NBN users may see twin price rises within six months

The ACCC has given preliminary backing to two price rises for NBN services within six months of each other, as it moved closer to approving a revised special access undertaking submitted by NBN Co.

The commission expressed cautious optimism Wednesday [pdf] that the latest SAU draft could be passed by the end of the year, subject to one more round of industry consultation.

“Our current view is that the August 2023 SAU variation proposal is a material improvement from its [previous] proposal,” the ACCC said.

“The ACCC is mindful of the extensive consultation undertaken to date on this matter and a desire from industry to reach a decision

“The ACCC currently intends to make a final decision as soon as practicable this year.”

The caution comes in the language used elsewhere in the report: “appears to address areas of concern”; “seems to be consistent with the relevant key outcomes”; “appears to have addressed our draft finding…”.

There are still at least two outstanding issues where it is not clear how the industry will react.

The first is changes to the 50Mbps and below speed tiers, where NBN Co is backing a proposal that is favoured by neither Telstra nor Optus, and that only has conditional support from other internet retailers.

Also likely to be contentious is that the ACCC won’t stand in the way of NBN Co imposing two sets of price rises on users in the first six months of the new deal - assuming it is approved this year.

The commission noted that “several” industry players had wanted a July 1 2024 price rise to be removed or deferred, since prices will rise when the SAU (and the associated commercial agreement, WBA5) come into effect.

The ACCC acknowledged that “end users would see price increases within six months of each other, on both December 1 [2023] and July 1 [2024]).”

NBN Co has kept the July 1 price increase in “on the basis that its average revenue per-user is effectively remaining flat from 2022-23 to 2023-24, which suggests that a further change within the year should not be overly disruptive,” the ACCC said.

“Our preliminary view is that NBN Co’s position is valid, although we acknowledge that the impact of price changes could vary across retailers depending on their product mix. 

“Further, were NBN Co to forgo this price increase, it could mean that efficient cost recovery objectives could be undermined in the short term, opening the potential for steeper price increases or price shocks at a later time.”