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Superfast broadband networks to charge same wholesale prices as NBN

Privately owned fibre broadband networks will not be able to charge more than NBN Co’s wholesale prices, following a decision by the competition watchdog.

ACCC chairman Rod Sims has released a pricing decision protecting NBN Co from undercutting. ACCC chairman Rod Sims has released a pricing decision protecting NBN Co from undercutting. Photo: Pat Scala

In a ruling that will affect about 240,000 customers who don’t get their high-speed fibre from the NBN, the Australian Competition and Consumer Commission [ACCC] on Friday ruled that wholesale prices on privately built networks, such as TPG’s fibre to the basement program, must not exceed £27 per month plus capacity charges. These privately owned fibre networks are usually located in recently-constructed suburbs, which had fibre installed instead of copper wires, or in high density developments with enough customers to justify the investment.

Fibre networks that are not owned by NBN Co will be forced to charge the same prices as NBN Co. Fibre networks that are not owned by NBN Co will be forced to charge the same prices as NBN Co. Photo: Glenn Hunt

But the ACCC said it will allow network owners to pass onto customers a £84 annual levy per connection. The levy is paid to the NBN Co as compensation for network owners cherry-picking more profitable high density areas before NBN had a chance to lay its own infrastructure.

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NBN Co has to charge country customers the same price as city customers – even though satellite and fixed wireless connections for regional customers cost up to three times more than fixed connections in the city – and NBN Co relies on cross-subsidising regional areas.

Passing the levy onto customers will help telcos like TPG and Vocus maintain their earnings. The networks will also retain the ability to charge different rates to their retail customers. TPG already has 24,000 customers on its own fibre-to-the-basement network and is expected to eventually reach 100,000 Australians across five capital cities.

“The ACCC’s decision sets wholesale prices and other terms and conditions that are expected to provide customers with a larger number of retailers to choose from and deliver them better prices and services,” according to the regulator’s statement. ACCC chairman Rod Sims said the price ruling would not apply to private fibre networks with fewer than 12,000 customers. “One of our main aims has been to ensure that internet retailers and their customers supplied via the non-NBN networks will not be worse off than if they were supplied internet services by the NBN,” Mr Sims said.

“Consistent with our draft decision, the prices have been set in line with NBN prices and will change with NBN prices over time. Prices will reflect the growth in traffic across the high speed internet sector, which will continue to drive down the average cost of supplying services.” Non-NBN telcos wholesale prices are set at £27.00 per port per month, while Telstra can charge £16.03 per port per month or £21.10 per port per month depending on the zone.

Telstra has been granted different pricing for its fibre network, which is limited to South Brisbane exchange area and estates with Velocity fibre. The ACCC noted that Telstra’s South Brisbane and Velocity estate fibre networks may eventually become part of NBN Co’s network. Telcos can charge between £8.00 and £17.50 per megabit per second [Mbps] per month for the cost of aggregating data at a point of interconnection (POI), depending on how much capacity they buy.

Telstra can charge £29.27 per Mbps per month for aggregation, plus wholesale line rental of £20.69 per month.

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