Telstra CEO has NBN Co chief's ear on underperforming FTTN issues

Telstra CEO Andrew Penn says he has the ear of his counterpart at NBN Co Stephen Rue over long-running issues around selling fibre-to-the-node (FTTN) services, though it’s unclear if that will lead NBN Co to pay for past mistakes.

Australia’s competition watchdog launched proceedings against Telstra, Optus and TPG on Monday, alleging they had breached court-enforceable undertakings to make things right with some FTTN customers.

The issues date back to 2017 onwards when many retail service providers (RSPs) got into trouble for signing customers up to plans that their NBN connections were incapable of delivering.

As iTnews reported at the time, RSPs receive only estimated speed information from NBN Co for new connections.

Providers must then take measurements over the following weeks, downgrade the customers’ plan if it turns out they don’t have the line speed to achieve the speed they wanted to sign up for, and refund the customer the difference.

RSPs have always felt they are being unfairly targeted and having their brands smeared when they are pinged for having customers on underperforming FTTN services.

They have long argued that NBN Co should accept more responsibility for service qualification errors, including by paying part or all of the refund amounts to customers.

With court actions pending, that frustration provoked an unusual LinkedIn post from Telstra’s Penn on Wednesday.

“There is a reason why all three major providers of home broadband have had issues with NBN speeds,” Penn wrote.

“When you sign up for the NBN you choose what speed you want. However, when we connect you to the NBN for the first time, NBN Co can’t tell us what speeds you will get. 

“Despite this, we still have an obligation to provide you with the speed you have chosen. 

“If after you’re connected the speed you get doesn’t match the plan you’ve chosen, it’s up to us to let you know and offer you options.”

Penn said the process was confusing and had caused issues for “all of the major NBN providers”.

“The root cause is at the beginning of the process,” Penn said.

“We need NBN Co to be able to tell us what their network is capable of for customers upfront and before we connect them and for the regulators to impose on NBN the same obligations we have to meet for our customers. 

“That’s how we’ll get this right for customers once and for all.”

Who pays

The “same obligations” may be a veiled reference to the issue of customer refunds, and more specifically who pays when a customer places an order for a service that it later turns out can’t be delivered.

Until the latest wholesale broadband agreement (WBA4), retailers were left to pay the full refund amount owed to customers: that is, the difference between the plan they signed up to and the plan they should be on, assuming that the customer aimed too high and had to be downgraded.

WBA4 changed that by offering a one-off rebate of $20 to RSPs caught out by the service qualification issue.

However, WBA4 only came into effect in December last year, after the volume rollout was completed.

Indeed, NBN Co agreed to a large range of compensatory measures only once there was little use for them.

In WBA4, an NBN Co spokesperson told iTnews, “If the measured line rates after connection indicates that that a particular premises’ line is not capable of achieving the download and upload speeds within the acceptable range of the wholesale speed tier that the internet retailer’s plan which the customer has ordered is based on, and NBN Co did not provide this information upfront to the internet retailer in site qualification when the order was placed, under the terms of [the] wholesale roadband agreement with retailers, NBN Co makes a one-off payment of $20 to the retailer.”

Following additional questions, the spokesperson then clarified that “the rebate is new and applies to connections post the implementation of WBA4 December 1 2020. It is not applied retrospectively.”

The service qualification issues that RSPs have compensated customers for - and are now being sued over - were covered by previous agreements, WBA2 and WBA3, neither of which had rebates. 

That is illustrative of the historical risk faced by retailers trying to sell NBN FTTN services.

RSPs paid for a wholesale service that later may have to be downgraded; they then had to foot the entire bill for the difference in cost between the old and new plans, and had no recourse with NBN Co to claim even the difference in wholesale costs in the period.

Cooperative tone

A day after Penn’s LinkedIn post, and at the telco’s FY21 results announcement, he indicated that NBN Co is interested in finding a resolution.

“I think the fundamental point I was getting at [in the post] is there’s obviously a problem in the process because the whole of the industry has struggled with this issue about the convoluted process of needing to sell customers plans, then go back and check speeds and then go backwards and forwards,” Penn said.

“I know because I’ve spoken to Stephen [Rue], he’s very supportive of trying to find a better solution for everybody. 

“I appreciate Stephen’s support in that regard, so that’s what we’ve got to do - I think as an industry, we’ve all got to come together to try and find a better way to do this.”

RSPs may separately have a bone to pick with the Australian Competition and Consumer Commission (ACCC) for initiating court proceedings.

The proceedings in large part are due to some customers that should have received remedies not receiving communications or offers of change - and therefore continuing to pay for plans their lines could not support.

There is some concern in certain industry circles that some of the miscommunications occurred during Covid, when many telcos had customer support issues in general.

The extent to which this is an issue or not is likely to be spelled out in their filed defences.

It will also be up to a federal court judge as to the extent to which support problems led to customers being on underperforming lines for longer, or whether other factors were involved. 

NBN process changes

NBN Co says it has made substantial changes to service qualification processes for FTTN services over the years.

Before connection, it offers a “site qualification tool which, for the connections that rely on copper lead-ins such as FTTN, fibre-to-the-building (FTTB) and fibre-to-the-curb (FTTC), estimates the line speed that should be attainable at that premises.

“If an FTTN service has never been connected and NBN Co has records of the copper path to that address, we provide a theoretical estimated range in which the service is expected to perform, noting there are factors that NBN Co cannot predict such as the exact condition of infrastructure and the in-home wiring and service configuration within the premises,” a spokesperson said.

“For FTTB and FTTC, this copper path information is not available and static estimates are provided.

“Once a service is connected, we update the site qualification estimates for FTTN/FTTB and FTTC based on the performance observed, which is then continuously updated over time. 

“This updated information is made available to internet retailers to further support future connections at that address.”

After connection, the spokesperson said NBN Co “polls each service to measure the actual line rate capability at that premises and supply this information to the relevant retailers.”

These days, RSPs aren’t making a lot of first-time FTTN connections to the NBN, and so there may actually be higher quality line speed data available at the point-of-sale.

“A lot of the work that is now undertaken by NBN Co and our retail partners is around the reconnection of premises, when a new owner or tenant moves into a home or business premises,” the spokesperson said.

“As a result of our continuous performance monitoring of the network at individual premises, we have a very good source of speed and performance data, which we make readily available to internet retailers.”

In the event of an error similar to the historical ones experienced by customers and RSPs, NBN Co will pay a one-off $20 rebate under certain circumstances.

“The rebate calculation is determined on day 31 post-connection where we look at the average performance over the last seven daily readings,” the spokesperson said, adding that the “days may not be consecutive as, for example, the modem may have been switched off for a day”.

NBN Co indicated it did not want to see the problems of the past again.

 “We want customers to be able to make well-informed purchasing decisions and it is also important that we do not over-promise and under-deliver,” NBN Co’s spokesperson said.

“We do everything feasible to help internet retailers to verify that their customers are actually receiving the line speed they are paying for.”