Vocus hopes ACCC will drive down NBN prices, if NBN Co doesn't

Vocus chief Kevin Russell is hoping the Australian Competition and Consumer Commission will invoke a “backup option” to force down NBN prices, if NBN Co proves unwilling to act.

Speaking at the ACCAN national conference, Russell said the result of NBN Co’s wholesale pricing review is expected “within the next week or two.”

While he hoped for changes to NBN Co’s price structure - such as lower entry-level prices and reduced variability in the costs charged to retail service providers - Russell raised the prospect of NBN Co’s proposals falling short of what was required. 

“When we see [the next version of NBN Co’s proposed pricing], we’ll find out if NBN Co is listening - and if NBN Co is willing to put consumers on low incomes ahead of its own financial interests,” he said.

In the event that NBN Co’s response to the pricing review did not go far enough for Vocus’ - and perhaps other RSPs’ - liking, Russell indicated a hope that the ACCC would step in and pick up where NBN Co left off.

“It’s worth remembering that the ACCC has a backup option to stand up for these consumers, if NBN Co won’t,” Russell said.

“As the regulatory regime stands today, only NBN Co’s fibre-to-the-premises network is covered by the special access undertaking (SAU) accepted by the ACCC.

“NBN Co’s fibre-to-the-node, fibre-to-the-basement, fibre-to-the-curb and HFC networks are not covered by this undertaking.

“And these networks account for 70 percent of NBN services today - around 7 million premises.

“So if NBN Co won’t set prices which are fair for people on low incomes, the ACCC has a fallback of making an access determination, which would give it the power to directly regulate pricing for those 7 million premises.

“Speaking on behalf of our NBN customers, if NBN Co isn’t prepared to act, I do hope the ACCC is.”

Russell said the battle to have NBN Co reinstate cheaper plans is “personal for us at Vocus”.

He said that low-income users were the “‘forgotten people’ in NBN Co’s product lineup”.

A company like Vocus, whose brands include the price-friendly Dodo, was disproportionately hit by NBN Co hiking the prices of its entry-level products.

“These are our people being left behind,” Russell said.

It is far from alone though; Optus recently revealed it is getting hit with millions in overage charges to service its entry-level customers, due to price changes made by NBN Co. 

NBN Co has been so far unwilling to accept that price-sensitive users want lower priced plans, and it remains unclear whether anything substantial will come out of the wholesale price review.

Russell also used his speech to call for the reinstatement of infrastructure-based competition in metro areas, and for government to fund regional and rural connectivity from the Budget.

He also repeated calls made elsewhere in the industry for the ultimate privatisation of NBN Co to be done with the consumer’s interests at heart.

“The long-term opportunity is to get the settings right for NBN Co’s likely privatisation - because that will set the foundation for how consumers are treated for the next decade,” Russell said.

“We can’t repeat the mistakes of the past”.

Russell said that a “fundamental” issue for NBN Co and the government was valuation. Put simply, he said that “the real market value of the NBN is far less than what it cost to build” the network.

He noted this was clouding decisions about NBN Co’s pricing and strategy today, and - if left unchecked - could cause problems for the industry through the next decade and beyond (potentially in the form of protectionist rules that lock the telco industry out of competing in any way with NBN Co over the longer term).

“The Government must resist the urge to ‘fatten the calf’ by entrenching the existing protection from competition that NBN Co enjoys today,” Russell said.

He acknowledged that “not all consumers will benefit from the re-introduction of infrastructure competition, because there will not be a market for competing networks in all areas”.

“In areas where there’s no choice, consumers should enjoy the strong oversight of a regulator that has their interests at heart,” he said.