NBN Co "should" set entry-level broadband prices at ADSL levels

NBN Co “should” be anchoring the price of entry-level broadband services to existing ADSL fees instead of trying to drive up retail costs for consumers, the Australian Competition and Consumer Commission (ACCC) has said.

The statement, made by ACCC chairman Rod Sims, was - in many ways - a long overdue incursion on a year-long bid by NBN Co to punish over 1.25 million entry-level users, either by hiking prices or reducing quality of service.

For the first time, Sims laid out the ACCC’s position on a consistent set of changes being forced onto the market by NBN Co that has seen prices go up and some retailers axe cheaper plans altogether.

Sims was highly critical of NBN Co’s trajectory, though he did not commit to intervene, saying only that NBN Co should “revisit” its offers to the lower end of the broadband market.

“NBN pricing overall is no longer being set by reference to the prices that were available on ADSL networks,” Sims said.

“We are now observing prices of low-speed NBN plans offered to new customers that are at least $10 per month higher than what consumers paid for equivalent plans on the ADSL network.”

Sims said that NBN Co was in danger of no longer meeting its requirements to “promote competition and encourage efficient use and investment in broadband markets.”

“Let’s not forget the very purpose of building the NBN was to make broadband faster, and more accessible and affordable for all,” he said.

“We were never meant to get to a situation where some consumers, in switching to the NBN, will be left worse off by paying more, or getting less.

“We believe NBN Co’s entry-level services should be anchored to existing ADSL pricing.

“This is only fair to consumers because they have no choice but to move to the NBN as their existing services are being withdrawn.”

Wholesale service standards action?

Sims said it had not gone unnoticed that there are now “fewer service providers willing to supply basic speed services over the NBN” and that “those still offering this service are under very significant margin pressure.”

Though he did not raise it specifically as an option to address the entry-level price problems, the ACCC could use its ongoing wholesale service standards inquiry on the NBN to force the government-owned network builder to act.

“We are now looking to the longer term service standards to ensure good consumer experiences,” Sims said.

“Where NBN Co’s actions are necessary to support an RSP to deliver a service to its customers, we want to make sure it faces the right incentives to meet its obligations.”

Missed appointments, slow speeds bite

One area that the inquiry is definitely focused is on improving rebates available to customers for things like missed appointments - of which NBN Co misses some 469 a day.

Sims said that one of the ACCC’s own staffers, living 7km from the Sydney CBD, sat through three missed appointments and a total window of time of 12 hours.

“No one showed, and there was no message to say no one was going to show,” Sims said.

The staff member managed to extract $70 out of the RSP as compensation - a month’s connection fee waived.

It appears that came fully out of the RSP’s own pocket since NBN Co typically does not pay rebates for missed appointments as it stands.

Sims said the staffer had since been connected but sees “less than half the speeds they were promised on a 50Mbps plan, and much less depending on which room of the house they are in”.

“The speeds can be as low as 2-3 Mbps,” Sims said.

“The cable service the person was previously on performed much better by comparison.”

Sims said the staffer was not alone; “on our reckoning, around one in eight NBN fixed-line connections do not come close to providing the full speed of the consumer’s plan.”

“This increases to as many as one in four plans supplied over FTTN connections on the 50Mbps speed tier,” Sims said.

Sims was particularly concerned that NBN customers on lower-end 12Mbps services may have been buying in this tier because their line simply wasn’t capable of supporting a more expensive, higher-end service.