TPG wants the ACCC to ensure the NBN Co cannot raise its prices yearly, arguing current regulatory drafts give the broadband provider too much power over pricing.
Under the current special access undertaking (SAU) “all consumers should expect to pay more every year,” TPG says. It wants pricing rises to be limited by regulatory cycles.
“One potentially very destructive outcome is an RSP [retailer] could sell a lot of a particular product today, yet find it will receive lower margins, or potentially negative margins, the following year when NBN Co releases an updated tariff list,” TPG wrote in a submission to the ACCC.
“More detrimentally, this proposal does not provide medium-term price certainty for consumers,” TPG continues.
“For instance, if NBN Co’s revenue targets are not tracking to expectations, NBN Co will have significant incentives to simply increase prices at the product level to remediate any top line revenue shortfalls.
“It is not in the long-term interests of end users for NBN Co to have the incentive and ability to exercise this kind of pricing power.”
TPG Telecom argues that pricing should only be allow to be modified every three-to-five years.
“This structural constraint would ensure NBN Co is discouraged from simply raising prices at the product level to meet top line revenue shortfalls,” TPG argued.
“This constraint will also stimulate innovation, as the only other opportunities available to NBN Co to increase revenue is by upselling to existing customers, on-boarding end-users who have chosen to not use the NBN, or by continuing to innovate on the product side.
“For clarity, we believe NBN Co should have the freedom to decrease prices to stimulate demand, but it should not have the ability to increase prices unilaterally on an annual basis.
“This constraint needs to be in place until at least 2032, at which point in time the ACCC will undertake a review of the SAU.”
