Tension as NBN trial agreement ends


news Tension is mounting between the National Broadband Network Company and its retail ISP customers about the final form of the wholesale agreement which will govern their relationship, with an impasse likely to leave the two sides unable to connect new retail NBN customers once an initial trial agreement ends on Thursday this week.

The Financial Review newspaper reported this morning that the major ISPs — Telstra, Optus, iiNet, Internode and so on — were refusing to sign up to what is known as NBN Co’s wholesale broadband agreement (WBA), with Internode carrier relations manager John Lindsay stating that NBN Co was “ignoring the legitimate concerns” of the ISP community. The ISPs’ concerns appear to focus around the need for the Australian Competition and Consumer Commission to be able to oversee the arrangements, as well as the levels of risk accepted by NBN Co.

The criticism echoes complaints made by the Competitive Carriers Coalition, an umbrella group for a number of the ISPs, which slammed NBN Co in December for what it said was poor behaviour by the company in not giving ISPs access to “the full suite of ACCC protections.”

“NBN Co’s extraordinary behaviour in trying to force retail service providers to sign contracts that quarantine it from important ACCC protections, and which would make retailers bear unreasonable risks, is unfortunate and a sad reflection on the failure of its management to understand why NBN Co was created in the first place,” a CCC spokesperson said at the time.

The issue has come to the forefront of the NBN debate this week due to the timing of the ending of a previous catch-all trial agreement signed between NBN Co and ISPs, which has allowed companies like Telstra, iiNet, Internode and Exetel to successfully sign up customers in the NBN’s early stage rollout areas. The deal was signed with the aim of helping ISPs and NBN Co quickly kick-off the NBN deployment process while much wider and longer-term negotiations over the final form of their relationship would take place.

However, NBN Co confirmed this morning, the conclusion of the trial contract on Thursday this week will leave the company unable to connect new retail customers on its network for some ISPs, as some ISPs have declined to sign its new one-year wholesale broadband agreement, meaning that there will be no overarching contract governing the relationship between it and the ISPs.

Despite comments from the ISPs that NBN Co was ignoring their issues with the wholesale broadband agreement, the contract actually went through five draft versions and extensive consultation with the telecommunications industry before the final contract was published in November last year.

“We released five versions of the WBA before publishing the final standard form of access agreement, giving industry ample opportunity for formal feedback, to participate in deep dive consultations or to otherwise provide comment,” an NBN Co spokesperson confirmed in a statement this morning.

When the current agreement was released in November, NBN Co emphasised that the process of putting wholesale broadband agreement together had been exhaustive, commencing in October 2010 and involving five consultation rounds with industry, five separate drafts and “many hundreds of hours of face to face discussions”.

“In assessing the views expressed by its wholesale customers as part of this consultation process, NBN Co has undertaken a comprehensive review of current wholesale terms and conditions prevailing in the telecommunications industry in Australia,” the company said at the time. “NBN Co has also had regard to the ACCC model terms and conditions, approaches found in other regulated network industries (such as the industry wide dispute resolution model), its own corporate plan, government policy objectives, and terms and conditions of supply of telecommunications carriage services in other jurisdictions.”

At the time, NBN Co appeared to acknowledge that the situation was changing and complex. To address some of the concerns about its document, it reduced the term of the contract from five years to one year. In addition, it stressed that it expected many of the issues which have been raised about the contract to be addressed through the ACCC’s examination of its much broader Special Access Undertaking document, which will guide how it deals with the ISP industry over the next decade and beyond. The document is currently being assessed by the ACCC and is subject to its own consultation process.

NBN Co has also made provisions in the WBA to incorporate outcomes of this process; to facilitate what it said were “additional commercial protections” for the ISPs. “Where commercial agreement cannot be reached on non-price terms not covered in the SAU, or where NBN Co introduces new prices after the SAU commences, the ACCC can be called upon to settle an outcome,” NBN Co said at the time. “Once the ACCC has made its decision, NBN Co will make the outcome available to all our customers.”

Today the company said it was “committed to having wholesale broadband agreements which are fair and reasonable to all parties”, adding: “We have made provision for further opportunities for the development of the WBA over time.”

My opinion on this one is that the ISPs are blowing a lot of hot air.

Firstly, it is very clear that NBN Co has consulted extensively and repeatedly during the process of putting this document together. Five drafts? Over a period of a year? With “hundreds of hours” of face to face discussions with ISPs about the document? Frankly, I think NBN Co has done a pretty amazing job of being open, transparent and consultative here.

