ACCC launches probe into NBN pricing

ACCC is worried that consumers who don’t want higher speed NBN plans are getting a raw deal.

The competition regulator is examining whether NBN Co’s wholesale charges are leading to unfair outcomes for some consumers.

The Australian Competition and Consumer Commission on Monday announced it was launching an inquiry into pricing and its effect on homes migrating from their existing ADSL services to the National Broadband Network.

The ACCC inquiry is particularly focused on entry level NBN plans, offering 12 megabits per second (Mbps) download speeds and 1 Mbps upload speeds, and whether consumers opting for these plans are getting a raw deal.

“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.

Consumers have no choice other than moving to the NBN once the network becomes available in their neighbourhood.

According to Mr Sims, there’s a risk that under NBN Co’s current wholesale pricing model consumer may have to pay more once they migrate to the NBN.

“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.”

Mr Sims initially raised the concerns in April and 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 retail telcos to offer attractive entry level NBN plans at ADSL-like prices.

NBN Co is proposing deeper discounts as part of its latest tweak to pricing, announced in September, which includes a modified 12/1 bundle that will keep the wholesale charge at $22.50 with 150 kilobytes of capacity included. However, telcos will have to pay less if a consumer uses up their 150 kbps data quota, with price paid for excess usage cut from $22.50 to $5.70.

However, the regulator said it’s worried about NBN Co’s continued use of discounts to adjust access prices.

According to Mr Sims, the discounts don’t provide the necessary certainty for telcos as they develop their offerings for consumers, given that NBN Co can withdraw these discounts ahead of a notice period that it sets itself.

“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,” he 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.”

The regulator said the inquiry will inform its decision on whether a final access determination (FAD) is required ahead of the expiry of the current wholesale broadband agreement, between NBN Co and the telcos, at the end of November 2020.