Fixed broadband prices fell 10% in FY17: ACCC

By Dylan Bushell-Embling
Tuesday, 31 October, 2017

Fixed broadband prices fell 10% in FY17: ACCC

Fixed broadband service prices fell 10% in FY17 while data quotas increased 41%, according to the ACCC’s latest market study for the telecoms sector.

Mobile service prices declined a more modest 2.8% over the same period, and data quotas increased by 49%.

But the report also found that while the nbn had been expected to increase competition by levelling the playing field between smaller providers and their larger rivals with far more infrastructure, 96% of fixed broadband services were supplied by four providers in 2016.

Telstra still dominates the market with a 51% share, followed by TPG Group (22%), Optus (17%) and Vocus Group (6%).

On the other hand, smaller providers account for 6% of nbn connections compared to just 3% of legacy broadband connections in areas outside the current nbn coverage area.

In the mobile sector, 91% of services are supplied by the big three operators of Telstra, Optus and Vodafone.

Still the study found that there is strong price competition between the major providers despite this concentration, and this competition is expected to increase as TPG launches its own mobile network while Vodafone starts offering services over the nbn.

“Overall, we consider that our regulatory framework remains fit for purpose in addressing current and emerging issues, and in ensuring that the long-term benefits of competition are realised. However, the study has highlighted a number of areas of consumer concerns which will benefit from some immediate actions,” ACCC Chairman Rod Sims said.

One of the most significant recommendations is that the government reconsider whether nbn co should be required to recover its full cost of investment, which is a key reason behind the high wholesale cost of nbn services and by extension the unattractive prices for higher-speed services.

The study also found that competitiveness of smaller providers may be impeded by a lack of access to wholesale inputs used to offer services on the nbn, such as aggregation services.

“We think there could be a transitional role for nbn co to provide a targeted aggregation service to smaller providers to support their entry and expansion during the rollout period,” Sims suggested.

The report also further highlighted the growing discontent over the nbn rollout and the customer experience of nbn end-user services. There was a 79% increase in complaints to the Telecommunications Industry Ombudsman on a per-premise basis between the second half of 2016 and the first half of 2017.

Sims said the ACCC is concerned that nbn wholesale service standards are precluding consumers from resolving issues with delayed connections and faults.

“We are examining the terms of access, particularly the service standards being proposed for access to nbn services,” he said.

“In particular, we will examine incentives in place along the supply chain and whether they are sufficient to support appropriate outcomes. If they are not, we will have to consider whether a regulatory response is necessary to improve service for consumers.”

The Communications Alliance, the peak body for Australia’s telecoms industry, has welcomed the report and its recommendations for improving competition across Australia.

Stanton noted that the recommendation to reconsider requiring nbn co to recover its full investment costs is a matter of active debate within the telecoms industry and the wider Australian community.

“Without commenting on the respective merits of potential actions to achieve this, the objective of providing nbn co with ‘greater flexibility regarding its cost recovery’ is certainly an issue worth exploring,” he said.

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