NBN taken to task by ACCC over discriminatory behaviour

NBN Co has received a slap down from the ACCC for discriminating between RSPs and for providing Macquarie Telecom with pricing details months ahead of its competitors.

The government-owned wholesaler has been given a formal warning over the discrimination with the ACCC accepting a court enforceable undertaking from NBN that it will put in measures to ensure similar doesn’t happen again.

The action, which relates to NBN’s enterprise Ethernet offerings, is the first time the ACCC has used its power to issue a formal warning for a contravention of the service providers. NBN Co is prohibited under Competition and Consumer Act obligations from discriminating among retail service providers in the supply of regulated wholesale services and related activities.

The ACCC says from at least January 2018, NBN offered ‘materially different’ commercial terms to different RSPs as it upgraded its infrastructure to support high-speed, business-grade services. It also provided Macquarie Telecom (which ACCC says did nothing wrong) with indicative pricing information for its new enterprise ethernet service in January 2018. It wouldn’t be until May 2018 that other RSPs would see that same information.

ACCC chair Rod Sims says NBN Co failed to comply with its non-discrimination obligations on a number of fronts.

“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.”

The ACCC says it found no evidence that NBN’s actions resulted in specific harm or competitive detriment and that market feedback found NBN’s entry to the wholesale markets had increased competition, particularly in areas where Telstra was the only other fixed-line infrastructure provider.

Sims says the action was nonetheless a serious breach of NBN’s 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.”

In its undertaking to the ACCC, NBN co admits it didn’t have appropriate processes in place to ensure compliance with transparency and non-discrimination obligations. It has committed to offering consistent contract terms and to providing information at the same time to all access seekers, as well as implementing ‘extensive compliance processes’. An external audit of its compliance will also be required.

“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 says.

ACCC to NBN: Improve service or pay the cost

Sort the service problems or pay the price. That the message from the Australian Competition and Consumer Commission, as it proposes new terms – including increased rebates for missed appointments, late connections and unresolved faults – in an effort to improve NBN Co’s wholesale service levels.

The consumer watchdog has released a draft decision for new regulated wholesale terms for the service standards NBN provides to RSPs. Among the proposals is that one-off rebate payments switch to a daily penalty, at an increased rate, and rebate rates for missed appointments increased from $25 to $75. Also flagged is a $20 monthly rebate introduced for underperforming fixed wireless services.

The proposals are part of the NBN wholesale service standards inquiry, which kicked off back in 2017 as complaints about the service soared. The Telecommunications Industry Ombudsman’s Annual Report for 2018-2019 noted 11,635 complaints about changing providers or establishing connections to the NBN, with the number of complaints rising from 6.7 per 1000 in the first half of the year to 8.6 in the second half.

Once connected, the complaints continued, with 23,362 complaints recorded about service quality.

In August the ACCC also flagged underperforming broadband as an issue, noting in its Measuring Broadband Australia report that 12.4 percent of consumers were continuing to experience underperforming services that rarely come close to reaching maximum plan speeds.

This week’s draft decision report says daily rebates for delayed connections should involve ‘a meaningful financial consequence for each delayed connection, providing a clear incentive for NBN Co to promptly resolve connection delays and minimise harm to end-users’.

With that in mind, the ACCC has suggested a connection rebate of $13.50 per business day for each missed connection service level, up to 20 business days.

Slow fixing of faults would see NBN charged $20 a day for the first five business days, then $30 a business day, up to a cap of 40 business days.

Rod Sims, ACCC chair, says it’s unusual for a monopoly telco network operator of NBN’s scale not to face regulated services standards.

Sims says the draft arrangements are designed to provide NBN Co with ‘more incentives’ to lift service standards to retail service providers, something Sims says should, in turn, improve service to consumers by reducing instances of missed appointments, delayed connections and unresolved faults.

“We have heard long-standing concerns from consumers about how frustrating, inconvenient and costly these issues can be,” Sims says, adding that there needs to be more action from NBN Co and RSPs.

NBN and RSPs are currently negotiating a new wholesale broadband agreement, setting out access to NBN’s wholesale service, and Sims says the ACCC’s proposal is expected to complement industry negotiations.

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

“We expect NBN Co and other service providers to identify more improvements that will benefit consumers.”

Feedback on the draft decision is open until 01 November.

BVivid coughs up A$25K over NBN cold-call tactics

Telecommunications provider BVivid has been hit by more than A$25,000 in penalties for making telemarketing calls that “likely misled” consumers transitioning to the National Broadband Network (NBN).

BVivid provides a number of telecommunications services to Australian businesses and individual consumers, including fixed phone, ADSL and NBN services.

