Telstra and Vodafone don’t like proposed NBN rebates system

Submissions to the ACCC on its NBN rebate inquiry have shown that Vocus, Telstra, and Vodafone all have issues with the current wholesale service standards.
Written by Corinne Reichert, Contributor

Telstra and Vodafone have both outlined the problems with the rebates system proposed for the National Broadband Network (NBN) company by the Australian Competition and Consumer Commission (ACCC), with Vocus suggesting improvements.

All three telcos took issue with rebates being a one-off payment of AU$25 without regard to the time taken to repair a service fault or connect a service.

"Rebates are a once-off AU$25 payment whether NBN Co misses a service level by one day or one month, yet clearly the customer experience in the latter scenario is much worse," Telstra argued.

"This lack of a time element in the rebates does not appropriately allocate risk and responsibility between NBN Co and RSPs, nor does it incentivise NBN Co to connect a service or rectify a service fault in a timely manner."

Vodafone called for a "vital shift" and "fundamental revision" in the wholesale broadband agreement, rather than simply implementing a rebates system.

"NBN Co uses RSPs to coordinate its workforce to complete the infrastructure build, with RSPs bearing the cost of issue and appointment management when there are problems. RSPs receive no compensation from NBN Co for performing these tasks, except in the event where an SLA breach occurs," Vodafone said.

"The rebate is a crude financial instrument that has been designed to drive NBN Co's adherence to SLAs and the rebate amount is not representative of the costs incurred by RSPs in managing these cases.

"The RSP meanwhile is also bearing the cost of providing the customer with a back-up connection, which in VHA's case is a connection to our 4G mobile network via a SIM in the modem."

Vocus suggested that NBN instead pay a daily, flat-rate rebate across fixed-line and fixed-wireless services, adding that AU$25 was too low for missed appointments, in order to properly incentivise NBN to repair faults.

Telstra also argued for a flat daily rate that escalates after five business days in the cases of aged orders or trouble tickets, as well as added penalties for when a ticket is closed and reopened for the same premises, or a subsequent appointment is missed.

NBN argued that it already has strong incentives, given it is "entirely reliant" on retailers to generate its revenue.

"There are competitive alternatives to NBN services in a number of markets and geographies, which will only grow over time as technologies such as 5G fixed-wireless are introduced," NBN said, saying commercial negotiations rather than regulatory intervention should be used.

NBN also rejected the calls for a fixed-wireless rebate, saying it is already addressing the congestion issue through its AU$800 million fixed-wireless network capacity upgrade, and changes to its "network spectrum configuration".

On fixed-wireless congestion, Telstra said NBN should be providing information on the number of congested customers rather than congested cells -- because, for instance, NBN's 4 percent of cells that are congested impacts 7 percent of Telstra's customers.

Telstra added that it provides affected fixed-wireless customers with credits and cost-free exits despite continuing to pay NBN the same amount for each service.

Vodafone similarly argued in favour of more accurate reporting from NBN on the attainable speeds on each individual line, and to provide the same data to all retailers so that it does not seem to consumers that some telcos can provide faster NBN speeds than others.

"Currently, information about the maximum attainable speed is not provided by NBN Co until after the connection of the service, so we are unable to use it to set customer expectations when the service is ordered," Telstra added.

The ACCC had in December published the next stage of its NBN investigation into wholesale service standards, including an examination of rebates for poor service, after kicking off its wholesale service levels inquiry the previous December.

The NBN's wholesale service standard levels are presently set out in its commercial agreements with retailers, 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.

The ACCC then accepted a court-enforceable undertaking from NBN in September 2018 on increasing its rebates paid to retailers.

For each late connection and fault rectification, the company responsible for deploying the National Broadband Network across Australia will hand AU$25 back to retailers, with a AU$25 rebate also introduced for each appointment missed by NBN.

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