- NBN Co's two major retail service suppliers have come out against the proposed adjustments to NBN Co's Special Access Undertaking, particularly its intention of hiking up prices for their most used services.
- Telstra and TPG provided their opinions in an NBN internal consultation on the revised Special Access Undertaking (SAU) that despite being better than the variation withdrawn last July, it does not resolve the Retail Service Provider's issues.
- Telstra argued that customers on 50/20 plans should not have to pay more where NBN Co’s network “cannot support higher speed plans and those customers do not benefit from service quality improvements.
NBN Co's two major retail service suppliers have come out against the proposed adjustments to NBN Co's Special Access Undertaking, particularly its intention of hiking up prices for their most used services.
Telstra and TPG provided their opinions in an NBN internal consultation on the revised Special Access Undertaking (SAU) that despite being better than the variation withdrawn last July, it does not resolve the Retail Service Provider's issues.
Telstra said: “The majority of Australians using the NBN are on the 50/20 plan and should not face a wholesale price increase from $45 to $50 per month. While NBN has proposed to reduce the wholesale price of other plans, and this is welcomed, those reductions are more than outweighed by NBN Co’s proposal to increase the wholesale price of the 50/20 plan from $45 plus overage to $50 plus overage.”
It added: “NBN Co’s proposal still contributes to Australia’s cost of living problems– the majority of Australians using the NBN are on the 50/20 plan, and they will become more expensive for RSPs to supply under NBN Co’s proposal.”
NBN Co has dismissed claims of a $5 rise, and instead is switching to direct usage billing for the CVC. It estimated that the cost of its 50Mbps tier would be an average increase from $48 to only $50.60 - much more mild compared to other options.
Telstra argued that customers on 50/20 plans should not have to pay more where NBN Co’s network “cannot support higher speed plans and those customers do not benefit from service quality improvements. We understand NBN Co intends to earn higher TC-4 ARPUs to recover its increased costs associated with building more fibre infrastructure.”
Customers on 50/20 plans should never be charged for upgrades that they won't benefit from. Telstra has expressed its concern that NBN Co is attempting to recover irrecoverable historical expenses and proposes the future expenditure plan should be available for public review. Besides this issue, they have also requested an improvement in service quality; a specific request being the adjustment of outage thresholds which currently permits up to ten dropouts daily.
TPG also pointed out that, regardless of the new government and policy's claims for a “new approach” to NBN pricing, NBN Co. still has the same objectives in mind. Moreover, even more disappointing is their discussion paper which only proposes minor modifications from May SAU proposal instead of something significant.
“While the discussion paper proposal reflects an incremental improvement from the May SAU, NBN Co has not corrected the fundamental problems with its approach. NBN Co is still seeking ACCC sign-off to substantially increase wholesale prices for up to 65% of NBN services that are currently in-market from 1 July 2023,” TPG said.
According to TPG, the proposed weighted average price cap will only encourage monopolistic behaviour; NBN Co has no drive for efficient investment, entry-level 12Mbps services, and the widely used 50Mbps tier prices are increasing.
TPG is also questioning why NBN Co demands an investment-grade credit rating when the current government has emphatically expressed that it will remain a publicly owned entity.
“NBN Co’s actions contradicts the Minister’s public comments. NBN Co ought to clearly state when it expects to be privatised and explain why such timing is chosen and is appropriate. End-users must be given a chance to participate in this conversation because NBN Co’s proposal requires all end-users to contribute to this goal in the form of increased NBN access costs,” TPG stated.
The telco lobby Commpete is pushing for the accelerated phase-out of CVC usage charges, which are currently slated to be removed by 2026. “We appreciate that some transition period may be necessary to accommodate tariff rebalancing. However, the current three-year proposal—whereby the maximum CVCTC-4 Overage charge remains between $6 and $8 per Mbps for the next three years before being reset to zero—looks like NBN Co's overriding objective is to continue the potential returns of increasing bandwidth demand for a few more years.”
Commpete strongly opposes NBN Co's proposal to raise prices at the rate of inflation and has also expressed their discontentment.
“Relevant cost inflation is already built into the building block model and therefore will be reflected in the forecast costs that determine NBN Co’s price path,” its submission said. “Automatically increasing that price path by CPI—which reflects many price changes that are wholly irrelevant to NBN Co’s own operations—it looks like NBN Co wishes to use the current period of rising inflation to re-base its prices before the commencement of the key (CPI–X) constraint.”
“We also question why the ICRA balance should be adjusted for inflation over coming years. The actual interest paid on the associated debt obligations should be the maximum consideration and included in the cost model so it flows through to pricing.”
The Initial Cost Recovery Account (ICRA) has gone beyond $36 billion.
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