Aussie Broadband chief warns NBN soft cap will be useless until May 2022

Aussie Broadband continues its attack on NBN's usage-based CVC pricing.

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Image: Aussie Broadband

Managing director of Aussie Broadband Phil Britt has issued a warning that NBN's proposed soft cap will be useless for half of its life.

Last week, NBN floated the prospect of a soft cap on overage CVC charges to limit the amount Australian telcos have to pay for increases in traffic.

For the soft cap to kick in, total NBN costs before rebates for any telco would need to rise 7% across a three-month rolling average, and the telco would need to keep customer churn below a threshold of 10% on top of its yearly historical churn. A fair use provision is floated as being set around the 30% to 40% mark.

Britt said that even with a soft cap in place, margins for ISPs would decline by 7% over the coming two years, which would lead to increased customer prices or reduced quality. Combining this with a mixture of rebates interacting with the cap, the cap itself would be useless until May 2022, he explained.

NBN said it would also look to begin consulting on a special access undertaking variation that would be its long-term pricing vehicle, which the ACCC welcomed.

The proposal arrives after retailers kicked up a stink when NBN attempted multiple times to taper off its CVC boost due to the pandemic outbreak in 2020.

"We welcome and are encouraged by the ACCC's recently announcement about taking a blank sheet approach to NBN's pricing structure, and the consultation process that's been announced," Britt told the CommsDay Summit on Wednesday.

"However, it's likely that this process will take at least two years, and we believe significant damage to the industry's reputation and/or retail price rises may happen in the meantime.

"We strongly believe NBN needs to urgently rebalance its access prices, and remove usage pricing altogether."

Also speaking at the summit, Shadow Communications Minister Michelle Rowland called on NBN to release the flat-price modelling it has developed but refused to release.

"NBN Co argued they could not do this because, if they did, not all providers would be happy with the model they produce," she said.

"With all due respect, the notion that a wholesale operator requires industry-wide support on modelling that nobody has seen, before it will release it for consultation, is, a most unflattering tribute to circular logic.

"If the removal of variable capacity charging is a bad idea, then simply release the modelling to retail providers and make the case for why that is so."

Rowland added the proposed NBN pricing makes it more complex, and it would be reasonable for the ACCC to look into it.

The shadow minister also struck out at the boards of Australia Post and NBN Co over bonuses, whether in the form of millions of dollars or Cartier watches.

"Working for Australia Post, or the NBN, or the ABC or the SBS is a reward in and of itself," Rowland said.

"That is the nature of public service and the privilege of opportunity it affords."

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