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The ACCC is going to need a standard speed measurement for one ADSL2+

On Wednesday, the Australian Competition and Consumer Commission (ACCC) published the submissions to its inquiry into the lower end of the NBN market, launched in October.

Formally dubbed the Inquiry into NBN access pricing, the ACCC is mainly concerned that people cannot get a basic NBN service at the same pricing level as prior ADSL services.

In the real world, this could result in the ACCC mandating a price for a entry-level anchor plan, and the debate is centring on which speed tier it should be set at.

It’s worth keeping in mind that the world of Australian telco is one in which the players create their own realities to promote their point of view.

For instance, just how good was the world of ADSL2+ before the National Broadband Network was created?

While viewing Telstra’s submission, which went on to create a whole new model for NBN to work from and would only lose it a little bit of money, the following chart ran alarm bells, because this is how I remember the world of ADSL. By which I mean, getting over 10Mbps was akin to living on top of a Telstra exchange.


Image: Telstra

So while a minimum 12Mbps NBN plan is far from a world-beater, it’s more than likely able to be better than ADSL — if the line is capable of those speeds.

Enter TPG, rushing in from stage left with an arm full of facsimile printouts to paint a picture of a world I wish I knew.

“TPG submits that most consumers have been using ADSL2+ services that offer effectively unlimited downloads at speeds that are between 12Mbps and 20Mbps and have been paying AU$59.99 per month,” it said.

“As a result, the migration to an NBN12 bundle is in fact making them ‘worse off’.”

But the Teoh company was not done and really got out the extra bright colours to add the final touches.

“For ADSL2+ customers, speeds have been close to 20Mbps for the bulk of customers,” TPG said.

During the start of this decade, I was on a TPG line that would run at 8Mbps on a good day. I would then faint and pass out at the slightest hint of water in the pit. I want to remember the world the way TPG does.

Knowing the attack was coming, the National Broadband Network (NBN) was already armed to smack down TPG’s price talk.

“TPG charges AU$59.99 per month for its unlimited ‘on-net’ ADSL2+ service, which is offered in selected exchanges in metropolitan Australia. However, for its equivalent high-data allowance ‘off-net’ services, TPG charges between AU$79.99 per month (300GB) and AU$99.99 per month (500GB), with no unlimited option,” it said.

NBN is no fan of the mandated entry-level plan, which could see the ACCC name a speed that could be set at a retail price of AU$60, and has stated its plan was based on the former unconditioned local loop service arrangements that the ACCC had moved away from.

“NBN does not support ACCC intervention on pricing of entry-level services because it will create artificial incentives for end users to remain on 12/1 NBN entry-level services that are unlikely to satisfy their changing usage habits as many more devices run concurrently and puts at risk the ability for Australia to realise the full benefit of the investment in the NBN network,” the company said.

“The ACCC has placed over-reliance on the need to replicate a single AU$60 retail price point for entry-level services with unlimited data. There has never been a single ‘entry-level plan’ offered at a single price in the Australian retail market, but rather there has always been a diverse range of retail prices for such services on ADSL/ADSL2+ networks.”

NBN warned that if such arrangements were to occur, it would mean it would be unable to recover costs from 20% of its user base.

“This would render impossible the cross subsidisation required to bridge the digital divide, and undermine NBN’s incentives to re-invest in the NBN network,” it said.

A common thread running through the submissions was criticism of the use of pricing discounts by NBN, which were regarded as unreliable and liable to being ripped away with little notice.

“There is always an end date to the discounts and this date is often changed, compounding the challenge for RSPs in planning and managing costs,” Vocus said.

“For example, the proposed end date of the DBD-R discount was May 2019. To prepare for this change, Vocus undertook significant network and IT development activity only for this date to be extended with little notice to June 2020.

“NBN Co’s approach to pricing creates significant cost uncertainty through shifting goal posts and drives unnecessary operational overhead to implement changes to stay relevant in a competitive market.”

For Vocus, despite the recent pricing changes from NBN, it said it was unlikely to reinstall a 12Mbps plan, and while 25Mbps could be an option with changes, it’s likely to keep its 50Mbps plans as its flagship.

“We do see the value of the new 100/20 speed tier at a more reasonable access price,” Vocus added.

That same tier is being lined up by Aussie Broadband as its new flagship plan.

Telstra, meanwhile, wants 50Mbps as the entry-level anchor at AU$35 a month, with no bandwidth overuse charges and penalties. Australia’s incumbent telco also wants a voice-only product from NBN at a wholesale price of AU$10.

“We are concerned that regulating a low speed (12/1Mbps) broadband plan will encourage customers to take-up low speed broadband, resulting in poor customer perceptions and experience of NBN, and limited achievement of the potential socio-economic benefit,” the telco said.

“The choice of NBN plan for many consumers has been guided by the more readily comparable and known feature — price.”

For a long time, watchers of the Australian telco space has viewed Telstra pointing to New Zealand as a broadband exemplar as a novelty, especially after its hostility to anything it didn’t come up with during the Trujillo-era.

“It is notable in this regard that in both the UK and in New Zealand, the regulated broadband anchor product is of a much higher speed than 12Mpbs — 40Mbps in the UK and 100Mbps in New Zealand,” it said.

“In both cases, the regulated anchor also reflects the current most popular basic speed product offered by the regulated entity — which in NBN’s case is its 50Mbps service.”

Perhaps Telstra really does have some contrition for how it acted in the past, which essentially forced the government into creating NBN in order to kill off Telstra’s wholesale dominance.

Elsewhere, TPG’s would-be marriage partner Vodafone wanted 25Mbps to be the entry level, along with ditched the loathed CVC altogether, another common thread among the telco submissions.

Meanwhile, Exetel stood up and handed out some real talk.

“NBN’s pricing (discount, credits and rebates) policies to date have been entirely self-serving with the sole focus of achieving their mandated wholesale ARPU of AU$52,” it said.

“If a basic speed access product has a regulated price applied, NBN will adjust its higher speed NBN services costs higher to ensure it meets its wholesale ARPU target.”

Exetel wants the 12/1Mbps entry-level bundle (ELB) plan extended to all technologies.

“The exclusion from fixed wireless and satellite from 12/1 ELB supply is discriminatory and contrary to NBN’s long term interest,” it wrote.

Ultimately, with the ACCC looking at the lower end of the market, it needs to decide whether to force NBN into offering a voice-only option that would allow it to mandate a 25Mbps or 50Mbps plan as entry level, otherwise it needs to decide if it could do both with the 12Mbps or 25Mbps option.

If the latter options are pursed, and this is probably the direction it is headed, the ACCC is going to run afoul of the “no worse off” clauses.

In such a situation, the central pillar to any determination will be how good it is perceived that ADSL was.

Unlike the volume of Sydney Harbour, London buses, or Olympic-sized swimming pools, the ACCC is going to need an actual measurement.

Otherwise, it will need to argue against those who want to push the idea it was a 20Mbps paradise. Because if that was what we had, we wouldn’t be in this NBN mess to begin with.

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