According to the Australian Competition and Consumer Commission (ACCC), BVivid cold-called consumers from October 2017 to at least May 2018 and told them that their internet services would be disconnected or that they would lose their telephone number if they did not move to the NBN immediately.

The ACCC said that the company, through a wholly-owned subsidiary in India, employed staff in India to promote its services by unsolicited telephone marketing to prospective consumers in Australia.

In some cases, the representations made by the telemarketers prompted customers to transfer from their current telecommunications services provider to BVivid without understanding the full nature of the NBN migration process or the services they were signing up to.

“BVivid’s calls likely misled consumers and gave them a false sense of urgency and need,” said ACCC Commissioner Sarah Court. “Consumers generally have 18 months from when the NBN becomes available in their area to switch before being at risk of disconnection.”

After being issued with two infringement notices by the ACCC over the cold-calling conduct, the company has paid A$25,200 in penalties and has admitted to likely breached the Australian Consumer Law (ACL).

BVivid has also admitted that it likely breached the unsolicited consumer agreement protections in the ACL after providing services within the cooling-off period while failing to give customers a form they could use to terminate the contract.

“We are of the view that BVivid did not meet all their obligations to consumers who were subjected to their unsolicited marketing practices,” Court said.

“Consumers who find themselves signed up to a contract as a result of unsolicited marketing can cancel their contract without penalty within 10 business days of signing without needing to provide a reason,” she said.

According to the ACCC, the court enforceable undertaking it has accepted from BVivid in response to the action will also see the telco provide redress for customers affected by its conduct by allowing them to terminate their contract without penalty.

The undertaking will also see BVivid commission an independent review of all of its policies, practices and procedures relating to its sales and transfer methodology to ensure compliance with the ACL, among other measures.

Vodafone Australia concedes it misled customers over direct billing service

Vodafone Australia has become the third local telco to be hit by the Australian competition watchdog over direct billing services.

The Australian Competition and Consumer Commission (ACCC) said on 16 July that Vodafone Australia had admitted to making false or misleading representations about its now defunct third-party Direct Carrier Billing (DCB) service.

Similar to services previously offered by Telstra, Optus and other telcos, Vodafone’s DCB service let the telco’s customers purchase online software and services from third parties, with the charges for that digital content then billed directly to Vodafone customers’ accounts.

According to the ACCC, Vodafone’s DCB service was automatically enabled on its customers’ mobile accounts, meaning purchases could occur in just a couple of clicks, without any identity verification, and be charged back to customers’ next Vodafone bill.

It should be noted that the content was marketed and provided by third parties who paid Vodafone a commission for sales to end customers.

According to the ACCC, Vodafone likely breached the ASIC Act from at least 2015 by charging consumers for content they had not agreed to buy or bought unknowingly.

Vodafone has offered up a court enforceable undertaking that compels it identify, contact and refund customers from as far back as January 2013 who complained either directly to the telco or via the Telecommunications Industry Ombudsman (TIO) about the DCB service.

According to the court enforceable undertaking, published by the ACCC, Vodafone was aware of issues with its DCB service from at least February 2015. These included a two-fold increase in revenue but a three-fold increase in complaints about the DCB service received in the 2014-15 financial year, compared to the year prior.

Moreover, according to the undertaking document, Vodafone agrees that from at least February 2015, it was aware that the operation of its DCB service had led to customers unintentionally purchasing DCB content without their knowledge or consent.

The ACCC, which carried the investigation into Vodafone’s DCB service under a delegation of the Australian corporate regulator’s powers, said that Vodafone began phasing out DCB subscriptions in mid-2015 in response to an increase in complaints about the service, cancelling its arrangements with some third-party content providers.

However, according to the ACCC, customers could still be charged for one-off purchases without any identity verification until March 2018.

“Through this service, thousands of Vodafone customers ended up being charged for content that they did not want or need, and were completely unaware that they had purchased,” ACCC Chair Rod Sims said. “Other companies should note, money made by misleading consumers will need to be repaid.”

While Vodafone follows Optus and Telstra in being pulled up by the competition watchdog over its direct billing service, it appears to have avoided being slapped with the $10 million fine the two larger telcos were handed over representations relating to their respective direct billing services.

In February, after action by the ACCC, the Federal Court ordered Optus pay a $10 million fine for its “treatment of customers” who unknowingly purchased games, ringtones and other digital content through its third-party billing service. Additionally, Optus committed to refunding affected customers.

Last year, the Federal Court ordered Telstra to pay a $10 million fine for making false or misleading representations to customers in relation to its third-party billing service known as “Premium Direct Billing” (PDB). Telstra also agreed to refund affected customers.

