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NBN agreement rejected by ACCC

In what is being hailed as a victory for common sense, The Australian Consumer and Competition Commission (ACCC) has rejected NBN Co’s pricing and access proposals for the National Broadband Network (NBN).

The decision is a victory for Optus – owned by Singapore Telecommunications (ASX: SGT) and Telstra Corporation (ASX: TLS), who have been vocal in their protests over NBN access and pricing. Optus called the decision a “victory for common sense”, and said that the company was pleased the ACCC understands the concerns raised by industry and suggested some important changes that need to be made to pricing and access arrangements.

The ACCC has called for further changes to NBN Co’s special access undertaking (SAU), the document that outlines pricing and access arrangements for the next 30 years. The commission suggested that it needs to include measures enabling it to enforce caps on broadband prices and to review usage charges over time. As Optus’ director of corporate affairs and regulatory affairs, David Epstein told the Australian Financial Review that, “We can’t predict the shape of technology or the thinking of NBN executives for 27 years, such agreements need real reviews periodically.”

One of the key issues of contention between NBN Co and industry players was oversight of NBN Co. One of the variations includes explicitly noting the ACCC’s ability to directly regulate pricing in future.

As iiNet Limited (ASX: IIN) chief regulatory officer Steve Dalby said, “The regulatory uncertainty and the unreasonable term of the SAU have always been a concern.” Macquarie Telecom’s (ASX: MAQ) Matt Healy is also reported to be pleased with the ACCC’s decision on key issues.

Foolish takeaway

With the NBN rollout months behind schedule, issues with its subcontractors and unlikely to meet the targets it had originally set for June this year, this latest news is yet another setback for NBN Co. With an election due in September, NBN Co will be under the pump to lift their game.

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More reading

The Motley Fool’s purpose is to help the world invest, better.  Click here now  for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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