The proposed framework would introduce flat rate wholesale prices, as well as a per consumer cap on how much retailers can be charged for access
Regulation will apply to the NBN’s copper and fibre networks: On 13 January 2023, the Australian Competition and Consumer Commission (ACCC) published a consultation on the NBN’s proposed variation to its Special Access Undertaking (SAU), the framework for the economic regulation of the operator until 2040. The variation, on which the ACCC is now seeking stakeholder feedback until 17 February, would incorporate fibre-to-the-node (FTTN) and other copper-based networks into the SAU, making it the primary tool for regulating the NBN. The variation would also implement changes to the undertaking’s provisions from July 2023, including introducing a framework for setting benchmark service standards for the first time. This is notable given the limited performance improvements reported during 2021/22; however, the NBN has proposed to initially continue with many of the existing standards that do not currently address issues raised by retail providers.
Prices of 100Mbps+ broadband services could fall: The proposed variation would result in significant changes to the NBN’s product and pricing commitments, for example the staged introduction of flat rate access prices and the removal of most bandwidth variable charges by July 2026. While average wholesale prices will increase through this decade in line with inflation, some speed tiers would initially be cheaper than others. This includes price reductions for voice-only access and broadband products above 100Mbps, but increases at the most popular speed tier of 50Mbps. Under the proposal, the NBN would also move towards efficient cost recovery – by recovering A$12.5bn (£7.0bn) from customers instead of the previously agreed A$44bn (£24.7bn) – before ultimately achieving a standalone investment grade credit rating by paying down some of its debt. The variation would also adopt 25Mbps as the entry level broadband access offer (up from 12Mbps) and set a cap on the average price per consumer that retailers pay for access, which could provide greater cost certainty and allow them to better compete downstream.
ACCC concerns could send the NBN back to the drawing board: The NBN’s revised SAU proposal, submitted on 29 November 2022, aims to resolve the pricing and quality issues that characterised the original version, which the operator was forced to withdraw. Though the ACCC considers that the NBN’s proposal appears largely positive, it is not clear on how certain aspects of the undertaking would promote the long-term interests of end users (e.g. price uplifts for low-use consumers). The ACCC’s concerns specifically relate to the apparent limitations on its ability to make regulatory decisions to encourage the NBN to invest and operate more efficiently over time. It also wants to gather views on the suitability of the initial benchmark service standards for addressing ongoing quality issues within a reasonable time. As such, the ACCC will consider stakeholder comments before coming to a decision on the variation. Despite the NBN’s best efforts, it may yet be sent back to the drawing board for a third time.
