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ACCC gives small broadband providers a boost in pricing decision

ACCC gives small broadband providers a boost in pricing decision

The competition watchdog aims to normalise pricing between NBN and non-NBN services

The Australian Competition and Consumer Commission (ACCC) has given smaller retail broadband providers a boost in its latest draft determination, which outlines the prices retail service providers without a commercial agreement could pay to acquire National Broadband Network (NBN)-like fixed line "superfast" broadband wholesale services on non-NBN networks.

The Australian competition watchdog released its draft decision for the superfast broadband access service (SBAS) and the local bitstream access service (LBAS) following industry input responding to its discussion paper released in September 2016.

Under the draft decision, the initial prices for providers other than Telstra will be $27.00 per port per month plus $15.25 per Mbps per month for aggregation. The aggregation price is $2.25 less than its existing regulated level.

The major SBAS and LBAS networks affected include those operated by Telstra (South Brisbane and Velocity Estates networks), TPG, Vocus, LBN Co, Opticomm, and OPENetworks.

TPG’s fibre-to-the-basement (FTTB) network rollout, which heavily targeted high-density apartment blocks, and other non-NBN networks rolled out in new housing estates were among the projects that helped to trigger the ACCC's enquiry.

The LBAS is a wholesale access service for fixed line networks that are built or upgraded after January 2011. The LBAS is a ‘last mile’ fixed line service provided to residences and small business where the download transmission rate is superfast (25 megabits per second [Mbps] or faster).

The SBAS, meanwhile, covers the remaining eligible fixed line networks, including those built before 1 January 2011, other than services supplied exclusively to business customers, public bodies, or charity customers within the CBDs of the capital cities.

The ACCC said it anticipates the pricing will match changes in the NBN charges over time.

“A key objective has been to ensure that retail service providers and customers supplied via SBAS and LBAS networks would not be any worse off than if they were supplied by the NBN,” ACCC Chairman Rod Sims said.

“The draft prices have been set in line with NBN prices and will change with NBN prices over time. Prices will reflect the growth in traffic across the superfast broadband sector, which will continue to drive down the average cost of wholesale aggregation services.”

Australian Competition and Consumer Commission chairman Rod Sims.
Australian Competition and Consumer Commission chairman Rod Sims.

“We expect that these wholesale price changes will likely lead to lower prices for retail customers of superfast broadband providers,” he added.

“The ACCC has been mindful of the regulatory burden our decisions can place on small providers. The draft decision proposes to exempt those SBAS providers supplying less than 12,000 end users (down from 20,000 in the SBAS interim access determination),” the consumer watchdog said in a statement.

“This is on the basis of technical advice that the compliance costs for these operators are expected to be high, relative to the expected wholesale revenues and the likely benefits to end users.”

One of these submissions to the ACCC's enquiry came from UXC Consulting which, in its submission to the commission, said, “UXC concludes that the small providers would be negatively affected to sufficient degree to warrant a continuing exemption from SBAS declaration for businesses below a certain threshold.

"However, because of the large range in business models, network architecture and uncertainties in developing a definitive assessment an exemption range has been proposed. The exemption range proposed is a total superfast broadband services figure of between 7,500 and 12,000 services,” the company said.

Submissions on the draft decision are open until 17 February 2017 and a final decision is expected by June 2017.

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