NBN Co begins renegotiating its role in enterprise market

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NBN Co begins renegotiating its role in enterprise market

Questions how users can be held responsible for fibre build costs.

NBN Co has outlined the uncertainties it faces from no longer entering direct contracts with large enterprise and government users, including clawback mechanisms for fibre build costs.

The network builder had faced months of sustained industry backlash over the way it approached the enterprise and government (E&G) market.

Providers already in that market criticised NBN Co for running more fibre into already well-served commercial premises, and for engaging directly with E&G users despite being a wholesaler.

In response, NBN Co said it would try to use existing fibre into commercial buildings where possible. 

It also plans to limit outreach to E&G users to marketing and education, and let retail service providers (RSPs) configure contracts and ultimately manage the relationships with those users.

But stepping back from the - at times, controversial - way it has approached the E&G market will require some significant changes.

NBN Co used a consultation paper, released Friday [pdf], to canvas how it can reposition in the E&G market.

In particular, the paper raises two interrelated issues that will need to be resolved.

Under its existing operating model, NBN Co has been deploying new fibre to E&G customers but deferring the build costs if the customer agrees to a minimum service term and consumption.

The build terms were negotiated and contracted directly with NBN Co.

That had its advantages, according to NBN Co - providing a direct contractual mechanism through which NBN Co could keep the end user on the hook for the fibre cost, especially in situations where the minimum terms weren’t met or the customer changed retailers.

NBN Co said in its paper it’s unsure how deferred cost builds will work when it has no direct contractual relationship with an E&G customer.

“How would RSPs propose that customers retain the deferred charge liability in a model where the fibre build contract is entered into between the RSPs and NBN Co independently of the telecommunications services contract entered into between the RSPs and their customers?” it asks.

“How do you suggest RSPs could be enabled to offer contracts to customers with a duration shorter than the duration of RSPs’ deferred payment contract with NBN Co (up to five years)?”

NBN Co suggested one option could be for RSPs and customers to keep the build and service aspects of all deals they enter commercially separate - and for the conditions of a deferred cost build to follow the customer, regardless of which RSP they take internet services from.

“One option may be for RSPs’ retail offers to customers to de-link the infrastructure commitment with NBN Co and the term for carriage services, with NBN Co facilitating novation of the NBN Co’s deferred charge obligation between RSPs, in the event that an RSP’s telecommunications services contract expires prior to the fulfilment of the NBN Co’s deferred charge in the build contract,” NBN Co suggested.

NBN Co said it wasn’t attached to any particular way to address the issue, saying only it wanted “to have contractual certainty for recovery of its charges.”

The company also suggested setting up a marketplace where all E&G deals it came across could be shared with RSPs. 

Alternatively, it suggested providing leads it uncovered with a list of certified RSPs and leaving it to the customer as to whom they contacted.

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