Secondly, most of the ISPs’ complaints appear to revolve around the idea that the ACCC does not have enough oversight of NBN Co’s relationships with the ISPs. On this point I find it hard to side with the ISPs, when NBN Co has a gargantuan special access undertaking agreement currently filed with the ACCC, which, again, the ISPs have been invited to comment on in detail. And, as NBN Co has noted, it has made provision that any outcomes from that process can be incorporated into the wholesale broadband agreement anyway.

Lastly, there is also the fact that this agreement is only for a year, and NBN Co has incorporated mechanisms for ISPs to discuss how future contracts will be re-worked. It is likely that only a few hundred thousand customers at most will be signed up to the NBN in total in 2012. So it’s not as if the whole Australian customer base is there for the taking right now. ISPs are quibbling about a short-term agreement which they will have the chance to re-work later on.

My message to Australian ISPs is this: Either sign the goddamn document and keep connecting customers to the NBN, which, after all, is what everyone in this situation wants, or issue a much more comprehensive and public response detailing precisely what your reasons are for blocking the progress of this important national telecommunications project. And during this whole process, ask yourselves: Who would you rather be negotiating with — NBN Co or Telstra?

Update: In a very useful article here, ZDNet.com.au has reported that 11 out of NBN Co’s current 22 ISP customers have signed the agreement. I assume those 11 are mostly the smaller companies ;)

Image credit: Sias van Schalkwyk, royalty free


  1. That NBN Co state that the ACCC have been heavily involved, and that these issues could/should have been raised by the ISPs earlier is quite true.

    I went to three of the WBA update meetings, and at two of those there was a whole swag of ACCC people there, and involved with the discussion. Including people from high up in the regulatory departments of certainly Telstra and Optus, and other major players.

    None of them were complaining about this stuff at those meetings.

    Make of that what you will.

  2. “And during this whole process, ask yourselves: Who would you rather be negotiating with — NBN Co or Telstra?”

    I’m sure Telstra would love to be negotiating with Telstra. :o)

  3. “It is likely that only a few hundred thousand customers at most will be signed up to the NBN in total in 2011”

    what about in 2012?

    also, how do i format text in the comments?
    ie. italics and or bold etc.

  4. I think it’s mostly a case of the ISPs have all the power here. After all, it’s NBNCo that’ll look back if ISPs are not able to sign up new customers so they can throw in a few last-minute changes as they like.

    Though from the text of the article, it appears that not all ISPs are in this boat — some have agreed to sign the WBA? Do we know which ones have signed it and which ones are refusing? I guess Telstra, Optus, iiNet and Internode are the major ones and they’re flagged as “refusing”…

    My prediction is that they’ll come around at the eleventh hour. We’ll see how that pans out :-)

  5. Honestly the ISP aren’t telling the full story because of their wholesaler agreements would prevent them from explaining why they appear to be blowing hot chunks of steam.

    Until they push the limits of their commercial confidential agreement with the NBN. The Public won’t understand

    • We know exactly what ISP’s are paying for NBN access, it is tabled in the NBN Co Business Plan, it’s not one price for BigPond and another for iiNet, it is the same for all ISP’s, I am not sure what you mean by that ‘confidentiality agreement’ for each ISP.

  6. Renai,

    On page 5 of the AFR today, Steve Dalby from iiNet is quoted explaining the key issues that NBNCo don’t want to fix to date. So thats not a secret – and you can answer your call for ISPs to explain by just reading the paper.

    Do you really think that every major ISP is being pig-headed for the sake of it, after years of supporting the NBN?


    You don’t have the full picture, and the picture you’re drawing as a result is a very twisted one.

      • Well here is a summery courtesy of ZDnet

        According to iiNet’s chief regulatory officer Steve Dalby, the concerns that iiNet had with the contract — disallowing regulatory oversight, and NBN Co accepting no liability for customer-service guarantees, negligence or network outages — still remained.

        The last part about NBNCo not accepting liability for negligence is quite serious, especially considering they are a monopoly and companies won’t exactly have a choice to use someone else for a fixed line connection

          • If the NBN is ultra-reliable, then NBNCo shouldn’t have any problems accepting liability for issues on their network.

          • As Mathew has said, thats besides the point

            Such an agreement shouldn’t exist, because things DO go wrong (and NBN already had issues in the past). If a network outage is NBNCo’s fault, they should be 100% liable, considering that everyone will have to go through them

          • The problem is the circular blame game, at present many ISP’s take the attitude when in doubt you can always blame Telstra, nothing much will change in the future, replace NBN Co for Telstra and add Telstra to the ISP list.

