NBN Co offers more reductions in new SAU proposal

Stephen Rue (NBN Co)

NBN Co has released its revised special access undertaking (SAU) and discussion paper citing price cuts, caps, limitations and a conditional expiry.

After receiving a letter from shareholder ministers – Minister for Finance Katy Gallagher and Minister for Communications Michelle Rowland – about its proposed SAU needs to reflect policy changes, NBN Co has come back to the table, claiming it has recognised “the changes in the policy landscape and operating environment since the previous proposed SAU variation was lodged in March 2022”.

Now, the key changes in the latest proposal, according to the National Broadband Network (NBN) builder, revolve around further reductions, NBN Co CEO Stephen Rue has claimed.

“The policy landscape has changed since we lodged our original proposed SAU variation in March, allowing us to reconsider our proposal. We are suggesting further changes to the SAU over and above the significant changes we had already proposed and in the context of delivering government policy,” he said.

For example, it is looking to remove Connectivity Virtual Circuit (CVC) charges and introduce Access Virtual Circuit- (AVC) only pricing for the wholesale speed tiers of 12, 25 and 50 Mbps by 1 July 2026.

This comes in addition to its previous commitment to remove CVC charging and introduce AVC-only pricing for plans at 100 Mbps and above whole speed tiers by 1 July 2023. 

It is also looking at “significant” wholesale price reductions to AVC-only pricing on key higher speed tiers by 1 July 2023 and reducing the wholesale bundle charges or additional data inclusions on 12, 25 and 50 Mbps wholesale speed tiers.

In addition, it has also presented the introduction of a weighted average price cap (WAPC) that will initially cap NBN’s overall pricing on average at CPI, bring in further limitations on drawdown of the initial cost recovery account (ICRA) and set benchmark service standards for each regulatory period with oversight from the ACCC.

On top of all of this, NBN Co is also including the automatic expiration of the SAU before 2040 on the condition that a future government gives up control of the NBN.

“We are proposing further reductions in wholesale pricing while also seeking to ensure we remain financially resourced to invest in upgrades to the network for both speed and reliability,” Rue said.

“We need to maintain our ability to repay government and private debt and ensure we remain capable of achieving a standalone investment grade rating, without requiring any additional government funding beyond existing commitments.

“We have reviewed the detailed submissions to the ACCC consultation paper and considered this important input. Central to our ongoing discussions with the government, ACCC, retailers and other key stakeholders is the need to meet the growing broadband access needs of end customers, at a fair price, over the long term. This includes making sure we have appropriate wholesale speed tiers to suit a range of customer segments.

“We appreciate that retailers want price certainty, and this proposal provides for that. We believe that it is in the entire industry’s best interests that we build shared capabilities around a strong, competitive and continuously improving [the NBN] network with an excellent customer experience.”

The ACCC is expected to provide a platform for further consultation later this month, seeking input from internet retailers and consumer advocacy groups.

After this, NBN Co plans to submit its revised SAU variation proposal in October, with it then implementing the revised SAU pricing within six months of its acceptance.

The first SAU proposal, which was submitted to the Australian Competition and Consumer Commission (ACCC) in March and open to submissions from stakeholders in May, was viewed by the national watchdog as, among other aspects, raising the prices of the vast majority of speed tiers on the National Broadband Network (NBN).

As part of the submission process, telecommunications coalition Commpete stated the SAU was “an appalling response to the pressures and problems, needs and preferences that were identified through the ACCC’s working group process”.