NBN Co scraps planned price hikes, will ‘reset’ process

The new federal government has ordered ‘substantive changes’ to planned broadband price increases, amid rising inflation and cost of living pressures.

NBN Co chief executive Stephen Rue. Picture: Britta Campion

The company building the national broadband network has backed down from changes that would have locked in price rises until 2040 and doubled the price of entry-tier plans, following heated criticism from telcos and an intervention from the government.

NBN Co made a pricing submission to the competition watchdog in May known as the Special Access Undertaking (SAU), which provoked an angry response from telcos and many consumers who are facing cost of living pressures amid higher interest rates and rising inflation.

Telstra said NBN Co was effectively pricing Australians out of broadband, while the ACCC warned that basic broadband prices could double by 2040 if NBN Co’s plans were to go ahead.

On Wednesday the company scrapped its proposals and announced it would go back to the drawing board following a letter from Communications Minister Michelle Rowland and Finance Minister Katy Gallagher.

The government wrote to both NBN Co and the ACCC on Wednesday to reset the SAU process, which would determine NBN pricing and access terms through to 2040. Ms Rowland has set a new deadline of early 2023 for the SAU process, where there had previously been no deadline.

“The SAU variation lodged in March 2022 under the former government would have allowed NBN price increases of inflation plus 3 per cent a year on some products. This was underpinned by unrealistic revenue expectations, and reflected a view to privatisation,” Ms Rowland.

“The SAU variation process offers the best prospect of a regulatory outcome that serves the long-term interests of consumers, but I have formed the view that the current NBN Co variation proposal is not acceptable.

“I support NBN Co withdrawing its current variation proposal and submitting a revised proposal that is capable of acceptance, and delivers pricing certainty for retail providers. I also encourage NBN Co and the ACCC to work closely with each other and industry stakeholders to ensure a new SAU proposal that achieves these objectives can be agreed by early 2023.”

Communications Minister Michelle Rowland. Picture: Tim Hunter

She wrote to NBN Co that the government would retain NBN Co in public ownership for the foreseeable future, expand full-fibre access to more homes and businesses, and “ensure the NBN delivers for consumers and facilitates productivity”.

Telstra, Optus and TPG all welcomed the government’s intervention. Virtually the entire telco industry had criticised NBN Co’s planned SAU changes, particularly its move to lock in price rises every year until 2040.

“Affordable access to broadband is the digital lifeline communities depend on to connect to essential services like telehealth, remote work and entertainment. It is essential NBN Co ensures entry level broadband remains accessible and affordable,” TPG head of external affairs James Rickards said.

“NBN Co’s previous proposal would have resulted in unreasonable, year-on-year price increases, without any improvement to services, at a time when consumers are already doing it tough.”

NBN Co chief executive Stephen Rue said his company was planning to release an SAU variation discussion paper to industry stakeholders in early August.

“We are committed to collaborating with the industry to deliver great outcomes for customers and play our part to create a new commercial and regulatory framework. It must be fit for purpose today but, importantly, it must ensure we are able to serve the future needs of customers and enable NBN to achieve government policy objectives,” he said.

“The policy landscape has changed since we submitted our original proposal. Therefore, we are pleased to be able to withdraw our earlier submission and submit a revised proposal that takes this into account.

“The NBN underpins Australia’s global competitiveness in the digital economy so it is imperative that we get this right.