ACCC Watchdog rejects NBN Co pricing, service level proposals

The ACCC says aspects of NBN’s proposals that would set prices and service standards for years to come are not in the best interests of consumers.

NBN Co CEO Stephen Rue. Britta Campion / The Australian

Australia’s competition and consumer watchdog has rejected NBN Co’s proposed Special Access Undertaking (SAU) – the regulatory framework that would set prices and service standards through to 2040 – declaring it’s not satisfied aspects of the proposal would be in the long-term interests of consumers.

NBN Co’s proposals represented a significant shake-up in which the company would pay its government loan while lifting the prices of some plans and lowering others, amid a growing cost of living crisis for many consumers.

The ACCC on Tuesday said it would reject the proposals, and said it wants a commitment from NBN Co to consult with retailers and consumer advocates over planned service improvements. It has also taken issue with the prospect of no service level improvements before 2026.

The decision will send NBN Co back to the drawing board and kick off a fresh round of industry consultations. Communications minister Michelle Rowland said the decision would ultimately lead to faster, more reliable broadband, while the opposition’s communications spokesman labelled it an ‘embarrassment’ for the government.

The watchdog’s commissioner Anna Brakey said the ACCC “had not taken the decision lightly.”

“The ACCC can only decide to accept or reject NBN Co’s variation proposal, and our draft decision today is to reject this proposal,” Ms Brakey said on Tuesday.

“However, in making our decision, we have identified a number of aspects of it that reflect issues raised in the ongoing industry consultation process and which represent a significant improvement on the current SAU and earlier variation proposals.

“We have also outlined some specific issues NBN Co could address to accelerate the pathway to an acceptable variation.”

Under NBN Co’s proposals, prices for voice-only access and speed tiers of 100 megabits per second and more would be reduced, but prices for the most popular speed tier of 50 Mbps would rise by $5 per month or around 11 per cent.

Jane van Beelen, NBN Co’s chief legal and regulatory affairs officer, said NBN Co will submit a revised proposal to the watchdog in early June.

“The ACCC’s draft decision provides further guidance on matters for consideration, and potential changes we could make in response,” she said.

“Once the SAU Variation is accepted and implemented through our new Wholesale Broadband Agreement, which is being developed in parallel, we look forward to delivering new wholesale prices, additional data inclusions and certainty to RSPs, customers and the industry as a whole.”

Ms Brakey said that the ACCC is aware that the SAU consultation process has been running now for two years.

“We appreciate the open and ongoing engagement by the sector through that time,” she said. “This is critical, national infrastructure and to accept a variation we must be satisfied it promotes the long-term interests of Australians.”

Australia’s major broadband providers including Telstra, TPG and Optus all welcomed the decision in the context of rising cost of living pressures.

Communications minister Michelle Rowland said she was confident the next round of consultations would happen quickly. Last year Labor forced NBN Co to withdraw its previous SAU proposals, telling NBN Co to shift its focus on affordability, service speed and quality.

Minister for Communications Michelle Rowland. Picture: NCA NewsWire / Gary Ramage

“We are pleased that NBN Co is continuing to engage constructively in the process and has written to the ACCC setting out a number of adjustments it is planning to make to its proposal. NBN Co has also stated its intention to shortly lodge an amended proposal, providing a clear pathway to new arrangements being settled,” Ms Rowland said in a statement on Tuesday.

“The outcome of the Special Access Undertaking variation process will support the long-term interests of consumers, and promote greater regulatory certainty for industry. It would set the regulatory framework of NBN pricing until 2040.

“The draft decision by the independent regulator is a key step forward in the SAU variation process. I encourage all parties to engage in the next stage of consultation and look forward to a successful conclusion to the process which will support delivery of the government’s commitments to increase access to faster, more reliable broadband.”

The decision mean millions of Australian NBN customers face an uncertain future on the cost of their internet however, according to the opposition’s communications spokesman David Coleman.

Mr Coleman said the draft decision by the ACCC was an “embarrassment” for the communications minister and that NBN customers now face what could be months of drift and uncertainty.

“It was nearly a year ago that the minister was promising a new plan to ‘deliver pricing certainty’ but all she’s delivered is pricing uncertainty and confusion,” Mr Coleman said in a statement.

“The collapse of the long-term plan for NBN pricing is a humiliating blow for the minister.

“The minister also needs to also come clean on whether she supports NBN’s plan that would have effectively pushed people into more expensive 100mbps plans – by making the 50mbps plans more expensive, relative to the cost of the 100mbps options.”

Sam Pratt, chief executive of networking start-up Render, told The Australian that the ACCC’s decision on Tuesday prioritised cost of living, over cost of opportunity.

Render CEO Sam Pratt. Source: Supplied.

“Ongoing expansion and improvement to the NBN is our only means to ensuring Australia can compete in a global digital economy. Investment abroad isn’t slowing down,” Mr Pratt said.

“NBN Co needs to be a sustainable organisation in order to undertake this investment. That was the goal of its SAU. It also ensures it can build infrastructure that our telcos won’t touch as it’s not commercially viable.

“Both the telco industry and the ACCC have a combined interest in keeping wholesale prices down. There are few championing the need to maintain world-class network infrastructure and the benefits that will yield — which happens to be the mission of the NBN Co. But the reality is, without sustained investment, Australia’s network infrastructure will fall behind its global counterparts and that will cost the country significantly more to rectify in the long term.”

NBN Co announced in March it was axing around 500 roles – or 10 per cent of its workforce — as it joined a growing list of companies hit by the global “tech wreck”.