Telcos urge revision to NBN regulation

Major internet service providers have opposed significant tenets of the proposed regulatory framework for the National Broadband Network.

In a rare example of solidarity between the current incumbent Telstra and its rivals, the telcos called on the Australian Competition and Consumer Commission to reject NBN Co's special access undertaking in its current form.

The draft undertaking, submitted in December last year, proposes a regulatory framework that will govern price and non-price principles for the NBN over the next 30 years.

Terms from the accepted undertaking are expected to be "harmonised" with those laid out in the wholesale contracts signed by access seekers.

But telcos and the commission have continued to voice concerns over regulatory oversight of that alignment.

In a submission [pdf] to the ACCC, Telstra argued NBN Co's draft undertaking left any plans to align the final undertaking with the wholesale contract to its own discretion without "regulatory oversight to ensure appropriate alignment or how ongoing alignment will be assured, particularly for future variations of the [wholesale contract]".

A joint submission from iiNet, Internode, Adam Internet, TransACT and Primus contended that any NBN Co undertaking accepted by the ACCC would be superseded by elements of the wholesale contract with access seekers.

Simply dubbed "the problem" in their joint submission, the telcos urged the ACCC to negotiate new clauses in the undertaking, which would ensure changes would be reflected in future variations to the wholesale contract.

"Our clients' fear that if the ACCC accepts the SAU without first solving the Problem, there will be no further opportunity for the ACCC to implement a solution to the Problem," the submission [pdf], authored by legal representative Herbert Geer, reads.

Failure to do so, they argued, would allow NBN Co to introduce products and pricing outside of the ACCC's regulatory scope; an issue they argued would "become an 'elephant in the room'".

Separately, Macquarie Telecom argued the proposed undertaking from NBN Co effectively sought to "dictate how the ACCC can make decisions and resolve disputes".

Optus is also expected to make a submission but a spokeswoman for the telco refused to detail the telco's stance on key issues surrounding the undertaking.

The issue of long-term regulatory oversight over NBN Co remains a pressing issue for the ACCC and telcos, who are concerned about future monopolistic behaviour by NBN Co.

The ACCC's head of communications, Michael Cosgrave, told a Senate committee last October that the commission supported the "heirarchy stack" that sees commercial access agreements supersede regulatory frameworks.

However, the commission remained concerned about any recourse access seekers would have in disputes.

"We are concerned that access seekers actually have the ability to get a regulatory determination, whether it be by way of the commission accepting an access undertaking or making access determinations when that right is triggered," he said.

30 years too long?

Though most submissions agreed on the changes required to the undertaking for regulation's sake, fixed line newcomer Vodafone Hutchison Australia conflicted with Telstra on whether the 30-year length of the proposed regulatory framework was suitable for NBN Co.

VHA appeared the only company willing to support the undertaking in any decent degree, arguing that the proposed 30-year term would be "not unreasonable" to achieve long-term certainty in building the network, a fear fleshed out in recent supporting documentation submitted by NBN Co.

However, VHA pointed to the potential for regulatory failure if the ACCC did not gain a greater foothold in negotiations around future versions of the wholesale broadband agreement in order to gain greater consistency between it and the undertaking.

Under the suggested 30-year term, a review of the regulatory framework would not occur before 2027, a 16-year break which economic consultancy Synergies this month said was necessary to encourage investor confidence in the network.

In conflict, Telstra argued the suggested term would only "exacerbate all other concerns".

The incumbent is set to sign the one-year wholesale broadband agreement within the next month, before the ACCC expects to finalise consultation on the undertaking.