NBN Co sent back to square one on pricing model

NBN Co sent back to square one on pricing model

Communications Minister Michelle Rowland says NBN Co should be left in public hands for the time being. Credit:Louie Douvis

It said these competitive pressures meant it needed a sophisticated pricing model to ensure it could recover its costs over time, otherwise its business might not be sustainable.

Rowland said a policy change – namely leaving NBN Co in public hands for the time being – meant the organization could create a model that would provide affordable, quality internet.

Rowland and Finance Minister Katy Gallagher wrote to the ACCC and NBN Co, asking both parties to start working on the model again. Rue said the NBN Co was planning to make substantive changes.

“The policy landscape has changed since we submitted our original proposal,” he said. “Therefore, we are pleased to be able to withdraw our earlier submission and submit a revised proposal that takes this into account. The NBN underpins Australia’s global competitiveness in the digital economy, so it is imperative that we get this right.”

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NBN Co faced widespread backlash from the telecommunications sector and the ACCC for its initial proposal, which flagged plans to dramatically increase wholesale prices.

The ACCC said under NBN Co’s current forecasts, it expected the maximum allowable cost to retailers to acquire the entry-level speed tier would double by around 2033 and “increase towards $104 per month in nominal terms by 2040”.

TPG Telecom’s head of public affairs, James Rickards, said the NBN Co’s original proposal to change the special access undertaking was “unacceptable” and welcomed the planned change.

“NBN Co’s previous proposal would have resulted in unreasonable, year-on-year price increases, without any improvement to services, at a time when consumers are already doing it tough,” he said. A Telstra spokesman said the telco was pleased NBN Co was reviewing its position. Optus’ vice president of regulatory and public affairs Andrew Sheridan welcomed the “long-overdue opportunity” for a reset.

Vocus Group, which runs Dodo and iPrimus, said in its submission NBN Co had missed a “critical opportunity” to create an approach that enables affordable and reliability connectivity. Vocus chief executive Kevin Russell said the government’s decision recognized NBN Co was targeting “unrealistic financial returns” in its first proposal. “For too long the NBN has been held back by its history – and its historical costs,” he said.

Telstra said in its submission the ACCC should reject NBN Co’s proposal to avoid customers being worse off while Optus told the regulator that increasing prices at a time of significant inflationary pressures would incentivise customers to downgrade their internet plans. It said it did not believe NBN Co should not be permitted to recover inefficient costs that were incurred during the building phase.

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