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Australian regulator rejects NBN price revamp

The future of Australia's A$51 billion (US$35.9 billion) NBN is set to be thrashed out yet again after the regulator rejected the wholesaler's new price arrangements.

The Australian Competition and Consumer Commission (ACCC) has called for an industry consultation after declining to approve NBN Co's proposed long-term framework for pricing and retail access.

The biggest operator, Telstra, has warned that the proposed new rules would lock in price increases and fail to address the need for better levels of customer service.

The ACCC declined to approve NBN Co's proposed long-term framework for pricing and retail access.
 (Source: STRINGER Image/Alamy Stock Photo)
The ACCC declined to approve NBN Co's proposed long-term framework for pricing and retail access.
(Source: STRINGER Image/Alamy Stock Photo)

"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 spokesperson said.

Flat-rate pricing

In its revamp, NBN Co has proposed flat-rate pricing for higher speed services, removing the hugely unpopular volume-based connectivity virtual circuit (CVC) regarded by retail ISPs as unsustainable (see NBN Co has nowhere to go on pricing).

But for 100Mbps and below, it will continue to rely on the CVC, with an excess fee of A$8 ($5.63) per Mbps.

In response, the ACCC has warned that the retention of CVC charging would likely result in continually rising costs for retail ISPs.

The cost of the 50 Mbps bundle would likely "equal those of the 100 Mbps product within only a few years and similarly for the 25 Mbps product," it said in a paper issued Monday.

"It could also expose retailers and customers to cost increases due to demand shocks, such as those observed during COVID-19 lockdowns. The cost escalation could occur because the CVC allowances for the bundles appear to be designed not to grow as fast as peak data demand."


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The ACCC said the A$8 excess fee was above the cost of providing the additional capacity. It calculated that the NBN Co allowance for annual growth in CVC demand was around half of the 13% growth that it had forecast.

It said NBN Co had not committed to increasing service standards or network performance but "has however proposed a rule that would permit it to increase its maximum allowable prices."

With a new government elected during the weekend, the process is likely to attract the intervention of the new minister, Michelle Rowland, as well.

The Telstra spokesperson said the operator would welcome the government stepping in to bring a "focus on encouraging take up through affordability and innovation rather than historic cost recovery."

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— Robert Clark, contributing editor, special to Light Reading

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