaking and is open to the G9 to refine its access proposal for future consideration. The ACCC seeks submissions on the draft decision by 4 February 2008.

The ACCC has also issued a position paper on the possible variation of the definition of the declared Unconditioned Local Loop Service (ULLS). The position paper notes the need for the ULLS declaration to be updated to keep in step with on-going network modernisation, including the evolution of traditional switched telecommunications networks to internet protocol.

The position paper seeks the views of interested parties on a proposed variation to the ULLS service description, with submissions due by 22 February 2008.