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The primary means by which this will occur with be through the, established process of NBN Co submitting to the ACCC a 'special access undertaking': a document setting out details of its services, the prices it intends to charge and other terms and conditions it will impose on its customers.
The ACCC has the option only to accept or reject the undertaking. If it is rejected, NBN Co will be able to amend it and submit it as a new undertaking.
This was the hurdle that prevented Telstra going ahead with its plan for a large scale FTTN network during the reign of Sol Trujillo. Telstra had tried to get the Government to override the ACCC and give the network the go ahead, but was told to submit a special access undertaking to the ACCC. It chose not to do so and, in December 2005 put its FTTN plans "on hold" indefinitely.
In an address to a conference last month, ACCC commissioner, Ed Willet, said: "We have encouraged NBN Co to engage with industry in developing product and pricing proposals for the NBN. Such proposals are likely to feed into a special access undertaking that NBN Co would submit to the ACCC for assessment."
He added: "We have had a number of productive discussions with NBNCo about a prospective special access undertaking and particular aspects of access to the wholesale fibre services to be provided over the NBN.
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Willet said the ACCC was supportive of the Government's plan for NBN Co to be a wholesale-only open access provider (however provision in the draft legislation for NBN Co to be permitted to retail services to government users is causing concern in the industry), but "the ACCC is facing some unique challenges in developing an approach to regulating a 'start-up monopolist'."
Willet explained: "We are dealing with multiple variables, for example product development, while likely demand and costs are all being determined by the network operator at the same time as the regulatory environment is being shaped."
Willet said the ACCC and NBN Co had to tackle some "fundamental issues" around the planned special access undertaking. These, he said, included: service description, product offerings, and location of points of interconnect; NBN Co's pricing methodology and its stated position to 'price with reference to existing services'; and balancing short term flexibility against long term certainty.
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One of the biggest challenges the ACCC will face will be whether or not to accept NBN Co's proposed wholesale prices for access to its network, in the absence of any historical data. To do so it will have to decide on a timeframe over which investment costs can reasonably expected to be recovered.
"One of the benefits of a longer term perspective is that it enables the costs of the investment to be recovered over a longer period, which has important implications for access prices," Willet said.
"If an artificially short perspective was adopted and given low initial utilisation, this may pose risks and concerns for NBN Co and unfairly burden access seekers and consumers with high initial access charges. Other concerns for NBN Co might include a stifling of demand in the short term."
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