NBN Co launches new wholesale price review

NBN Co is kicking off its first wholesale pricing review in two years that takes a conciliatory tone with retail service providers and end users.

The company today released a consultation paper to “more than 50 retail service providers (RSPs) selling NBN plans to residential and business customers, and special interest groups such as ACCAN”, it said in a statement.

Chief customer officer for residential, Brad Whitcomb, said the aim was to collaboratively “develop new NBN wholesale price and discount options and bundle discount inclusions” to offer to users.

“As part of this process, we’ll be balancing the economics of our wholesale pricing structure with the commercial imperatives of RSPs, and the very reasonable expectations of residential and business customers around product affordability and choice,” Whitcomb said.

“We want to work with RSPs to find solutions to bring the benefits of high-speed broadband to more customers, particular those for whom price is a major consideration.”

NBN Co last ran a wholesale pricing review in 2017.

One of its key outcomes was the introduction of bundled services, which helped guarantee a minimum level of service performance for many users.

However, it also created a visible divide on the network between users that could and couldn’t afford to pay extra for NBN services.

Bundled price users connect to the NBN over a separate link compared to customers on ‘legacy’ priced plans.

The unusual construct has been an expensive pain for RSPs, and NBN Co’s general manager of pricing and commercial Ken Walliss told iTnews that it will be up for review.

“A key theme coming out of the consultation paper is to get feedback from industry on how we can make sure that we're easy to do business with,” Walliss said.

“We're continuing to look at ways in which we can reduce complexity and reduce costs for RSPs when they're doing business with us as well.

“I'd expect industry will be looking to provide feedback on that.”

The industry is likely to have other bones of contention with NBN Co.

Just this week, Telstra and Optus accused NBN Co of not listening to RSP-led proposals, of failing to consult the industry over price changes, and of having too much power in the setting of prices generally.

Some of that isn’t new: Telstra, Optus, TPG and Vocus all back an Australian Competition and Consumer Commission (ACCC)-led inquiry into how NBN Co’s wholesale service standards are set.

Again, RSPs complain that NBN Co has been unwilling to negotiate and saddled them with bad deals.

NBN Co’s new wholesale pricing review also comes against the backdrop of widespread complaints from industry that they don’t make any money from selling NBN services.

Some, like Vocus, have stopped actively marketing NBN services and are looking at cellular alternatives for future revenue.

NBN Co said in a statement that its new pricing consultation paper seeks “industry feedback on five key areas: lifting take-up in under-serviced consumer segments; promoting higher speeds; improving support for RSPs in the face of increasing demand for broadband; creating a regular cadence for future pricing consultations; and making it simple and easy for RSPs to do business with NBN Co.”

While acknowledging the market had “evolved”, NBN Co’s Ken Walliss claimed to iTnews that “things have actually progressed better than what we actually forecast at the time that we did the original consultation paper [in 2017].”

However, he noted,. “we need to be reacting to how the market changes, to the feedback, and also the types of outcomes that NBN Co's getting as well.

“That's why it's now timely for us to do the consultation.”

Feedback is to be collected from RSPs and interest groups over the course of the next five weeks.

After that, a second consultation paper will be released “with a set of tangible propositions” on where to go next, Walliss said.

Neither consultation paper will be made public.