NBN Co, internet retailers warn ACMA against messing with rebates

NBN Co - and top retail service providers like Telstra, Optus, TPG Telecom and Vocus - are united in wanting some flexibility in the way rebates for service mishaps are passed on to impacted consumers.

The retail service providers (RSPs) penned a joint letter to the Australian Communications and Media Authority (ACMA), which is consulting on a set of draft rules.

At issue is the extent to which the full “monetary value” of a rebate from NBN Co needs to be passed through to the end user, and whether the ACMA even needs to intervene, since much of the rebate issue is addressed in the latest wholesale broadband agreement (WBA4) between NBN Co and the RSPs.

Jointly, the RSPs argue that “highly prescriptive” rules on rebates enforced by the ACMA would “result in all RSPs having to offer the same rebates and service levels, thereby preventing innovative service solutions.”

The WBA4 agreement gives RSPs permission to pass on a “fair value benefit” of a rebate to consumers in most cases, noting that it could be monetary or non-monetary. 

Only rebates for missed appointments need to be passed on in full.

In a submission to the ACMA, TPG Telecom said that further rules around passing through rebates, on top of those already negotiated in the WBA4, were unnecessary.

“Imposing a requirement on RSPs to pass through all rebates would be complex and difficult to enforce,” TPG Telecom said.

“Introducing pass through rules, as proposed by the ACMA, undermines service providers’ ability to differentiate in competitive markets and imposes unnecessary costs on already tight RSP margins through system changes and reporting and compliance obligations.”

TPG Telecom argued that RSPs should be able to use rebates to offset costs they incur dealing with the aftermath of faults and problems they have no control over.

“Significant costs can be incurred in managing consumer enquiries and providing these solutions, despite the cause of the service issue often not being attributable to any fault by the RSP,” TPG Telecom said. 

“Examples of these costs include the RSP ensuring it has sufficient numbers of appropriately trained staff, back-end infrastructure and resources to assist with consumer enquiries for issues regarding service faults. 

“These costs are ongoing as the RSP will continue to regularly engage with the consumer until the service fault has been rectified. 

“The RSP also incurs the cost of ensuring that any hardware solution [such as a modem with 4G backup] contains the required technical and IT components to allow a consumer to access the service in the event of a service disruption. Further, there are costs associated with a consumer’s use of these services.”

Telstra argued in its own submission that both it - and the end user - is only interested in “service continuity” when a fault occurs, not in whether a rebate might be paid months down the track.

“The [ACMA] draft [rules] do not reflect how we manage our customers, nor does it reflect the reality of what our customers want,” Telstra said.

“At the time our customers experience an activation or assurance issue, we have no way of knowing whether NBN Co has met its service level agreements (SLAs), nor if we will be entitled to a commercial rebate. 

“There is a lag in the information provided by NBN Co regarding which events did not meet their SLAs, as well as in the remittance of commercial rebates to RSPs. 

“Long before this process occurs - and certainly before we know whether NBN Co has met its SLA or whether we will receive a commercial rebate - Telstra must manage the customer experience and mitigate any poor performance.”

Telstra continued: “Our customers certainly prefer a working service over a rebate paid possibly months after the event has passed. 

“We focus on service continuity whether or not NBN Co provides a commercial rebate, as we have incentives to ensure our customers have a good experience with us and are not inconvenienced.”

Telstra argued its commitment to service equated to customers receiving the “fair value benefit” of rebates, since they could continue using the internet even if their main NBN connection went down.

Like other retailers, Telstra argued the “fair value benefit” was applied at a whole-of-customer base level, rather than calculated down to whether an individual customer received a monetary or non-monetary amount.

NBN Co argued arrangements in the WBA4 “should have primacy” over any intervention by the ACMA.

The wholesaler said it did not harbour concerns that RSPs who are signatories to WBA4 wouldn’t pass on an appropriate “fair value benefit” to customers using rebated money.

“If an RSP elects to offer a mitigation measure, it is likely that it would use the value of the wholesale rebate to fully or partially subsidise the cost of the mitigation measure,” NBN Co said.

“Some flexibility must be retained to allow industry to develop new rebates to reflect market circumstances at a particular point in time. 

“This will ensure that innovative solutions can be developed in response to emerging service level issues, and deliver the best outcome for consumers.”