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The ����ԭ�� has accepted NBN Co’s latest proposed variation to its Special Access Undertaking (SAU), which includes measures designed to protect consumers from sharp price rises, reduce barriers to entry for new retailers and create incentives to fix systemic issues that drive poor NBN consumer experience.

The SAU sets the rules for how broadband providers will access the NBN over the coming decades and will apply until 2040.

“The NBN is a critical piece of national infrastructure that is central to Australia’s digital economy. Every day, millions of Australians use the NBN for work, commerce, education and entertainment,” ����ԭ�� Commissioner Anna Brakey said.

“The SAU applies ground rules to the NBN and is the regulation through which we can encourage efficient investment in and efficient use of the network.”

“We are satisfied that NBN Co’s latest SAU variation proposal promotes the long-term interests of Australians, which is the primary objective of the test that we have to apply,” Ms Brakey said.

More stable pricing to protect consumers from price hikes

The new SAU introduces long term pricing commitments that will restrict any annual increase in NBN Co’s average wholesale price to no more than the change in the consumer price index. This would apply until NBN Co’s revenue reaches efficient costs, which is expected to occur around 2030.

While some individual offers could still increase by slightly more than the consumer price index, this would need to be balanced by lower price increases for other offers.

“The new pricing arrangements will result in greater price stability, keeping prices in line with inflation and protecting consumers from unexpected sharp price hikes,” Ms Brakey said.

Under the new pricing structure, a new basic voice and data service will be offered at about half the price of NBN Co’s existing entry level broadband offer. Wholesale prices for 25 Mbps and 100 Mbps or faster speed services will also be reduced, offset by a small increase in the wholesale price for the 50 Mbps speed service.

NBN Co’s volume-based capacity charges will also be progressively reduced before they are completely withdrawn in 2026.

“These changes are intended to encourage more efficient use of the NBN rather than materially increase NBN Co’s revenues,” Ms Brakey said.

“The variation provides the ����ԭ�� with greater oversight of NBN Co’s future expenditure, ensuring that customers only pay for prudent and efficient investments, which will encourage efficient use of and investment in the network.”

A boost to competition and service quality

The improved certainty of prices will also reduce barriers for retailers entering the market and seeking to expand their offering to consumers.

“Greater competition between retailers will lead to more choice and innovative products for consumers,” Ms Brakey said.

“The variation introduces a new framework for setting service standards that aims to deliver greater consistency in the quality of service that NBN Co provides to broadband providers.”

“This should mean that issues such as faulty services and connection delays will be  addressed more efficiently,” Ms Brakey said.

A fit for purpose regulatory framework

The ����ԭ��’s decision to accept NBN Co’s SAU variation follows more than two years of consultation between NBN Co, broadband providers, the ����ԭ��, Government and consumer groups.

NBN Co proposed two previous variations but these were withdrawn after the ����ԭ�� and stakeholders outlined concerns about aspects of those proposals.

“The process of updating this regulation has taken a lot of time and effort, and we are grateful for the open and honest engagement that we have had with interested parties,” Ms Brakey said.

“The SAU variation that we have accepted addresses our previous concerns and we are satisfied it meets the statutory criteria that we are required to assess it against.”

NBN Co has stated that it intends to put in place new commercial agreements with broadband providers by 1 December this year.

While the new wholesale arrangements will have important implications for consumer offers, it will be up to individual broadband providers to decide any changes to their residential and business plans.

The ����ԭ��’s final decision and NBN Co’s SAU variation are available at NBN Co SAU Variation (August 2023)

Background

NBN Co’s services are taken to be declared under Part XIC of the Competition and Consumer Act (CCA), which enables the ����ԭ�� to regulate the terms and conditions of access, such as price, to apply where the terms of access cannot be agreed.

The CCA allows NBN Co to submit to the ����ԭ�� a variation to an SAU which is currently in operation. The ����ԭ�� must then decide whether to accept or reject the variation to the undertaking, in accordance with criteria set out in section 152CBD(2) of the CCA.

The CCA requires the ����ԭ�� to publish a proposed variation to an undertaking and invite and consider submissions on it.

NBN Co’s current SAU provides a long-term regulatory framework for the supply of NBN Co’s services. It has been in place since 2013 and is scheduled to operate until 2040, unless the Government privatises the NBN. At this point the revised SAU would cease and the ����ԭ�� would consider the appropriate regulatory arrangements.

In March 2022, NBN Co proposed a variation to its SAU following extensive pre-lodgement engagement with its customers and other stakeholders that the ����ԭ�� facilitated. NBN Co withdrew this proposal in July 2022.

NBN Co lodged a revised SAU variation proposal in November 2022. In May 2023, the ����ԭ�� published a draft decision to reject NBN Co’s November 2022 proposal.

In August 2023, NBN Co lodged a revised SAU variation proposal that the ����ԭ�� consulted on.

The ����ԭ�� can only accept or reject a variation to the undertaking. The ����ԭ�� must not accept a proposal to vary an undertaking unless it is satisfied that it meets the statutory criteria, which includes assessing whether certain aspects will promote the long-term interests of end users, and whether certain terms and conditions are reasonable.

The revised SAU will bring NBN Co’s mix of technologies, including hybrid fibre coaxial, fibre-to-the-node, fibre-to-the-curb and fibre-to-the-building, under the same regulatory framework. The SAU has previously only regulated fibre-to-the-premises, fixed wireless, and satellite services, which together account for only about one quarter of NBN Co’s services.

Under this variation that the ����ԭ�� has accepted, the transition to the new pricing arrangements will commence by three months from today (excluding the period from 23 December 2023 to 14 January).