The Australian Competition and Consumer Commission (ACCC) has launched a new inquiry that will consider whether the prices of entry level NBN plans are reasonable. Here are the details.
The affordability of low-speed NBN connections is under fresh scrutiny, with the Australian Competition and Consumer Commission (ACCC) worried that consumers on basic and inexpensive ADSL services face a steep price rise when moving to an equivalent NBN plan.
Few NBN service providers offer unlimited plans with low-speed 12Mbps downloads, and those that do price them at around $60 per month which is not significantly less expensive than the more popular 25Mbps and 50Mbps plans.
When it comes to the NBN, we know that plans and providers are not all equal. Despite standard speed tiers, in-home performance can vary a lot, especially during the evening peak times.
The ACCC cautioned NBN Co in late 2018 when a new wholesale pricing model resulted in many service providers ditching 12Mbps in order to push consumers towards faster plans. In April this year, the regulator made a statement expressing concern about the state of low-speed plans, and suggesting consumers should be able access such services at a similar price to their existing ADSL plans.
Last month an NBN Co consultation paper suggested the introduction of new 250Mbps and 1Gps plans, as well as wholesale price changes designed to make sure telcos could profit from low-speed plans, but the ACCC now says its inquiry will decide "whether regulation is needed to ensure a smooth transition for consumers".
"We have concerns that NBN Co's wholesale pricing has resulted in unfair outcomes for those consumers who have no need for, or do not want, higher speed plans," ACCC chairman Rod Sims said in a statement announcing the inquiry.
"Most consumers have no choice but to migrate to the NBN if they want to keep their home service active, but are at risk of not being able to obtain a comparable NBN service at a similar price to their ADSL service."
The ACCC enquiry will determine whether NBN Co's current wholesale pricing allows service providers to retail plans at ADSL-like prices.
The watchdog's statement also points to NBN Co's frequent discounting as a cause for concern. The company can withdraw the discounts at any time, whichthe ACCC says may create uncertainty for service providers and discourage the selling of low-end plans.
"Right now, we are approaching a peak period for NBN service activations and mandatory migrations. The window for many consumers to migrate to the NBN without losing their existing fixed line service is closing," Sims said.
"We are interested in what changes can be made quickly to promote competition and the interests of consumers, while allowing NBN Co the opportunity to grow its revenues, invest in its business and earn an appropriate rate of return."
A Telstra spokesperson said that the ACCC's inquiry was reassuring.
"NBN's plans are costly and complex and there is still a lot of uncertainty in the way they sell their plans", the spokesperson said.
"If Australia wants to see the social and economic benefits of their investment in the NBN, we need to ensure prices are kept affordable for consumers and retail service providers."
An Optus spokesperson said a more holistic review of nbn’s approach to pricing might be needed.
"It is important that nbn wholesale prices support affordable and sustainable retail services for all households," the spokesperson said.
"It is not clear that these objectives will be achieved by the review of one nbn price point."
A spokesperson for NBN Co said the company would welcome any additional options highlighted by the ACCC and that it had recently introduced an "entry level bundle” discount aimed at lower priced services.
"The discount provides retail service providers with the flexibility to develop affordable [12Mbps] broadband plans for a similar price to legacy products, with either capped or uncapped data inclusions," the spokesperson said.
"To increase future certainty for retailers and customers, we’ve also announced that we will publish a rolling two-year roadmap of future pricing across all wholesale speed tiers."
Separate to the new inquiry, the taxpayer-funded NBN Co was last week issued an official warning by the ACCC to stop any discrimination between its commercial customers, while the CEO of Vocus Group (parent of Dodo and iPrimus) accused of the company of overreach by selling directly to businesses.