The Australian Competition and Consumer Commission (ACCC) has released a draft decision proposing approve specific provisions within the revised agreements between NBN Co and Optus.

These arrangements involve the progressive migration of Optus’ HFC subscribers to the new multi-technology NBN, while parts of Optus’ HFC network are integrated into the NBN.

The revised agreements form part of a broader transaction between the parties, which involves the acquisition of Optus’ HFC assets. Under the Competition and Consumer Act (2010), the ACCC is not able to authorise acquisitions. The parties have asked the ACCC to consider the proposed acquisition separately under its informal merger review process (which takes into account the impact on competition but not public benefits).

In assessing the application for authorisation of the revised arrangements, the ACCC has had regard to the likely future without the conduct for which authorisation is sought.

“The ACCC accepts that in the absence of the revised arrangements, NBN Co and Optus would continue to operate under the terms of their original agreement, as authorised in 2012,” ACCC Chairman Rod Sims said.

“The ACCC concluded that it would not have exercised its discretion to initiate a revocation process for the existing authorisation having regard to the need for regulatory certainty and its view that the balance of benefits and detriments identified by the ACCC in 2012 was not likely to have changed, despite policy and technological changes since then.”

“This is because Optus would still be unlikely to invest in significant upgrades of its HFC network in order to provide infrastructure based competition beyond the short to medium term,” Mr Sims said.

“This means that Optus would cease to be a network competitor to NBN Co in any event and so little, if any, additional public detriment is generated by the revised arrangements.”

The ACCC accepts that the revised arrangements are likely to result in some benefits to the public, by:

  • Allowing NBN Co to access the fibre components of Optus’ HFC network and avoid inefficient investment in additional distribution fibre on these parts of the multi-technology NBN,
  • Providing consumers with a greater choice of service providers and access to a greater range of broadband products sooner than they otherwise would have, and
  • Facilitating less disruptive customer migration to the NBN.

“The ACCC acknowledges the revised arrangements form part of a broader proposal for NBN Co to acquire Optus’ HFC network assets, and that utilising existing HFC infrastructure in rolling out the NBN is likely to generate cost savings,” Mr Sims said.

The ACCC is now seeking submissions from NBN Co and interested parties in relation to its draft determination before making a final decision in August/September 2015.

nbn CEO Bill Morrow welcomed the move.

“Today’s decision is yet another significant step that enables nbn to deliver better broadband to every Australian as soon possible and at the least possible cost.

“The agreement between nbn and Optus delivers clear benefits to families and businesses. We are pleased to see that the initial view of the ACCC is the same.”

The rollout of the nbn™ network is due to be completed by 2020. All the technologies being used in the nbn™ network are capable of being upgraded to deliver faster speeds and greater capacity when consumer demand calls for it.

Earlier this year, nbn announced plans to introduce into its HFC network the high-speed cable technology, known as Data Over Cable Service Interface Specification (DOCSIS) 3.1, which puts nbn on a path to offer Gigabit broadband services.

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