“The end of HVAC shouldn’t necessarily impact end-user pricing, since NBN should generate the same revenue,” Sheridan said.
TPG Telecom said CVC is “effectively a tax on broadband consumption” and should also be abolished for entry-level and mid-level internet speed plans.
“Under the CVC pricing model, NBN Co will continually increase the prices of a product without providing additional value. This will ultimately lead to increased costs for industry and price increases for consumers,” he said.
“What the industry needs is certainty on affordable and sustainable wholesale pricing.”
The NBN responds
As things stand, telcos pay NBN Co a single price for a defined level of capacity on the network and CVC for any excess. It’s a structure that telcos say leads to erratic but ever-increasing wholesale costs as internet usage wobbles and jumps, while NBN Co says it generates revenue and is better for its low-income users.
However, in a draft response to an Australian Competition and Consumer Commission review, NBN Co suggested ending CVC on broadband internet plans and reducing it on entry-level plans and intermediate level that retain the HVAC.
“This is intended to provide retailers with greater long-term price certainty,” NBN Co said. “It is expected that this will ensure retailers benefit from more cost-effective wholesale sourcing, saving them time and valuable resources.”
The proposed reforms come after months of roundtables including NBN Co, the ACCC and telecom operators to review the regulatory and pricing structures of the now functional network.
The ACCC identified five key issues that needed to be addressed, including protecting consumers from price shocks, encouraging NBN Co to operate more efficiently, rebalancing bargaining power between NBN Co and industry, and even the guarantee that telecom operators benefit from greater price certainty in the future.
ACCC Commissioner Anna Brakey said the conclusion was that NBN Co “should move to a more standard regulatory framework” now that it has completed its deployment phase.
“In our view, a regulatory framework that achieves these results will promote efficient use of NBN, ensure that future price increases are not more than necessary, and give NBN Co what it needs for efficient operation and continued investment. said Ms. Brakey.
Mr Sheridan said these principles were “reasonable”.
“But success will depend on the outcome in terms of price level, price structure and the mechanism to adjust them over time,” Mr Sheridan said, “so the real challenges lie ahead.”
Telstra said it was considering NBN Co’s response to the ACCC.
“We look forward to this ACCC-led process leading to better outcomes for customers and a financially viable broadband market in Australia,” a spokesperson said.
NBN Co is expected to provide a final response to the ACCC in February.