Summary of the Pricing Review 2021 Consultation Paper 2:
- Soft cap for variable capacity charges, subject to industry feedback
- Data inclusions increased across most wholesale bundles discounts in the Bundles Discount Roadmap for the two years to April 2023
- Data inclusions increased for the 250/100 Business Bundle and brought forward to December 2021
- Long-term evolution of wholesale pricing model to be part of a Special Access Undertaking variation consultation with industry and the Australian Competition and Consumer Commission.
We're told the Pricing Review 2021 Consultation Paper 2 (PDF link), released today, "takes into consideration industry feedback received via 14 submissions from all major internet retailers, representing 95% of the retail market, and key consumer advocacy groups during the five-week, first-round consultation period."
Responding to feedback in Part A of the first consultation paper, NBN Co says it "will add more value to the two-year Bundles Roadmap by increasing the Connectivity Virtual Circuit (CVC) inclusions across most wholesale bundles discounts, increase inclusions in the Business Bundles discounts and bring forward inclusions for the 250/100 Mbps speed tier."
Furthermore, NBN Co is proposing to "improve industry certainty around data usage by introducing a soft cap on variable charges for eligible retailers, subject to a fair use policy", and says "the offer is intended to increase retailers cost certainty in the potential event that data usage increases significantly. NBN Co is proposing to run the offer from December 2021 to December 2022."
Additionally, in light of Industry’s request to implement future changes to its pricing construct as soon as possible and the ACCC’s preference to engage directly with retailers and other stakeholders on a sustainable, long-term pricing framework, NBN Co "intends to initiate an SAU variation process that will also serve as the vehicle for further consultation on long-term pricing reform.
"This process will also provide the framework to discuss key aspects of the SAU variation, such as inclusion of select nbn network access technologies that are currently not included in the SAU, applicable price controls and the possible development of a targeted, long-term, low-income offer.
"NBN Co intends to provide a discussion paper to industry outlining the key elements of our proposed approach to the SAU variation in May 2021. We understand that the ACCC may also seek industry views on our proposed approach prior to any lodgement of the variation."
NBN Co Chief Customer Officer, Brad Whitcomb, said: “The proposals put forward in Paper 2 today are the latest in a series of steps to deliver more value and certainty to customers and the industry around wholesale and retail pricing of nbn services.
“Our job is to deliver a fast, reliable, high capacity network and provide a wholesale framework that supports robust retail competition, which ultimately leads to better outcomes for customers.
“We are proposing to offer retailers a soft cap to limit the potential cost of additional capacity. We see this offer serving as an important bridge between the two-year roadmap and the potential for longer-term pricing changes via the SAU process.
“In response to the industry’s strong desire for nbn to implement long-term pricing changes quickly, we are initiating an SAU variation consultation that will involve the ACCC. We believe this is the best way to progress this important industry conversation. By engaging the ACCC and the industry early in the process, we are hoping to expedite the delivery of outcomes that will benefit customers and the industry.”
Two-Year Bundles Discount Roadmap
NBN Co states it will "proceed with the planned increases in CVC inclusions for the 50/20 Mbps, 25/5 Mbps speed tiers and Fixed Wireless Plus Bundles in the May 2021 roadmap, which will range from 11% to 20% of additional capacity. As previously stated, NBN Co brought forward significant additional CVC inclusions for selected higher speed tiers in December 2020."
In the May 2022 roadmap, NBN Co says it is "proposing no change to the Discount Bundle effective charges but will be providing between 0.1Mbps to 0.75Mbps of additional CVC inclusions to the 25/5Mbps and higher speed tiers. CVC inclusions for the Home Ultrafast speed tier will increase from 6.25Mbps to 7Mbps from May 2022 and capacity for the Home Superfast will rise from
5.25Mbps to 5.75Mbps, with any unused CVC able to be shared across other speed tiers."
NBN Co will also be "adding more value to the wholesale business services by increasing the CVC inclusions for all the Business Bundles constructs and bring forward the inclusions for the 250/100Mbps speed tier.
"Under the changes, CVC inclusions in the 250/100Mbps speed tier will increase from 3.5Mbps to 5.25Mbps effective from 1 December 2021 and will be available as a Business Bundle with enhanced service level eSLA12 included, with a further rise to 5.75Mbps from 1 May 2022. For the 500/200 speed tier, CVC inclusion will increase to 6.25Mbps from 1 May 2022 and will be available as a Business Bundle with eSLA12. CVC inclusions for the close to 1000/400Mbps speed tier5 will increase to 7Mbps from 1 May 2022 and will also be available as a Business Bundle with eSLA12."