The Australian Competition and Consumer Commission (ACCC) today approved an agreement between NBNCo and SingTel Optus for the migration of Optus’ hybrid fibre coaxial (HFC) customers to the forthcoming national broadband network and the partial decommissioning of Optus’ HFC network. NBNCo will pay A$800 million to Optus as part of the deal.
The ACCC decided that the resulting lessening of competition from the agreement was outweighed by benefits to the public good. Justification for this rested on a range of issues, including the fact that Optus did not intend to improve or expand its HFC service in the future so that its network would only provide a close substitute to the NBN for lower end broadband services. Further, and partly as a result of this lack of investment, growing customer demand for higher speed services means consumers would naturally migrate to the NBN (and away from the HFC network) over time if the agreement did not proceed. The HFC network would then be uneconomic to operate once a critical mass of customers were lost. This decision confirms a draft decision made by the ACCC in May 2012.
Frontier (Australia) advised Optus and NBN Co in regard to their submissions to the ACCC.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
