The ACCC Has Decided How Much Accessing Superfast Broadband Networks Should Cost Providers

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Back in October 2012, the Australian Competition and Consumer Commission declared a local bitstream access service (LBAS), then in July 2016, a superfast broadband access service (SBAS). This means that the network owners must provide access to the service if requested, so that all service providers have access to the infrastructure they need "to supply competitive communications services to end-users".

When a commercial agreement can't be reached, prices apply. Today the ACCC have released a draft of what those prices would be.

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 regulated aggregation charge will also apply to the LBAS.

Different prices apply for Telstra's fibre access broadband (FAB) services supplied in South Brisbane and its Velocity Estates. This is because these networks were built to work with Telstra's legacy copper-based systems and because they are expected to move to the NBN within the next few years.

The draft Telstra FAB prices are similar to those prices set in line with the NBN and will initially be $23.45 per port per month (Zone 1) and $28.46 per port per month (Zone 2) and $16.65 per Mbps per month for aggregation. These changes bring a significant reduction in the aggregation charge – by $12.62 per Mbps per month from current levels.

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 covers 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.

Other technologies capable of supplying superfast broadband services (defined as services capable of download speeds of at least 25 Mbps) that are not covered by the SBAS and LBAS declarations are fixed wireless, satellite, and mobile.

"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".

Sims says 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. The ACCC expects that these wholesale price changes will likely lead to lower prices for retail customers of superfast broadband providers.

The major SBAS and LBAS networks expected to be subject to the Final Access Determinations include those operated by Telstra (South Brisbane and Velocity Estates networks), TPG, Vocus, LBN Co, Opticomm, and OPENetworks.

"The ACCC has been mindful of the regulatory burden our decisions can place on small providers," the ACCC said in a statement. "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)".

This decision has been made "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".

The ACCC has also provided for prices to incorporate the Government's proposed industry levy on superfast local access lines "to help fund NBN's supply of non-commercial regional fixed wireless and satellite services".

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

[ACCC]

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Comments

    Hang on, does that mean that for 25Mbps they can charge $25 + 25x$15.25 = $406.25 per month?

    I hope that isn't the case.

    Soo.. a gigabit connection would be $15,277 per month? What am I missing?

    @PharmboyAndy, @namarrgon

    These are wholesale prices that the ISP pays. The Mbps rates advertised by your ISP are the maximum rate attainable prior to broadband throttling and congestion. Every ISP will highlight this as a T&C item, that the rate in their plan is the max theoretical rate according to NBN Co.

      Yeah I get that these are wholesale aggregate rates, covering intermittent usage over a number of customers - but that still seems very high for what's being resold. Or alternatively, ISPs are underprovisioning dramatically more than I thought.

      If I resold my above gigabit link to 250 customers as 100 Mbit connections, base costs of $61 each wouldn't leave much room for my other costs let alone profit. Yet if just a quarter of them tried to watch a stream or two of Netflix in the evening then my backhaul would be maxed in no time, and they'd get only 16% of what they paid for - minus whatever the other three-quarters are using.

      Similarly, if I have a business customer who wanted a dedicated gigabit line with guaranteed bandwidth, I'd have to bill them close to $20k a month? Is that really the going rate?

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