Don’t play favourites, NBN Co told

NBN Co has been warned by the competition watchdog over giving junior telco Macquarie Telecom advanced notice on pricing.

ACCC chairman Rod Sims. Picture: Kym Smith

NBN Co has copped a formal warning from the competition watchdog for giving junior telco Macquarie Telecom advanced notice on pricing, with Australian Competition & Consumer Commission boss Rod Sims saying the move was a blatant breach of the rules put in place to stop the broadband network favouring one telco over another.

Mr Sims told The Australian that while NBN Co’s action did not harm competition it was too big an indiscretion to ignore.

“These laws were passed some years ago and the wording of the act is very specific. It’s very clear.”

As a wholesale monopoly provider of broadband access, NBN Co is prohibited from discriminating between telcos on the supply of regulated wholesale services, and related activities.  The non-discrimination rules were initially put in place to allay concerns of the smaller telcos, including Macquarie Telecom, that Telstra would look to work out stand-alone deals with NBN.

“That was the major concern of smaller telcos and it’s clear that NBN Co breached the rules. As a wholesaler they have to let every telco know the details at the same time,” Mr Sims said.

“Now it’s clear that there was no harm done, but it would have looked really bad if we just let this go.”

According to the ACCC, NBN Co last year gave Macquarie Telecom the indicative pricing for NBN Enterprise Ethernet service, which is designed for business customers, five months before the other telcos.

The ACCC said on Wednesday that it had accepted a court-enforceable undertaking from NBN Co, which includes a commitment by the company to ensure such conduct is not repeated.

NBN Co admits it did not have the appropriate processes in place to ensure it was complying with its transparency and non-discrimination obligations.

NBN Co said on Wednesday it welcomed the clarity and certainty provided by the undertaking agreed to with the ACCC.

“The undertaking helps give certainty to both NBN Co and the market about the way we build our network and how Australian businesses can benefit.”

The nature of NBN Co’s breach highlights the pressure the company has been under to push higher margin business plans into the market. Business services are crucial to NBN Co bottom line and its aggressive pursuit of business customers has prompted Telstra to label it as an unnecessary intrusion into a market already well-served by operators.

The formal warning isn’t the only source of tension between NBN Co and the ACCC at the moment, with NBN Co boss Stephen Rue on Wednesday pushing back against proposals that would force it to pay higher rebates to retail telcos for botched service.

The ACCC last week ratcheted up the regulatory pressure on NBN Co, proposing it increase the size of rebates for missed appointments by NBN technicians from $25 to $75.

Speaking at the CommsDay Melbourne Summit on Wednesday, Mr Rue said that level of regulatory intervention was unnecessary given NBN Co’s commitment to improving consumer experience.

“We have a major role in shaping customer experience and we are not shying away from this.”

He added a framework was needed to ensure any compensation paid to the telcos was passed on to end users. “We support the ACMA’s role in regulating these service standards to ensure that if a customer is inconvenienced by a poor connection experience, then it is the customer who should be compensated.”

The ACCC’s draft measures were released at a delicate time for NBN Co as it looks to hammer out a new wholesale broadband agreement with the telcos, with sources telling The Australian that the proposed hikes in penalties incensed NBN Co management.

The key worry for NBN Co is that it weakens the company’s hand as it hammers out the agreement with the retail telcos. There are also concerns about the lack of details on how the ACCC will stop the telcos from gaming the system.

But Mr Sims said passing the rebates on to consumers wasn’t a straightforward process.

“The telcos already have measures in place to make sure consumers are not affected,” Mr Sims said.