          • I thought fibre was perfect and could never go wrong, and copper is the devil incarnate

            Am I right folks?


  7. I find it very hypocritical that the ISPs are complaining that the ACCC aren’t babysitting NBNco enough, when they’ve let Telstra have free reign for years and apparently NBNco is the company that has to be scrutinized.

    • Clearly you haven’t been reading the newspapers or tech news/blogs for the last decade then Goddy…

  8. It doesn’t sound right that the refusal to sign is based on:

    ‘NBN Co’s extraordinary behaviour in trying to force retail service providers to sign contracts that quarantine it from important ACCC protections,’

    Because the ACCC’s jurisdiction over the NBN Co is legislated, like all ACCC powers over any industry group, it would be interesting to know from any of the ISP’s listed which ACCC protections are being attempted to be overridden here, as I would have thought it was something you could not waiver under a contract anyway.

    • there is a well-known legislative provision that anything agreed to privately between NBNco and an access seeker in a formal contract is immediately removed from the ACCC’s jurisdiction and purview.

      • That’s correct. An executed WBA ‘trumps’ an ACCC determination. That is completely arse-about and we have (as an industry) highlighted this bizarre situation.

        Once we sign that WBA, the ACCC is sidelined. Given the leopard doesn’t change his spots, we are keen to see the real NBN. It would appear that their current behavior is not something we’d be happy with, without ACCC oversight.

    • An executed WBA ‘trumps’ an ACCC determination. That is completely arse-about and we have (as an industry) highlighted this bizarre situation.

      Once we sign that WBA, the ACCC is sidelined. Given the leopard doesn’t change his spots, we are keen to see the real NBN. It would appear that their current behavior is not something we’d be happy with, without ACCC oversight.

      • It would be interesting to know what particular aspects of the WBA sidelines the ACCC, especially as far as I know the ACCC SAU has yet to be approved by the ACCC.

        I would have thought there would be aspects of WBA conditions that overlap with that SAU, in the light of all of that it would also be interesting to hear what the ACCC thinks of these WBA’s, keeping in mind the NBN Co will be a monopoly supplier and be controlled just like the Telstra copper has and still is today.

  9. Sad to see a Labor government gradually crippling what should be a viable and competitive industry. NBN Co is just going to be Telstra Mk II.

  10. Sorry Remai, I didn’t know that your approval was part of the official contract process.

    We’ve detailed our issues to NBN Co repeatedly over the two years and five versions and guess what ? They still haven’t provided us with satisfaction on the items we’ve spelled out, over and over.

    Just because NBN Co says they’ve consulted widely, doesn’t mean they’ve satisfied the issues identified by the companies they depend on to sell their product.

    Now they are threatening to cut off their supply of new business if we don’t cooperate and sign. I ask a simple question – is that a sign of a rational negotiation?

    It’s ok – I know the answer.

    We’d like to get the damn thing signed, but not the way it’s currently worded – they know that – because we’ve told them. But shutting down their core business (connecting new services) damages them without really affecting our business plans, so it’s a bizarre threat.

    • hey Steve,

      thanks for your comment, I really appreciate it!

      Just so we’re clear, would you be able to lay out your issues with the WBA as it currently stands — the ‘dealbreakers’? That would help us a great deal in our discussion of it.

      I understand what you’re saying about ACCC determinations, but NBN Co has a concept in the WBA which enables outcomes from the SAU process with the ACCC to be retro-fitted into the WBA. I believe it feels the ACCC SAU process is the correct venue for much of this discussion to take place, and on the face of it I agree with NBN Co on that.

      Could it also be that the ISPs are trying to port much of the current regulatory paradigm into the new NBN world?



  11. Anyone able to provide a link to the conditions of the proposed contracts between the ISPs and NBNCo? Otherwise it’s all just ‘he said’, ‘she said’ speculation.

    But given that “many of the issues which have been raised about the contract (are) to be addressed through the ACCC’s examination of its much broader Special Access Undertaking” is it possible that the ISPs are waiting on the outcomes of the SAU negotiations ? If so then it’s understandable for the ISPs to hold off. And if so then the obvious solution would be to extend the trial period for a set time post the SAU negotiations being concluded.

  12. it would be tactically stupid and reckless for access seekers to put their signature to a contract that contains any major non-price clause that they fundamentally disagree upon and take a punt that a suitable remedy will be provided through a separate and independent process whose ultimate scope and outcome is uncertain.

    only NBNco apologists fail to see this.

