Telstra 'reassured' as ACCC looks into NBN pricing

Telstra has called a fresh Australian Competition and Consumer Commission (ACCC) inquiry into NBN Co’s wholesale pricing “reassuring”, renewing its hopes of less “costly and complex” wholesale products.

The telco has been locked in a public battle with NBN Co over prices it sees as “unsustainable”.

A year ago, Telstra CEO Andy Penn called for a “more than $20” a month cut to NBN Co’s wholesale charges because reseller margins were “rapidly falling to zero”.

Penn made similar overtures through the first half of 2019. Telstra also asked the ACCC to rein in NBN Co’s ability to set its own wholesale prices.

This eventually provoked a response from NBN Co that blamed payments to Telstra in part for high wholesale prices. Telstra countered that access to its infrastructure has kept NBN Co’s costs down.

News that the ACCC would take a closer look at NBN Co’s pricing was welcomed by Telstra.

“It is reassuring to see the ACCC undertaking a much-needed transparent and comprehensive inquiry on NBN Co’s pricing,” a Telstra spokesperson said.

“NBN Co’s plans are costly and complex and there is still a lot of uncertainty in the way they sell their plans.  

“If Australia wants to see the social and economic benefits of their investment in the NBN, we need to ensure prices are kept affordable for consumers and retail service providers (RSPs).”

Sense of urgency

Telstra said that three changes to wholesale pricing are “urgently needed”.

“Firstly affordability, by reducing wholesale pricing on the most used plans; secondly accessibility, by introducing a lower tiered price for voice only customers, [and] thirdly, RSPs have largely moved toward unlimited plans and away from excess usage and overage charges, because that gives a much better outcome for customers,” Telstra’s spokesperson said.

Telstra will use the ACCC inquiry to renew calls for NBN Co to “get rid of CVC [connectivity virtual circuit] and overage charges.”

Through an ongoing pricing consultation of its own, NBN Co has already ruled out eliminating the CVC construct, which levies a variable bandwidth consumption charge on RSPs.

RSPs have to buy enough CVC to maintain performance of customers’ services, particularly during the evening periods of peak usage. 

Though some CVC comes bundled with newly-sold plans, it is not enough to avoid having to buy more (known as “overage”).

Additionally, the amount of CVC bundled with plans is not growing at the same pace as data usage on the network, meaning RSPs face increasing overage charges in future years if nothing changes.