Cabled 2 You

NBN Co given formal warning

NBN

9 October 2019

NBN Co has been given a formal warning by the ACCC for discriminating between retail service providers (RSPs) for the supply of upgraded NBN infrastructure to business customers.

The ACCC has also accepted a court-enforceable undertaking from NBN Co, which includes a commitment by NBN Co to take measures to ensure such conduct is not repeated.

NBN Co is prohibited from discriminating between RSPs in the supply of regulated wholesale services, and related activities.

The ACCC is satisfied that from at least January 2018 NBN Co offered materially different commercial terms to different RSPs as it upgraded NBN infrastructure to support high-speed, business-grade services.

NBN Co also provided one RSP with indicative pricing information for its new Enterprise Ethernet service months before it gave the same information to other RSPs.

Following the ACCC’s investigation, NBN Co admitted it did not have appropriate processes in place to ensure it was complying with its transparency and non-discrimination obligations.

“The ACCC has concluded that NBN Co failed to comply with its non-discrimination obligations on a number of fronts,” ACCC Chair Rod Sims said.

“These legal obligations were enacted to ensure that NBN Co does not distort competition in the market for retail NBN services, such as by favouring larger RSPs.”

In this case, the ACCC has not identified evidence that the conduct resulted in specific harm or competitive detriment before it came to light.

“Market feedback suggests that NBN Co’s entry into the wholesale enterprise market has increased competition, particularly in areas where Telstra is the only other fixed-line infrastructure provider,” Mr Sims said.

“Despite this, the ACCC is satisfied that NBN Co’s conduct amounted to a serious breach of its non-discrimination obligations. The undertaking we have accepted from NBN Co is intended to ensure that all access seekers can compete on an equal footing going forward.”

As part of the court-enforceable undertaking, NBN Co has committed to offering consistent contract terms to RSPs for the supply of upgraded NBN infrastructure.

NBN Co has also committed to giving the same information to its customers at the same time. It will put in place extensive compliance arrangements, including an annual independent audit of its compliance with its non-discrimination obligations.

“We will be closely monitoring NBN Co’s conduct under the enforceable undertaking, and reserve our right to take further action if we are not satisfied,” Mr Sims said.

For further information see Formal Warning to NBN Co and NBN Co Limited’s undertaking for transparency and non-discrimination obligations.

Background

In June 2018, NBN Co announced new wholesale business-grade product and service offerings, designed for RSPs that supply, or intend to supply, services to large corporations and government entities, referred to as the downstream enterprise market.

NBN Co’s new offerings include Enterprise Ethernet, which supports very high speed symmetrical data services (services that supply the same data speed and quantity in both directions).

The new offerings also include the design and installation of fibre infrastructure where the current or proposed NBN technology must be upgraded in order to support the supply of these services, including Enterprise Ethernet, and NBN Co’s existing Ethernet TC‑2 service (a symmetrical broadband service that can be used for multiple phone lines and/or a data service).

Both Enterprise Ethernet and Ethernet TC-2 are declared, or regulated, services under the Competition and Consumer Act 2010 (CCA).

NBN Co’s non-discrimination obligations under the CCA prohibit it from discriminating between access seekers when supplying declared services  and when carrying on activities related to the supply of those declared services.

The ACCC can issue a formal warning for contravening these provisions under the Telecommunications Act 1997. A formal warning places a person on notice that the ACCC has identified contraventions of the service provider rules. This is the first time the ACCC has used its power to issue a formal warning for a contravention of the service provider rules. The contraventions described in the formal warning relate only to the conduct of NBN Co and do not apply to the RSPs referred to in the formal warning.Release number: 183/19ACCC Infocentre: 

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