    • @efd

      Unlike the bulk of the NBN opponents who bluntly refuse to acknowledge anything NBN positive, there is no doubt; access seekers cannot sign unless they are happy with the deal and I’m sure the pragmatic pro-NBN people (who want what’s best all round, not just what’s best for a company or political party) would agree.

      However, I also believe Renai hit the nail on the head by asking Steve if some ISP’s were simply trying to morph the old Telstra access clauses into the new NBN contract! Because as someone who has supported ISP’s access rights and criticised Telstra for their access tactics, I also believe ISP’s have led a pretty charmed life in a lot of ways too.

      Storm in a tea cup, because this is nothing more than the typical negotiating process, where each side tries to push but has room to move. In the end, they meet half-way and it’s all simply about dotting the i’s and crossing the t’s.

      Basically, NBNCo need to be fair, but not too fair and access seekers need to also be realistic (not try to take undue advantage of the situation) and only NBN grim reapers fail to see this.

  13. Whatever the outcome of the discussions, the NBN Co and the ACCC must deliver a new platform for the Industry and the product consumers. The old situation where the ACCC delivered help to one section of the Industry (after copious crocodile tears designed to deliver financial advantage) must be finished. The level playing field (thanks Senator Conroy) was designed to allow all participants to compete, and survive or die, by open, fair and fierce competition which will be to the benefit of the Australian consumer.

  14. I wouldn’t offer customer services guarantees on the network still in build also. If the NBN give ISPs customer services guarantee does that mean I will be able to get a customer service guarantee on NBN connection from an ISP, something we as consumers have to pay a price premium on at the moment. Although I can understand the objection to the exclusion of provable negligence by the company.

    Now as a full area covered by a PoI is completed and fully tested Customer Service Guarantees should be available with the option of full SLAs as required(at a premium).

    So yes NBNco should be required to take on the risk where the network is fully in their control and within reason. Should this Customer Service Guarantee be any more onerous than the existing USO that applies to Telstra with regards to voice services?

    • I agree mostly with this. Having been involved with any number of “multi-phase” or “progressive” builds of network solutions, it is usually difficult to guarantee the “design performance/reliability” at an intermediate phase.

      The dynamics are just “different”.

      The kicker here is the USO, where there are obviously different expectations again, and where the “shifting sands” create difficulties.

      I do however suspect that most of the reason why the copper stays turned on for 12 months after an area is completed – (this might even have extended to 18 months recently?) – is to provide for USO compliance until each module of the network is up and proven.

      Also, quite logically, there has to be some overlap as not everyone will be able have an NBN service activated on the one day – but overall, their USO obligations are – I believe – right in the forefront of thinking at the moment.

    • Well you hope the USO that applies to the NBN Co is not just about the provision of a voice service especially as yet the NBN Co do not provide a voice ONLY service off their household box.

      If you spend $43 billion dollars on the back of the so called need to take Australia into the digital age the USO obligation in the NBN Co’s case should be be about providing a voice device for all off their ONT box AND as at a minimum the 12 Mbps data service.

      The NBN Co’s obligation to takeover the USO from Telstra should be from the time a Region is declared Ready for service and the full migration has taken place and all the copper and HFC in that region are disconnected.

      Of course the it gets muddied before that time when there is the overlap before the 90% of premises is passed by the NBN footprint in a Region but new services voice and data are all on the NBN.

      You would hope that if a residence has NBN active in the street they are not ringing up Telstra for a new PSTN connection, in reality there is nothing stopping them doing that though, but there must be a point where Telstra says no to a PSTN order and new or transferred connections are NBN only.

  15. The part about ‘not being liable for outages’ looks like leading to the same SNAFU we currently ‘enjoy’.

    The ISP isn’t liable, because its a Telstra issue… and Telstra isn’t liable because they’re only legally required to provide a basic voice line.

    Can’t say I’m overjoyed to see the same kind of crap appearing with the NBN.

    • As an interesting side note, Telstra are technically required to provide a copper line – (or equivalent) – that can carry a voice service AND guarantee dialup modem speeds of 4800 baud.

      …but now I’m showing my age!

      • Telstra are also required to fix faults in side specified time-lines. Although as have been mentions Voice plus 4800baud dialup mean to the line have to be pretty stuffed up to be classed as a fault. They could maintain the some CSG but increase the minimum line standard to 12mb Data.

  16. Perhaps more signatures will be forthcoming as people return to work from their annual holidays?

    I don’t know what experience you have with dealing with either Telstra or NBNCo but from Exetel’s limited perspective there is very little difference that I have noticed.

    I imagine Telstra would find dealing with a mirror image of themselves unpleasant.

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