NBN withdraws pricing variation from ACCC

NBN has told the ACCC it wants longer to explore wholesale pricing options following the success of its Focus on 50 discounts, as well as the launch of its new bundles.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has announced that the National Broadband Network (NBN) company has withdrawn its Special Access Undertaking (SAU) variation on wholesale pricing, saying it is continuing to consult with retailers.

"NBN wishes to inform the ACCC that it withdraws the SAU variation with immediate effect," new NBN CEO Stephen Rue said in a letter [PDF] to the consumer watchdog published on Friday afternoon.

"Since the lodgement of the SAU variation, NBN has undertaken several pricing and discounting initiatives and pricing evolution industry consultations. These have included the DBD-R discounting initiative, the Focus on 50 promotion, and the recent launch of the high-bandwidth, fixed-wireless, and entry level bundles discounts.

"The outcomes from these pricing initiatives have been very positive, promoting the long-term interests of end users ... average network bandwidth (CVC) congestion decreased from 256 minutes per week to 38 minutes per week."

NBN added that it will continue consulting with retail service providers on wholesale pricing, after which it will lodge a new SAU variation "as soon as practicable".

"The additional areas which NBN proposes the new SAU variation will cover will include affording additional price certainty to RSPs regarding NBN's pricing and discounting approach going forward, while also providing a reasonable degree of flexibility to NBN to price experiment and introduce innovative and efficient pricing arrangements," Rue wrote.

The ACCC said it would continue monitoring developments, including the transition to the new wholesale pricing as well as changes to fixed-wireless pricing, but expressed concern in NBN using uncertain discounts.

"Our main concern is about the framework for regulating prices over the longer term and ensuring that the framework is effective to continue to meet the objectives of the SAU," the ACCC said [PDF].

"The products established through discount notices are not NBN offers under the SAU, which means that the additional protections, such as the product withdrawal restrictions, do not apply. As such, NBN Co is able to withdraw the bundled offers or promotions, or significantly alter the composition of the products, without consultation with or agreement from the ACCC. This outcome is inconsistent with the intent of the SAU to ensure stability and certainty in downstream markets.

"While the bundled offers and promotions that have been introduced will benefit consumers who want premium products, it may result in a detrimental impact on those consumers who are price sensitive or who want to obtain a service on the NBN that is of equivalent quality and price of legacy services."

NBN had submitted its SAU variation in mid-2017, with the ACCC in October last year announcing that it would let the discussion between NBN and RSPs on wholesale pricing run its course, as an industry-led solution would achieve better outcomes for consumers.

"There has been a lot of discussion about NBN Co's pricing, particularly around capacity issues and whether it is impacting consumers' experiences on the NBN," ACCC Chair Rod Sims said a year ago.

"We think an industry outcome on NBN pricing is the best solution and preferable to a regulatory outcome. We welcome NBN Co's initiative here, and will let the process run its course."

Read also: Telstra calls for near halving of NBN wholesale price

The variation was submitted in May 2016 for the purposes of incorporating NBN's multi-technology mix (MTM) networks of fibre to the node (FttN), fibre to the building (FttB), and hybrid fibre-coaxial (HFC) into the SAU, and extending the existing price terms to these.

Since then, fibre to the curb (FttC) has been added to NBN's stable of networks.

"We do not think it is appropriate to make a decision on the SAU variation until the pricing consultation is further progressed," Sims said, after the ACCC in June 2017 said it would prefer NBN and retailers to reach a CVC resolution themselves upon rejecting NBN's proposed SAU variations in March and receiving a revised variation in August.

In December, NBN then unveiled its Focus on 50 pricing discount, and in May this year launched its new wholesale pricing bundles after several months of consulting with industry.

NBN last month cited its temporary 50Mbps discounts as the reason why over 2.1 million premises are now on higher speed tiers -- but said its dropping network congestion would "fluctuate" as its new pricing bundles take effect.

"We have put in place support and resources to help internet providers adjust to the new billing solutions and changes to IT systems. These aren't things that affect consumers directly, but they need to be carefully managed with the industry to minimise disruption," NBN said in a blog post.

"Our team has built bulk migration tools to help internet providers shift large volumes of customers to the new bundle discounts. A dedicated team will be on standby to provide support should internet providers need it.

"We will also continue to monitor congestion levels."

NBN added that it is working on a "Fixed Wireless Plus" product, after it ripped up plans to offer 100/40Mbps services and told Senate Estimates in June about plans to throttle "extreme" fixed-wireless users.

New NBN CEO Stephen Rue in August revealed NBN's new wholesale fixed-wireless pricing -- AU$45 for existing customers and AU$65 for new customers on the 50/20Mbps speed tier -- during a joint standing committee hearing; however, after backlash the company retreated.

Recent NBN Coverage

Editorial standards