ACCC scrutinises NBN’s key wholesale agreement

Retail service providers have reported a number of concerns to the Australian Competition and Consumer Commission over NBN’s Wholesale Broadband Agreement (WBA), which sets out the contractual terms on which NBN supplies services to RSPs.

(The way that NBN has been established means it functions solely as a wholesaler, with RSPs selling broadband services to end users.)

The WBA is being heavily scrutinised by the ACCC as part of its inquiry into NBN’s wholesale service standards. The competition watchdog this morning released a discussion paper as part of the inquiry.

NBN recently finalised a third version of the WBA mdash; WBA 3 mdash; which includes a new service fault rebate for RSPs when the company doesn't meet fault restoration targets.

The ACCC’s discussion paper noted that a number of RSPs have indicated concerns about WBA 3, including in relation to NBN’s service standards.

“Several RSPs have approached the ACCC to raise these concerns,” the discussion paper states.

According to the ACCC, two of the key issues causing disquiet among RSPs are that service levels and performance objectives in the agreement “may not be appropriate to ensure a good consumer experience”, and that the compensation on offer when NBN fails to meet service levels and performance objectives “are not sufficient to incentivise NBN Co to supply services that meet specified service levels”.

“As a result some RSPs are either trying to avoid paying compensation to customers or are making compensation payments but without themselves being compensated,” the discussion paper states. “They may also be incurring costs to mitigate the impacts on consumers.”

One aspect of the WBA process that the ACCC’s inquiry will examine is the relative bargaining positions of NBN and the RSPs.

“We are interested to understand from all stakeholders whether there is a significant degree of inequality in bargaining power between NBN Co and access seekers and if so, the degree to which this has impacted commercial negotiations, particularly in relation to service standards set out in WBA 3,” the discussion paper states.

Two RSPs delayed signing WBA 3, but continuing to directly supply NBN services requires agreeing to the WBA.

The ACCC said that if decides to take action over wholesale service standards, the timeframe should be short, medium or long term, with the commission potentially able to take action as soon as 2018 to address “immediate, high impact issues”.

One area where immediate regulatory action could potentially promote the long-term interests of end users (LTIE) would be “ensuring appropriate incentives are in place for NBN Co to meet its current service standards, potentially through revised compensation arrangements,” the paper states.

“We are seeking views from interested parties as to whether there are any specific NBN service standard issues that require urgent or more immediate regulatory intervention and the reasons why this is the case,” the paper adds.

“NBN is now in its peak rollout phase and the ACCC is concerned that complaints about connecting to services, including missed appointments and having faults repaired, will continue to grow unless improvements are made now,” ACCC chair Rod Sims said in a statement.

“This inquiry will consider whether there are appropriate incentives for NBN Co to remedy service failures. We will also look at the compensation made available by NBN Co to ISPs, which are responsible for providing redress directly to consumers when things go wrong,” Sims said.

“The ACCC has heard industry concerns from ISPs that the service standards aren’t adequate to ensure customers have a good experience connecting to and having faults repaired for NBN services,” he added.

The ACCC is accepting submissions until 16 February.

Copyright © 2017 IDG Communications, Inc.

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