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Turnbull warns of above CPI NBN price rises

NBN says prices must meet ACCC approval first

Opposition communications minister, Malcolm Turnbull, has warned that a special access undertaking (SAU) lodged with the Australian Competition and Consumer Commission (ACCC) could see National Broadband Network (NBN) prices rise dramatically in future years.

According to Turnbull, the undertaking, which was lodged by NBN in late July, would enable the broadband provider to raise the prices for all of its offering — except its entry-level 12 megabits per second (Mbps) service by up to five per cent per annum more than the consumer price index (CPI).

Further, the entry-level service, which has its price capped, will have that cap removed after five years, Turnbull said.

“So what that is doing is, a government spends $50 billion of taxpayers' money on a massive broadband network, eliminates all competition with it, and then the Australian public get what? They get access to speeds equal to today's ADSL 2+ at prices which are similar or slightly higher than what they are paying at the moment,” he said.

“But in terms of the super fast speeds — up to 100Mbps — the speeds which we were told were going to be the Nirvana, the Holy Grail of internet access, those prices are going to go up, and up, and up.”

According to NBN Co, the SAU had been opened up to the industry and public for comment since early August, and the company had conducted workshops during July to further engage the industry in discussion.

“NBN Co’s customers are the companies which are familiar with regulatory pricing processes and will understand the steps that NBN Co is taking to provide unprecedented transparency, certainty and clarity in relation pricing over a 30 year period,” a statement from the company reads.

According to NBN Co, the SAU was a voluntary set of constraints that the company was offering to enter into with the ACCC to provide clarity on its price-setting while it seeks to recover the cost of the NBN build over a 30-year period.

“The Corporate Plan is NBN Co’s current projected estimate of revenue, costs and service take up and NBN Co stands by the pricing intentions outlined in the plan – to reduce prices over time as usage increases,” the statement reads.

While not directly addressing Turnbull’s claim of prices rising five per cent above the CPI, NBN Co said the SAU would involve its commitment to limit any possible increase in the price of key services to less than CPI over the 30-year period.

“The overall package of pricing commitments made in the SAU will need to be approved by the ACCC, and they would only do so if their primary concern — that pricing changes are in the long-term interests of end users — is met,” the statement reads.

Follow Tim Lohman on Twitter: @Tlohman

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More about: ACCC, Australian Competition and Consumer Commission, CPI, etwork
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