Special Access Undertaking (SAU)

5 March 2012

NBN Co provided a further document in support of the SAU to the ACCC. This was a report prepared by Analysys Mason, who provided their opinion on whether, and the extent to which, NBN Co’s design for its fibre and wireless networks reflects an efficient and prudent network design.

17 January 2012

NBN Co provided an additional document to the ACCC in support of the SAU that it lodged on 5 December. This document was a report prepared by Synergies Economic Consulting, which examined whether key mechanisms in the SAU are economically efficient.

22 December 2011

NBN Co has provided additional documents to the ACCC in support of the SAU that it lodged on 5 December. These documents include:

• NBN Co's Supporting Submission in relation to the SAU
• NBN Co’s Network Design Rules, which outline the initial design of NBN Co’s network, for the purposes of the SAU
• Report on WACC component of NBN Co’s Special Access Undertaking by Professor Bob Officer and Dr Steven Bishop

These documents have been published by the ACCC on their website, and will form part of the ACCC’s assessment of the SAU. NBN Co anticipates that it will provide further material to the ACCC during the course of the SAU assessment process, and will provide public versions of them on this page when it does so.

5 December 2011

NBN Co has today lodged its Special Access Undertaking with the Australian Competition and Consumer Commission (ACCC). The SAU sets out the terms that will govern access to the NBN Access Service over the 30 years of our Corporate Plan. The NBN Access Service covers all wholesale Layer 2 services provided over NBN Co's fibre, wireless and satellite networks, and provides the framework in which NBN Co delivers uniform national wholesale prices across Australia.

The SAU makes commitments in relation to how NBN Co will price its services over the long term, key non-price conditions of supply, and ensures that NBN Co will recover no more than its prudently incurred costs.

NBN Co has developed the SAU with two objectives in mind:

• to provide an appropriate degree of certainty to Access Seekers, End Users and NBN Co about the terms of access to its services. This includes how NBN Co will price its services over the long term, key non-price conditions of supply, and provides the framework for NBN Co's long-term recovery of its prudently incurred costs; and
• to provide the framework necessary to achieve uniform national pricing of services provided by NBN Co to Access Seekers.

The SAU works in conjunction with the Wholesale Broadband Agreement (WBA) that was published on November 30, 2011. The SAU provides the overarching framework that will shape price and non-price terms until 2040, while the WBA sets out the commercial arrangements between NBN Co and its customers over shorter periods of time. Both the SAU and WBA contain provisions that ensure any WBA offered by NBN Co will be consistent with the accepted SAU.

Importantly, the SAU confers powers and functions on the ACCC to create a transparent and efficient mechanism which can be used by Access Seekers where agreement cannot be reached on non-price terms that are not covered by the SAU, or in relation to the introduction of new prices. Once the ACCC has made its decision, NBN Co will make the outcome available to all our customers via the introduction of changes to the WBA. This means that the ACCC will play an ongoing role in ensuring that NBN Co continues to offer appropriate terms of access to its services.

Some of the other key features of the SAU include:

• A term that extends to 2040, with a significant review of key terms related to prudency and cost recovery prior to any future privatisation;
• Prices of basic products remain the same till June 2017;
• Price rises on any products or services limited to half of CPI in any one year and cannot be accumulated if not used;
• Coverage of all services and products offered by NBN Co, over all networks;
• Commitment that all prices will fall in real terms;
• A mechanism that allows NBN Co to recover only its prudently incurred costs, and no more. This includes a regulatory rate of return on its assets of 350 basis points above government bond rates.

With the SAU now lodged with the ACCC, a formal process will be commenced by the ACCC to assess the reasonableness of our proposal. This will involve consultation by the ACCC with industry on the SAU terms. While there is no requirement that NBN Co should provide information other than through that formal process, today we are publishing the complete draft of the SAU on our website, to provide our customers and other interested parties with an early view of our proposal. Also published today is a short Overview Paper, which outlines some of the key features of the SAU and the rationale behind the approach we have taken.

NBN Co recognises that it is playing a transformational role in the Australian telecommunications industry. The SAU, which lays out a framework for regulation of its services over a 30 year period, will clearly be a central part of that transformation. NBN Co believes that its proposed approach will provide an appropriate blend of both certainty and flexibility in its access arrangements, and delivers a level of regulatory oversight that will ensure that those arrangements continue to meet the needs of industry.