NBN prices ‘already the world’s highest’: Telstra

The telco giant says NBN Co’s planned price hikes are a big fail, while others have described them as necessary for the project’s future.

Telstra has joined a growing chorus of retailers criticising NBN Co’s plot to increase prices. Picture: Michael Dodge/Getty Images

Telstra has joined a growing chorus of retailers criticising NBN Co’s plot to increase prices, describing the plans as a failure and a wasted opportunity after rival telco TPG called the plans ‘a slap in the face’ for consumers.

NBN Co wants to lock in price rises until 2040, and double the price of entry-tier plans over the next decade, it revealed in a redacted submission published by the Australian Competition and Consumer Commission (ACCC) on Monday.

The figures show that by applying NBN Co’s current forecasts the cost to retailers to acquire the entry level speed tier would double by around 2033, and continue to increase towards $104 per month in nominal terms by 2040.

“NBN’s wholesale prices are already the highest in the world among comparable countries and they’ll get worse with the proposed price increases,” a Telstra spokesman said.

“Lower wholesale prices would help encourage innovation and differentiation among retailers, leading to better service levels and value for customers and more people making more use of this national asset.

“It would also motivate retailers to put more customers onto the NBN. That’s good for NBN Co and the government as more customers using the network can lead to increasing revenues and long-term financial stability.”

The telecommunications industry has been calling for genuine reform of NBN Co’s wholesale pricing and service levels to help secure Australia’s digital future, the spokesman said.

“This has been a clear and consistent message over a number of years.

“NBN Co’s SAU was an opportunity to do that, but it has failed to deliver what our customers and the industry need. In fact, it does the opposite, by locking in ongoing price increases and failing to address the need for better levels of customer service.

“The time has clearly come for the ACCC to define a way forward that delivers more certainty for the market, better wholesale prices and services for customers and sustainable returns for retailers.”

There is an opportunity for the new government to play a role, the spokesman said, and shift its policy focus to encourage NBN take-up through affordability and innovation, rather than focusing on historic cost recovery.

“We want NBN Co to be successful. It is a critical part of our industry. But at the moment it’s a vital piece of national infrastructure that is being underused. It was built at a cost of $51 billion to keep us all connected, but at the moment almost 30 per cent of homes and businesses are choosing not to use it.

“And although 40 per cent of fixed premises can get 1 Gbps speeds, less than 5 per cent buy speeds of more than 100Mbps. At the same time the high wholesale prices are driving retailers to actively move customers off the NBN onto their 4G and 5G mobile networks.”

Sam Pratt, chief executive of networking start-up Render, said on the other hand that given the NBN is committed to world class connectivity, there needs to be a price tag attached.

“It’s not a government-subsidised scheme, NBN needs to stand on its own two feet,” Mr Pratt said. “In order to do that it needs to raise its rates to fund investment in future technologies and better connectivity for all Australians.

Render CEO Sam Pratt. Source: Supplied

“A move like this is never going to be popular with Internet Service Providers, who have to justify the cost to their customers. But it’s a reality of the telco industry in Australia,” Mr Pratt said.

Mr Pratt said as consumers, more analysis is needed as time goes on as to whether the price increase over time will directly result in better services.

“In CPI adjusted terms, by 2030, or 2040, will we be better off in terms of internet speeds and level of connectivity across all technologies?,” he said.

“The reality is Australia needs incremental investment in connectivity infrastructure to keep pace with other developed countries.”

The ACCC, which has to approve any changes, will now kick off a public feedback period with telcos, households and businesses.

“The Special Access Undertaking exists to promote competition and efficiency in Australia’s broadband market, to the benefit of households and businesses,” ACCC Commissioner Anna Brakey said in a statement on Monday.

“The variation will influence the price, quality and range of broadband offers in the market for the next two decades. Before we decide whether to accept NBN Co’s proposed variation, we are conducting a public consultation to hear from the retailers who sell NBN services, other service providers, and households and businesses that rely on the NBN for their broadband.”

Andrew Sheridan, Optus vice president of regulatory and public affairs, recently said NBN Co’s price proposal would hit everyone’s hip pocket.

A NBN spokesman said “NBN welcomes the commencement of the Special Access Undertaking variation consultation process led by the Australian Competition and Consumer Commission.

“Our proposed SAU variation responds to RSP calls for changes to our price construct, and the need for greater regulatory and price predictability. We look forward to an ongoing discussion, as part of this consultation process, with the ACCC and the industry.”