NBN Co won't release its flat-rate price modelling

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NBN Co won't release its flat-rate price modelling

Says it would be 'counter-productive' to future discussions.

NBN Co has decided not to share internal modelling of a flat-rate price for wholesale services, despite requests from many major providers to do so.

The network operator is set to enter discussions with retail service providers (RSPs) from as early as next month on the long-term future of its pricing model, in a process to be convened by the Australian Competition and Consumer Commission (ACCC).

Retailers have consistently said they see the future of NBN pricing to be a single flat-rate charge per service, rather than the current structure where they pay a fixed component and then a variable component called connectivity virtual circuit (CVC).

NBN Co does briefly acknowledge this in the pricing review consultation paper, albeit that flat pricing is framed as problematic and not to be actioned before November 2022.

It has now fast-tracked that by effectively referring the issue directly to the ACCC for discussion.

The stakes on flat-rate pricing - and the abolition of CVC - were raised last month when NBN Co admitted to modelling what this might look like, without sharing its findings.

Telstra, Vocus and Optus were among RSPs to express an interest in seeing NBN Co’s modelling, however the company was non-committal at the time.

It now appears to be against releasing the modelling, apparently over fears it could colour discussions with the industry that are set to take place as early as June.

“We can’t create any sort of valuable model in a vacuum,” NBN Co’s chief customer officer Brad Whitcomb told iTnews.

“We need the engagement of retailers, and in this step we’re also talking with the ACCC. 

“But in any change this broad-reaching, it’s difficult to imagine a scenario where there won’t be winners and losers, including among the retailers, and we believe that publishing any so-called model - which is really nothing more than a set of assumptions - would be counter-productive to having a healthy engagement with the retailers.”

Whitcomb said that NBN Co and the industry would “have to see how” the ACCC-led inquiry unfolds as to whether flat-rate pricing gets over the line or not.

He defended the company’s existing two-part pricing structure.

“If you look at the pricing construct we’ve got today, we’ve run as a business and the industry’s been working around it for the better part of 10 years,” Whitcomb said.

“While it may not be perfect, I think we’ve all learned how it works and the consequences of it.”

Whitcomb said that the consequences of moving to a flat-price model weren’t fully understood.

“If we’re going to make a fundamental switch, we really need to understand how the RSPs intend to use the network,” he said.

“We’ve looked at it and something as simple as going straight over to an [flat-price] model could have unintended consequences, including - and most concerningly - what would it do to prices at the lower end or entry-level. 

“We don’t want to see those get inflated and shift take-up down on the network and customers not being served.”

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