By Lucy Battersby
The competition watchdog has watered down rules designed to prevent NBN Co from offering different contracts around the telecommunications industry, to give the government-owned company more flexibility in commercial negotiations.
This contrasts with government stipulations that NBN Co not discriminate between providers in its commercial contracts. This policy was designed to prevent large companies from getting bulk discounts on the NBN, which would allow them to offer lower retail prices and reinforce their market dominance.
NBN Co would now be allowed to offer different commercial contracts to retail service providers — its direct customers — providing all customers were offered equal conditions, the Australian Competition and Consumer Commision (ACCC) has proposed in a discussion paper for the industry.
It would also permit NBN Co to negotiate one-on-one deals with retail service providers providing all were offered the same deal or it was in the long term interest of retail customers.
However, emerged in commercial negotiations that the strict non-discrimination conditions were hampering NBN Co, because all commercial agreements would have be re-written if one company wanted different conditions — even if no other companies wanted or objected to those conditions.
NBN Co has been negotiating a 12-month wholesale contract without about 25 companies in recent months, with a view to signing five-year contracts in late 2012.
ACCC commissioner Ed Willet said it had become apparent from discussions with the industry that NBN Co could not write a one-size-fits-all commercial contract for the industry. However he also said the ACCC would be on guard for anti-competitive behaviour and would not permit volume discounts.
The draft proposal noted that ‘‘the ACCC has also identified certain conduct which is at high risk of breaching the non-discrimination provisions. In particular, [NBN or any other network owners] will not be able to favour a particular access seeker based on the size of their customer base (and their represented value to the network access provider) by offering volume discounts.’’
The ACCC said it would take a ‘‘pragmatic approach’’ to non-discrimination provisions and would not require all commercial agreements be identical providing all customers were given ‘‘equal opportunity to obtain the same term, condition or treatment’’.
The ACCC has also suggested NBN Co be allowed to negotiate new contracts one-on-one with wholesale customers, ‘‘provided access seekers in the same class are subsequently offered the opportunity to amend their [contracts] in response to the outcomes of those negotiations’’.
‘‘Where differences across [contracts] are identified, the ACCC will investigate whether access seekers belonging to the same class have been given an equal opportunity to obtain the same term, condition or treatment. If access seekers belonging to the same class have been given an equal opportunity to obtain the same term, condition or treatment, the ACCC will generally consider that the non-discrimination obligations have not been breached.’’
Submissions are due by February 3, 2012.