Affordability of basic NBN products to be examined

14 October 2019

The ACCC will consider whether Australians are able to access basic broadband plans at fair and affordable prices, as part of an inquiry into NBN wholesale charges launched today.

The inquiry will examine wholesale prices paid by retail service providers (RSPs), which use the NBN to supply residential-grade broadband services.

The ACCC’s inquiry will focus on prices for basic speed broadband products offering 12/1 Mbps, and will consider whether regulation is needed to ensure a smooth transition for consumers to the NBN from legacy services such as ADSL.

“We have concerns that NBN Co’s wholesale pricing has resulted in unfair outcomes for those consumers who have no need for, or do not want, higher speed plans,” ACCC Chair Rod Sims said.

“Most consumers have no choice but to migrate to the NBN if they want to keep their home service active, but are at risk of not being able to obtain a comparable NBN service at a similar price to their ADSL service.”

The inquiry will assess whether NBN Co's most recent pricing offers (in particular, NBN Co’s recent changes to its Entry Level Bundle) will allow RSPs to offer attractive retail NBN plans at ADSL-like prices.

The ACCC first raised these concerns publicly in April 2019, after NBN Co’s wholesale pricing changes in late 2018 led to the withdrawal of many basic speed retail plans.

The ACCC is also concerned about NBN Co’s continued use of discounts to adjust access prices.

NBN Co can withdraw these discounts ahead of a notice period that it sets itself. The ACCC is concerned that these arrangements may not be providing enough certainty for RSPs as they develop and promote their retail offers.

“This lack of certainty creates unnecessary risks that may ultimately be passed on to consumers, who may face higher prices and reduced quality and product offerings as a result,” Mr Sims said.

The inquiry will also look at NBN Co’s service transfer and reversal charges. These fees are applied each time an existing service is transferred between access seekers.

The ACCC considers these charges can discourage the efficient use of service transfer processes, impeding competition and impacting consumers.

“We want to hear from interested parties as part of this public and transparent inquiry process,” Mr Sims said.

“Right now, we are approaching a peak period for NBN service activations and mandatory migrations. The window for many consumers to migrate to the NBN without losing their existing fixed line service is closing.”

“We are interested in what changes can be made quickly to promote competition and the interests of consumers, while allowing NBN Co the opportunity to grow its revenues, invest in its business and earn an appropriate rate of return,” Mr Sims said.

The inquiry will allow the ACCC to make a final access determination (FAD), should one be needed, ahead of the expiry of the current wholesale broadband agreement at the end of November 2020.

Any FAD would provide access seekers with certainty about the terms and conditions of the access to the NBN that would apply should they be unable to reach a new commercial agreement with NBN Co at that time.

The ACCC has released a discussion paper examining these issues and seeking views on those and other related issues.

Further information is available at Inquiry into NBN access pricing

Background

The ACCC has powers under Part XIC of the Competition and Consumer Act to set regulated terms and conditions of access to NBN services to promote the long-term interests of end-users. NBN services are declared services.

The ACCC may consider regulatory intervention through a binding rule of conduct, an interim access determination or a final access determination.

The inquiry is being conducted under Part 25 of the Telecommunications Act 1997.

NBN Co is continuing its own consultation with access seekers over various pricing proposals including in respect of its Entry Level Bundle offer, and has indicated it will implement some changes to its commercial product and pricing offers.

Conducting our inquiry in parallel with the commercial consultation process will allow us to obtain information and test the reasonableness of the commercial pricing proposals through a public process.

Release number: 
187/19
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