Excess pricing will push retailers and thus users towards an access-only 100Mbps plan, which will hollow out the lower end of the market, the ACCC has said.
On Monday afternoon, the Australian Competition and Consumer Commission (ACCC) released a consultation paper on the proposed variation to the NBN Co Special Access Undertaking, which would codify NBN’s preferred pricing model of removing the loathed connectivity virtual circuit (CVC) capacity charge on plans of 100Mbps and faster. For 12Mbps, 25Mbps, 50Mbps plans, NBN is putting forward the same type of model it currently uses, where each plan has an allocation of CVC included — often around 6% of the marketed speed or lower — and would see excess capacity at AU$8 per 1Mbps per month to retailers. For plans at 100Mbps and above, a flat access fee each month is paid. While the flat price plans are set to increase at a rate of the consumer price index (CPI) plus 3% initially, and the greater of CPI or 3% later, which is higher than the pure CPI increases on the bundles, the ACCC believes excess usage charges will steer retailers towards the 100Mbps plan.
«As a result of the retention of CVC charging for the bundled products less than 100Mbps and the CVC cost escalation mechanism built into the SAU proposal (along with allowable CPI+X adjustments), we observe that the costs to retailers of the 50Mbps product are expected to equal those of the 100Mbps product within only a few years and similarly for the 25Mbps product before the end of SAU term [in 2040]», the ACCC said in its consultation paper.
