NBN Proposed CVC Relief, Certainty in SAU Proposal Paper Included

The most radical revamp of pricing, and NBN Co has recently proposed product construct in an attempt to meet concerns of retailers, regulators, and consumer advocates ahead of the proposed lodgement of a new Special Access Undertaking in February.

Specifically, NBN Co proposes the potential development and availability of AVC-only pricing. NBN said that “The AVC-only pricing will initially be available for residential Home Fast, Home Superfast, Home Ultrafast and 100/40, 250/100, 500/200 and 1000/400 Mbps wholesale speed tiers with potential for further expansion of AVC-only pricing planned as the market matures. This is designed to help retailers accommodate the comparatively higher data demands of customers on higher speed tiers by providing single wholesale price points for each speed tier.”

NBN Co also suggested that retailers would potentially no longer need to forecast and manage their CVC provisioning actively. In this case, NBN Co said “This aims to provide retailers with greater long term price certainty by changing from retailer provisioned CVC billing to utilised CVC billing. It is intended that this will ensure retailers benefit from more cost-effective wholesale procurement, saving them time and valuable resources.”

NBN Co further said, “Importantly these changes would maintain NBN Co’s opportunity, subject to market conditions, to earn the revenues need to sustain its business and continue to invest in the network to uplift the digital capability of Australia.”

“When making pricing decisions, NBN must undertake a complex price/quality discovery process. While some users can be made of market surveys and the like, the price/quality discovery process can ultimately only be undertaken by running real-world experiments. That is, seeing what happens when absolute and relative prices change and seeing what happens when the quality of products are changed, and new/old products are introduced/withdrawn... The task is made more difficult for NBN as it is a vertically separated entity with non-discrimination obligations. It means that NBN has less information on end-user characteristics that may affect the customer’s willingness to pay. This means that relative to a vertically integrated entity, NBN is at a disadvantage and places more emphasis on the form of regulation allowing product/pricing flexibility and discovery.”

NBN Co chief legal and regulatory officer Jane van Beelen said: “We would like to thank the ACCC, all internet retailers and industry groups that have participated in the three working groups throughout the second half of this year. It has been a very constructive and collaborative process, we appreciate the feedback we have received and look forward to ongoing engagement.”

“We remain committed to supporting all customers across metropolitan, regional, rural, and remote Australia. We look forward to releasing our SAU Variation Proposal for further consideration and consultation early in the New Year, with a view to evolving our wholesale pricing and products to support retailers and achieve our mutual goal of delivering the best possible experience to customers.”