ACCC chief determined to peg down NBN entry-level pricing

Chair of the Australian Competition and Consumer Commission (ACCC) Rod Sims told Senate Estimates on Tuesday night that the consumer watchdog was determined to ensure NBN’s 12/1Mbps plans remained low, and prices at the low end would not rise “if we have anything to do with it”.

“We’re intending to peg the price of the entry-level product and that would be pegged irrespective of what happens with [NBN fibre upgrades]. And indeed, that’s what we’re working on right now to peg that entry-level price,” he said.

Sims said the regulator was looking into a special access undertaking (SAU) since the price it had in mind and the one proposed by NBN were “very different”.

“Now we’re so close and we’ve also been talking to about service standards, our judgment is we’re so close,” Sims said.

“They’ve agreed they’re going to put our new agreement — which is NBN moving a long way from when we started — into their WBA4 new agreement with the retailers. And if they do that, then we’ll probably hold off issuing an access undertaking.”

The ACCC held fire on the undertaking as the regulator got what it wanted as it was able to keep its powder dry and have flexibility in how it could respond to the market, the chair added.

Earlier this month, Communications Minister Paul Fletcher issued the ACCC with a statement of expectations regarding NBN’s SAU. The ACCC has three months to respond with a statement of intent.

Even though the issuing of such a statement is a first, and ACCC representatives shouldn’t point out any legal basis for it, they said it was “consistent with practices across departments and agencies”.

Sims said the essence of the statement was to begin on a new SAU to govern the regulatory arrangements of the NBN. The original SAU was issued in 2013, but the ACCC chief said it had been “somewhat in obeisance” since then.

Under a potential new undertaking, the ACCC said it was a chance to fix issues in the original undertaking and that it would look to ensure entry-level pricing matched pricing on ASDL prior to the NBN being built.

“We don’t think people should be paying more for getting the same thing or getting what they would have got had the NBN not been built,” he said.

“Sure, pay a lot more for the massive extra speed that people are able to get, but don’t pay more for what you could have got before. ”

On the issue of NBN getting a return, Sims said it was not an important one.

“It’s a sort of a modelling exercise as to whether with current price constructs they could ever get a return on that capital,” he said.

“My own view is that whether they do or not is really not an important issue. The important issue is that we price the NBN effectively so that we get the benefit of the NBN for Australians and we get maximum use out of the NBN.”

Speaking more widely, Sims said prices typically increased whenever governments privatise assets.

“Users lose just so we can sell them for very big price, which I don’t think is a very good idea,” he added.

“We’ve got to keep in mind that what’s important here is getting the most efficient use of this AU$50 billion spend as distinct from necessarily getting a return on that spend. And I think that’s a principle that applies for a lot of infrastructure where government has fundamentally been the one that’s built it.”

Speaking on Wednesday, Shadow Communications Minister Michelle Rowland described the statement of expectations as a demand for the ACCC to “bend over backwards for NBN Co”.

In a speech that heavily criticised the calculations used for upgrades of the NBN, after years of Coalition figures saying fibre was unneccesary, Rowland said the plan was not an “epiphany about market demand”, but more a “pre-determined surrender to seven years of Liberal incompetence”.

“This revised AU$57 billion cost currently assumes only 400,000 households — that is 1 out of every 10 premises in the copper footprint — are budgeted to actually get a fibre connection to their homes between now and 2024. This is based on the size of the Fibre to the Node footprint being around 4.2 million premises,” she said.

“If these 1 in 10 figures do in fact play out, and even I’m sceptical this government could be that hopeless, that will be nothing short of a farce. This means the copper network will be operated and maintained in full, while the fibre network being constructed in parallel goes under-utilised.”

Rowland said over the coming months, Fletcher would use “all sorts of spin and revisionism” to explain the “anti-logic” of the decision.

“Just remember this is the same Minister who used to rail in opposition about NBN connecting enterprises, and now he has backflipped,” she said.

“This is the same Minister who would deliver Labor lectures about the market power of NBN Co, and now he writes letters to the ACCC saying he effectively expects them to grant NBN more market power.”

Yesterday, Fletcher claimed the Coalition had taken the politics out of the NBN, and compared Labor’s belief in its full-fibre rollout to Soviet tractor production. 

Elsewhere on Tuesday night, Liberal Senator Alex Antic asked Sims about the supposed deplatforming and shadow banning of conservatives by social media platforms.

“Our concern with the digital platforms in that area is very much the use of data to influence consumer choices, the use of data for people to get scammed, we haven’t really taken an interest in, and nor do we institutionally have an interest in what political voices come out of the platforms, if I understood your question,” Sims said in response.

Sims added that a code to deal with misinformation had recently been submitted to ACMA, and the ACCC recommended having a takedown procedure for misinformation or disinformation. The ACCC chief said where to draw the line on content on social networks was an issue government would need to grapple with, but it was not one for the ACCC.

The ACCC is currently locking horns with Google and Facebook over proposed media bargaining laws.

Related Coverage

By ZDNet Source Link