Special Access Undertaking (SAU)

18 December 2012

NBN Co has today relodged its SAU with the ACCC, to reflect amendments made to the Wholesale Broadband Agreement (WBA) in the Contract Development Process (CDP) between 28 September and 30 November 2012. As a consequence, NBN Co has withdrawn the SAU lodged on 28 September 2012.

The relodged SAU aligns the non-price terms and conditions and service level schedule of the SAU with the outcomes of the CDP, which concluded two months after the SAU was lodged on 28 September 2012. In addition, the relodged SAU implements the clarifications that NBN Co provided to the ACCC in the letter it sent to the ACCC on 4 December 2012.

By withdrawing the 28 September SAU and lodging this amended version, NBN Co is seeking to provide clarity and certainty to access seekers on which set of non-price terms and service levels should be considered during the ACCC's assessment of the SAU. The existing supporting submission and expert reports continue to remain relevant to the relodged SAU.

The updated SAU has been published on the ACCC website, as well as a version showing changes from the 28 September version. These are also available on this page.

28 September 2012

NBN Co has today lodged a revised Special Access Undertaking with the Australian Competition and Consumer Commission (ACCC). The SAU sets out NBN Co's commitments in relation to the NBN Access Service over the life of the 30-year business case set out in 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.

This SAU replaces the SAU lodged with the ACCC in December 2011 and recently withdrawn.

The SAU makes commitments about NBN Co's wholesale pricing over the long term, key non-price conditions of supply including service levels, and ensures that NBN Co will recover no more than its prudently incurred costs, inclusive of a rate of return on capital of 350 basis points above government bond rates.

NBN Co's objectives in developing the SAU are to:

• give NBN Co's customers, their end-users and NBN Co certainty about the terms of access to NBN Co's services, including an appropriate regulatory oversight role for the ACCC; and
• provide the framework necessary for long-term cost recovery and for NBN Co to achieve uniform national wholesale pricing of services.

The SAU works in conjunction with the Wholesale Broadband Agreement (WBA) which is currently being updated and refined with industry via the Contract Development Process. The SAU will shape price and non-price terms until 2040, while the WBA is the commercial contract between NBN Co and its customers. Any WBA offered by NBN Co will be consistent with the accepted SAU.

The SAU includes a transparent and efficient mechanism which can be used by NBN Co's customers to seek regulated terms and conditions from the ACCC where agreement cannot be reached on non-price matters that are not covered by the SAU. Once the network is built, every 3-5 years NBN Co will need to update the SAU by variation 'modules'. The ACCC will assess and accept or reject these variation 'modules', and the ACCC can establish its own terms if it does not accept NBN Co's.

Some of the other key features of the SAU include:

• Prices of key products remain the same until June 2017;
• Price rises on all products or services limited to 1.5% less than the Consumer Price Index (CPI) in any one year and cannot be accumulated if not used;
• Coverage of all services and products offered by NBN Co, on all its networks (fibre, fixed wireless and satellite), including ancillary services and facilities access services;
• Commitment that all prices will fall in real terms;
• A regulatory rate of return on assets of 350 basis points above government bond rates for the first 10 years;
• Adoption of a standard utility model for regulating long-term revenues after the network build is completed;
• Commitment to include key non-price terms in the WBA.

With the revised SAU, now lodged with the ACCC, a formal process will be undertaken by the ACCC to assess the reasonableness of our proposal. This will involve consultation by the ACCC with industry. Today we are publishing the lodged 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 the key features of the SAU and the rationale behind the approach. In addition, NBN Co has also published its supporting submission on the SAU, along with a number of expert reports that have analysed various aspects of the proposed SAU.

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