NBN Co faces $30-a-day fines for unfixed faults

NBN Co is set to be fined $13.50 per business day - capped at $270 - for late or delayed connections to its network, and up to $30 a day - capped at $1150 - for slow fault fixes, under sweeping new service standards proposed today.

The network builder is also facing a tripling of the size of rebate available when its technicians miss appointments, from $25 to $75 - all of which must be passed on to the consumer.

And NBN Co will also be forced to pay $20 rebates each month for congested fixed wireless services, as well as for fixed line services “that fail to meet certain minimum speed objectives.”

The changes are set out in a draft final access determination (FAD) that the Australian Competition and Consumer Commission (ACCC) is proposing to make [pdf], following a near two-year inquiry into NBN Co’s service standards.

The ACCC already used the process to extract an enforceable undertaking from NBN Co late last year, but said today that did not go far enough.

The ACCC had threatened last December to force NBN Co to pay out daily rebates on connections afflicted by faults for an extended period of time.

Barring something drastic occurring between now and the end of the year, NBN Co is likely to start 2020 doing just that.

“We consider that NBN Co should take clear responsibility for connecting customers in a timely manner, and that it is appropriate to provide incentives for this through the introduction of a daily rebate,” the ACCC said today.

There are two sets of rebates that NBN Co will have to pay on a daily basis.

The first concerns connections that are delayed or not completed in a timely manner. For these it will pay $13.50 per business day, capped at 20 days.

“We consider that the rebate should not be disproportionate or unnecessarily onerous on NBN Co,” it said.

“We have carefully considered the potential cost impact on NBN Co based on the confidential data it provided to us. 

“We consider that a connection rebate of $13.50 per business day for each missed connection service level, up to a cap of 20 business days, is appropriate. 

“We have set the rebate amount with reference to six months of revenue for the ‘typical’ NBN residential offer (the $45 a month bundle products), divided over the 20 business day rebate period. 

“We consider that a potential rebate amount equal to six months of revenue for a typical service represents a meaningful financial incentive for NBN Co to resolve a delayed connection, while ensuring the cost impact is proportionate.”

NBN Co faces much steeper penalties for not fixing faults.

"The Fault Rectification Rebate is equal to the total of $20 for each full or partial business day in the first five business days, and $30 for each full or partial business day thereafter, from the day after the relevant service level until the end user fault is rectified, up to a cap of $1150," the ACCC said in its draft FAD.

NBN Co will also have to pay a new $20 a month rebate on slow or underperforming fibre-to-the-node, fibre-to-the-basement and fibre-to-the-curb services.

This will be payable when the peak information rate (PIR) of a service is half of what was promised.

NBN Co's response

But NBN Co argued in a statement to iTnews it already had "every incentive to improve service levels for customers".

"It’s in our best interest for customers to join the network as early as possible, stay connected, and ultimately take up higher value services over time," an NBN Co spokesperson said.

"We are concerned the draft determination announced today by the ACCC will not drive the right improvements in customer experience and could lead to unintended consequences if rebates are not passed onto consumers."

iTnews was seeking more information on the "unintended consequences".

NBN Co claimed that "forthcoming negotiation of Wholesale Broadband Agreement 4 (WBA4) provided an excellent opportunity for retail service providers and NBN Co to identify and implement new service standards, taking into account issues raised by the ACCC and the operational and commercial needs of all parties."

However, the ACCC's two-year inquiry into service standards was born out of dissatisfaction among all RSPs for how NBN Co conducted negotiation of the previous WBA3 agreement - and it is unclear what has changed in how that process is to be conducted in future.

ACCC chair Rod Sims suggested that the daily rebates should be a "baseline" in the WBA4, suggesting RSPs may be able to use the process to negotiate an even better deal.

“We expect our process to complement these industry negotiations,” Sims said in a statement.

“These proposed regulated terms will establish baseline service standards, while allowing parties freedom to bargain on specific terms.”

More to come