There are a number of further developments that we can expect in the coming months:
- New criminal prohibitions relating to competing superfast networks
On 14 April 2012, the so-called ‘superfast network obligations’ will take legal effect, but with retrospective application from 1 January 2011. The obligations are intended to deter the deployment or upgrading of fixed infrastructure that is competitive with the NBN by requiring all fixed superfast networks to operate on the same wholesale only ‘open access’ basis. All fixed broadband infrastructure owners and controllers in Australia, as well as related entities, will need to ensure they are compliant. The obligations have broad application and involve criminal penalties.
- ACCC approval of NBN Co’s Special Access Undertakings
We anticipate that the SAU proposed by NBN Co may ultimately be accepted by the ACCC, following further amendments (and potentially resubmission) by NBN Co. Once the SAU is accepted, the regulatory parameters for the pricing of the NBN services will effectively be set. The technical features of the NBN will also be locked in place as well as the NBN wholesale contracting structure. Importantly, the revised SAU may also give the ACCC a greater degree of oversight over NBN Co’s current contracting arrangements in order to resolve current industry concerns regarding aspects of those arrangements.
- Commencement of the Definitive Agreements
The ‘Definitive Agreements’ document a commercial agreement between Telstra, NBN Co and the Government that underpins the business case for the NBN. Telstra has agreed to implement copper-fibre migration in return for compensation payments. Telstra has agreed to provide NBN Co with access to key infrastructure necessary for NBN rollout, such as ducts and dark fibre. The Government has agreed to reform the funding of Australia’s universal service obligation and legislation to achieve this is currently before Parliament.
Now that the SSU has been accepted, the last remaining conditions for the commencement of the ‘Definitive Agreements’ should be quickly satisfied. The Minister will need to waive a legislative requirement for Telstra to divest its HFC network and Telstra’s interest in Foxtel. NBN Co will also need to obtain formal approvals from its shareholding Ministers. Once the Definitive Agreements have full legal effect, NBN Co is intending to accelerate its fibre rollout.
- Acceleration of NBN fibre rollout
NBN Co will continue to deploy the NBN in accordance with its rollout programme. As at the end of 2011, around 18,000 premises were passed by NBN fibre and around 4,000 premises were connected to the NBN, primarily for trial purposes and to receive interim satellite services. By the end of 2012, the number of premises passed by NBN fibre should exceed 500,000, comprising roughly 4 per cent of the 12 million Australian premises to be ultimately served by NBN fibre.
Please contact Dr Martyn Taylor, Partner if you have any questions arising from this commentary.