The document summarizes issues with the upcoming NBN Special Access Undertaking (SAU) and proposed pricing changes. Key points include: - The SAU consultation process has been delayed until at least late 2022, providing no pricing certainty for internet providers. - NBN's CVC costs increased 70% in the last 6 months despite commitments to fair pricing. Proposed pricing changes include moving high speed tiers to access-only pricing but also potential price increases for most customers. - The author argues NBN should lower prices for some high speed tiers to stimulate demand and that internet providers need to take responsibility for current issues by offering better services rather than competing on price alone.

1. The trouble with
NBN and the SAU
Phillip Britt
Managing Director

2. The entire industry is holding its
breath for the new NBN SAU.
• SAU = Special Access Undertaking
(basically the agreement between the
ACCC and NBN Co that allows NBN to
operate even though it’s a monopoly).
• The consultation process began in April
2021, with an initial timeline of ~12 months.
• This has now been delayed until at least the
end of CY2022, although there is no
certainty for RSPs that this will be the actual
date (it could be the end of FY23 or longer).
• NBN to date has not engaged in any other
pricing review as the SAU ”is coming” to fix
all of our problems.
Where are we now

3. • NBN provided temporary CVC relief due to
COVID in 2020, but this effectively wasn’t
continued in 2021.
• Additional punitive CVC charges were
introduced without any consultation in 2021
which added insult to injury.
• EG: Our CVCBot makes thousands of
changes every month, but if one or two
orders get stuck we are slugged with CVC
breaches costing hundreds of thousands.
• Despite NBN’s commitments to ensure fair
and sustainable pricing, our CVC costs rose
by 70% in the 6 months to Dec 2021.
In the meantime…
Nov-21 Dec-21 Jan-22
CVC Monthly Cost
Last 3 Months

4. Speed
Current
Inclusion
Current
Cost
Proposed
Inclusion
Proposed
Cost
12/1 0.15Mbps $22.50 0Mbps $26
25/10 1.5Mbps $37 0.1Mbps $26
50/20 2.5Mbps $45 2.45Mbps $50
100/20 4.25Mbps $58 AVC only $60
100/40 4.25Mbps $65 AVC only $65
250/25 5.25Mbps $68 AVC only $70
1000/50 6.25Mbps $80 AVC only $80
• NBN released their latest update just before
Christmas (5pm on 22nd of Dec) which
flagged some very positive changes:
• Move to AVC-only pricing for 100/20 tiers
and above.
• Change basis of billing to utilised CVC,
rather than provisioned CVC.
• Making 25Mbps the entry level tier.
• There were, however, a couple of gotchas,
such as proposed price increases for the
majority of customers, with a mechanism for
continued annual price rises.
The current proposal
As reported in ITNews, 23 Dec 2021. All prices are ex GST.

5. We support NBN’s overall
direction, with some changes to
create a win-win-win for NBN,
RSPs and consumers.
• Keeping a variable component in the low
speed tiers allows RSPs to tailor their
products for different consumers.
• AVC-only pricing on the high speed tiers
protects RSPs from CVC overage. Dropping
the prices would further stimulate demand.
• ABB’s suggested pricing:
• Leave 50/20 bundle at $45, increase
current inclusions.
• Drop 100/20 to $50 and 100/40 to $55
(both above NBN’s target ARPU).
• Drop 250/25 and 1000/50 to $60 and $65
respectively (to accelerate uptake).
The ABB Proposal

6. Our industry needs to take
responsibility for getting
where we are today.
• Telco margins are slim because the industry has
competed on price, rather than service.
• We can choose to raise prices rather than
participate in a race to the bottom, but
customers will expect more for their dollar.
Presently the NBN service levels don’t allow this.
• As an industry we introduced a product
(unlimited NBN) that didn’t have the matching
wholesale construct which has left us exposed to
margin decline over time due to increased
usage, primarily from OTT demand.
• OTT providers are getting a free ride because we
created a product that allowed them to do that
(ie no metered usage).
Industry responsibility

7. Australians are reliant upon
high-speed internet more
than ever. We should be
rising up the global rankings.
• NBN’s Fibre Connect Program will mean that 75% of
premises will be eligible for 1Gbps speeds by the end
of 2023 (compared to 42% today).
• In NZ, over 13% of customers have a 1Gbps plan
(2020), which is available for $68 wholesale.
• We have seen the success of long-term price
changes (not temporary discounts) in changing the
take-up of plans.
• Focus on 50 program increased uptake of 50Mbps
and above from ~16% to ~70%.
• Launch of high speed tiers in May 2020 has almost
doubled the take-up of these services.
• If the ACCC doesn’t get to a resolution before June
2022 retail prices will start to rise in FY23.
Now is the time

8. The Telstra & TPG mobile
network sharing agreement
should not be approved
without conditions attached.
• The ACCC opposed the TPG/Vodafone merger and
now we are seeing further reduction in network
deployment through this deal, in effect we will have
2.5 mobile networks in Australia.
• Telstra has only done this deal because it suits them. If
they had been allowed to bid for more spectrum this
would not have happened.
• If any MNO accepts money for black spot
improvements or other government grants they
should be subject to regulation that mandates
network slicing and full open access to other
operators, especially MVNOs.
• MVNOs are at the mercy of the MNO’s and what
crumbs the MNO’s will allow them to have – there is
no effective wholesale competition.
Mobile networks

9. Thank you