ACCC launches NBN wholesale standards inquiry

Citing concern over the high number of complaints from consumers on NBN services, the ACCC has launched an inquiry into its wholesale service standard levels.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has announced that it will conduct a public inquiry into the appropriateness of the wholesale service standard levels for the National Broadband Network (NBN) company.

The ACCC said it will be determining whether regulation of wholesale service standards, including resolutions for consumers when wholesale standards are not reached, is necessary in order to improve NBN customer experience.

"We are very concerned about the high number of complaints from consumers around poor customer experiences, particularly in relation to customers connecting to NBN services and having faults repaired," ACCC Chair Rod Sims said.

"Many of these complaints relate to matters set out in wholesale service level standards. We will examine whether the service levels that are currently in place are appropriate and effective."

NBN's wholesale service standard levels are presently set out in its commercial agreements with retail service providers (RSPs), and include performance and operational objectives and targets for NBN's services; requirements for when service levels are not met; and the framework under which RSPs can claim rebates or compensation for their customers when NBN fails to meet its service levels.

"One of the main focuses of our inquiry will be whether there are appropriate incentives for NBN Co to remedy service failures, along with the adequacy of compensation available to wholesale customers, to ensure consumers in turn are provided appropriate redress when things go wrong," Sims explained.

"While our inquiry will focus on NBN wholesale service levels, we will examine them in the context of the supply chain."

Sims added that the ACCC is "concerned" that some of the retail-level service levels are unenforceable.

The announcement follows the ACCC publishing its Communications Sector Market Study: Draft report [PDF] on Monday, which said "immediate measures" are needed to address dissatisfaction with speeds and rising consumer complaints.

The commission's report had pointed to the Australian Communications and Media Authority (ACMA) research on NBN migration issues, and said it would be proposing to examine NBN's service standards, particularly in regards to "incentives in place along the supply chain".

Also needing investigation is the "allocation of responsibility" for faults between NBN and RSPs, the regulator said, along with whether there are incentives for repairing faults and compensation for consumers.

"As NBN Co is moving from the rollout phase to delivery of services, risk allocation must also shift to ensure services are delivered to consumers that meet expectations of quality. We will consider whether the proposed allocation of responsibility is appropriate and whether regulatory intervention is necessary, for example, by including service level terms within NBN Co's regulated terms of access," the ACCC report said.

The ACCC said it also supports recent amendments made to the Telecommunications Industry Ombudsman (TIO) terms of reference requiring NBN and RSPs to cooperate on resolving consumer complaints, and said the TIO should collate NBN complaint data according to technology type.

Migration and experience issues also "stem from failures in retail and wholesale markets that could largely be overcome through more accurate information, improved information flows, and better coordination", the ACCC said, adding that speed issues can be addressed by improved information from retailers such as abiding by its recently released guidance on how RSPs should advertise NBN speeds.

Speed advertising compliance should be enforced through Australian Consumer Law as of 2018, it added.

"There are a number of aspects to this issue, the most significant of which are the choice of speed tier made by a consumer when migrating to the NBN and the provisioning of connectivity virtual circuit (CVC) capacity by service providers to deliver the speed and user experience appropriate to that speed choice during the busy hours," the ACCC said in its draft report.

"A potentially significant factor contributing to these outcomes is that current average revenues per user for NBN services may not be sufficient to meet NBN Co's long-term cost-recovery requirements."

NBN is currently dealing with the wholesale pricing model through consultation with retailers on CVC, which the ACCC last month declined to step into, saying an industry-led decision would be preferable.

However, its draft report on Monday said it would "consider exercising our regulatory powers where this would support these market outcomes being realised sooner".

Also needing examination is the NBN wholesale aggregation market, the ACCC said, with smaller providers currently unable to connect to all 121 points of interconnect (POIs) themselves. The ACCC suggested that NBN offer transitional products and pricing measures while the rollout is taking place in order to assist smaller retailers to enter the market, and said it will examine the supply of transmission services to POIs as part of the Domestic Transmission Capacity Service (DTCS) declaration and Final Access Determination.

Following questions last week over NBN's commercial viability, the ACCC said the government could instead directly fund the satellite and fixed-wireless networks through the Budget; introduce debt-relief measures; or re-evaluate NBN's assets instead of extending the rural broadband scheme (RBS) charge to non-NBN mobile services.

The ACCC's NBN wholesale standards inquiry will see a discussion paper released in December, with submissions on this due in the first quarter of 2018 and an inquiry conclusion in December next year.

Previous ACMA Coverage

ACCC suggests Budget funding for non-commercial NBN services

The ACCC has said NBN's cost-recovery process should be addressed through direct government budget funding for its non-commercial networks, debt-relief measures, or re-evaluating assets.

ACCC leaves CVC decision to NBN and retailers

The ACCC has said it will not add FttN, FttB, and HFC services to the special access undertaking until NBN finishes consulting with retail service providers and decides whether to amend its CVC pricing structure.

Telstra to introduce unlimited NBN data plans

Users paying more than AU$99 a month will get unlimited data, with other users promised a data doubling.

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