‘NBN has ignored us’

Telcos including Telstra, Optus and TPG have all hit out at NBN Co’s latest pricing paper, describing it as a ‘waste of time’.

Optus VP of Regulatory and Public Affairs Andrew Sheridan. Picture: Supplied

NBN Co’s latest pricing proposal shows its negotiations with telcos and retail providers had been a ’waste of time’, according to executives of Telstra, Optus and TPG who have all hit out at the government-run company for retaining controversial CVC charges and not going far enough with pricing reform.

On Wednesday NBN released a new pricing paper following months of consultations, proposing a soft cap on variable data capacity charges, as well as what it described as more generous data inclusions and a progress of long-term pricing reform.

The company said the proposed soft cap would protect retailers from sudden surges in demand, and improve industry certainty around data usage.

The Connectivity Virtual Circuit - or CVC - is the price telcos pay to move data from the NBN to their networks. The amount of CVC a telco buys affects the internet speed, particularly at peak usage times from 7pm to 11pm.

“The proposals put forward in Paper 2 today are the latest in a series of steps to deliver more value and certainty to customers and the industry around wholesale and retail pricing of NBN services,“ the company‘s chief customer officer Brad Whitcomb said.

“Our job is to deliver a fast, reliable, high capacity network and provide a wholesale framework that supports robust retail competition, which ultimately leads to better outcomes for customers.“

Telcos have widely criticised the proposals, however, once again calling for NBN Co to scrap its CVC charges entirely, rather than implement a soft cap. They say that a lack of reform will inevitably lead to price rises for end consumers.

“NBN Co’s latest proposal again fails to address the fundamental concerns we and other retailers have about increasing costs and complexity,“ a Telstra spokesman said.

“We believe the best way forward is for the ACCC to take a stronger role and we get to a solution that can be endorsed by all parts of the industry, and provide a stable basis for pricing well into the future. We’re pleased to see the ACCC’s announcement today on next steps on this.

“We need real reform to ensure the long-term financial sustainability of NBN Co and the rest of the industry. Getting this right is critical to achieving the government’s goal of making Australia a leading digital economy and to giving Australians the broadband experience they need at a price they can afford.

Optus’ Andrew Sheridan, VP Regulatory and Public Affairs, said that the consultations had to date been a “waste of time.”

NBN Co chief customer officer Brad Whitcomb. Source: Supplied.

“These consultations are a waste of time if NBN simply ignores feedback, fails to consider the needs of customers and continues to maintain the fiction that prices are going down,” he said.

“Almost unanimously, Retail Service Providers called on NBN to provide a fixed price option, and advised that its short term options are not-fit-for purpose for consumers, RSPs – or even the NBN. ‘

“NBN has ignored us, and ignored the users of the NBN.

“What it has done instead is proposed a discount structure that bizarrely still allows customers’ costs to increase, while requiring RSPs to limit competition between themselves.”

TPG Telecom Group Executive Legal and External Affairs, Trent Czinner, said the proposal didn‘t go far enough.

“The CVC is ultimately a tax on speed for consumers,” he said. ”Instead of simplifying the pricing model and moving away from the outdated CVC, it adds more complexity and further entrenches the CVC.

“We’re concerned the CVC soft cap threshold is designed to discourage competition. Working from home, video and other consumer trends mean the CVC isn’t fit-for-purpose and should be replaced with a flat pricing model.”

NBN Co on Wednesday also flagged it wanted the competition watchdog, the ACCC, to take a stronger role in regulating pricing.

ACCC chair Rod Sims announced he will hold a roundtable in June, to convene a meeting between retailers, interest groups and the NBN.

“This roundtable will be an important step in this process of designing a revised regulatory model for the NBN that sets pricing and access terms for its whole network,” Mr Sims said in a statement.

“Until now, access pricing has largely been developed by NBN Co, so the prospect of bringing this work squarely within the remit of a special access undertaking with effective ACCC oversight is a very significant change.”

“This is the start of a long reform process that would effectively put NBN pricing under the ACCC’s regulatory umbrella, and would improve access pricing for NBN Co customer.

“As a first step, we are seeking contributions from NBN Co, access seekers, retail service providers and other interested stakeholders so their views can be considered as the undertaking is being developed.”