New NBN pricing likely to favour big players, says IA

IA executive chair Anne Hurley said the original NBN strategic plan was designed to improve competition in the provision of broadband services.

“The idea was that we’d see a wide range of small- to medium-sized retailers, mostly existing ISPs, able to better compete with the larger operators. This new pricing scheme could have the exact opposite effect," she said in a statement.

The new wholesale pricing charges, to come into effect from 1 June, will be calculated on individual retailer averages rather than an industry average.

{loadposition sam08}“The concern we have is that we will see the bigger operators on better rates than their smaller competitors. In the end this could just reinforce the market dominance of the existing large players," Hurley said.

While NBN Co claims the new pricing structure was drafted after industry consultation, the IA said it had not been contacted. Nor, as far as it could assess, were any retail service providers who were its members.

“If NBN Co only talked to a limited range of operators then I suggest they failed to observe the spirit of the minister’s undertaking to see that the industry was consulted," Hurley said.

Communications Minister Mitch Fifield ordered the pricing review late in 2015 after RSPs expressed concern and a spike in consumer complaints about NBN delivery was registered.

The main complaint levelled at the current arrangement is that it discourages RSPs from offering customers higher speed plans.

“The fact is RSPs make better margins for themselves by selling the slower speed tiers. Plus they risk receiving more angry customer complaints if they sell the higher speed packages and nbn fails to deliver," Hurley said.

IA has been a constant critic of the multi-technology mix NBN that is being built, arguing that it will not deliver the network needed for Australia's future needs.