Optus cops return to court over alleged NBN disconnection claims

BREAKING NEWS

Optus has acknowledged new legal action by the Australian Competition and Consumer Commission and “admitted its mistake,” after the regulator today instituted proceedings in the Federal Court against the Singtel-owned telco, alleging it misled consumers about the need to move to the NBN or risk being cut off.

According to the ACCC, on 24 May 2018 Optus sent an email offering its NBN broadband services to 138,988 of its mobile customers, advising them that their broadband service would be ‘disconnected very soon’ and encouraging them to ‘make the switch, before it’s too late.’

The ACCC said it alleges this was a false or misleading claim, adding that when the email was sent, Optus knew the recipients of the email were already being provided with NBN-based services by another company, and Optus did not have any reasonable basis for saying they would be disconnected.

0“Optus acknowledges the ACCC’s action today and its mistake,” said the telco’s VP of regulatory and public affairs Andrew Sheridan. “Optus has apologised to customers who received the mistaken communication and offered a costless exit for those who took out the offer.”

The ACCC – which is now seeking declarations, injunctions, pecuniary penalties, compliance orders and costs – also reiterated how on 22 May 2018, following the regulator’s action, the Federal Court ordered Optus pay penalties of $1.5 million for making misleading representations to customers about their transition from the telco’s HFC network to the NBN.

“Moving to the NBN is an important decision for consumers, and it can also be a confusing process,” ACCC Commissioner Sarah Court said today. “The ACCC has had to take action about Optus’ advertising on several previous occasions, and it is concerning that we are again having to take them to court for alleged misleading statements about this issue.”

“We are keeping a close eye on this sector and we will continue to take enforcement action where appropriate,” Court added.

NBN consumers continue shift to higher speed plans: ACCC

More than 5.2 million Australian households are now connected to the NBN, with almost 60 per cent subscribed to higher speed plans, according to the ACCC’s latest quarterly Wholesale Market Indicators Report, released today.

The report shows that NBN residential broadband connections across Australia rose by 8.5 per cent in the March quarter, up from 4.8 million at the end of the previous three months.

“The NBN has now passed five million residential premises connected and using an NBN service, and more than half of those customers are on higher speed plans,” ACCC Chair Rod Sims said.

Higher speed services now represent 58.4 per cent of all NBN broadband connections, with more than three million subscribers on services of 50Mbps or above.

The report shows that the number of 50Mbps plans taken up by consumers has grown substantially, following the introduction of discount offers and wholesale bundled products by NBN Co.

More than 2.6 million 50Mbps services were connected at the end of March 2019 (or 50.4 per cent of connections), compared to only 159,000 consumers on 50Mbps plans (or 4.6 per cent of connections) in December 2017.

A large number of higher speed plans are likely being taken up by customers newly connected to the NBN, after migrating from ADSL and HFC, while other consumers are switching from the lower speed NBN plans.

Consistent with this increase in the number of services on higher speed plans, the number of consumers on the entry level 12Mbps speed plan has declined for the second quarter in a row.

There were still one million consumers on these plans at the end of March, although this number has declined by 200,000 over the past two quarters.

“Although the number of consumers on these plans has dropped, they still account for a significant number of NBN users,” Mr Sims said.

“We would be concerned if the options to acquire entry level plans declined, either through availability or higher prices. Indeed, we continue to have concerns about the impact of NBN pricing changes on affordability of entry level plans for those consumers who only require a basic service.”

Connectivity Virtual Circuit (CVC), which is the NBN bandwidth acquired by RSPs to provide data to their customers, increased slightly on a per user basis over the quarter from 1.65Mbps to 1.67Mbps.

RSPs’ market shares remained mostly stable during the December quarter, with smaller retailers slightly increasing their collective share from 6.6 per cent to 6.8 per cent – a rise of about 38,700 services.

There were at least seven access seeker groups acquiring NBN services directly from NBN Co at each of the 121 points of interconnect (POIs) and at least eight access seeker groups at 118 of the POIs.

“NBN access seekers are continuing to directly connect to the NBN at more POIs, including in regional areas,” Mr Sims said.

ACCC fixes software glitch behind early TPG-VHA merger rejection announcement

Australia’s competition watchdog has patched its website content management system (CMS) and apologised, after publishing its decision on TPG’s proposed merger with Vodafone Hutchison Australia (VHA) before it was meant to be made public.

In a somewhat unprecedented move, the Australian Competition and Consumer Commission (ACCC) released a statement on 16 May explaining how it accidentally published its rejection of the proposed TPG-VHA Australia merger a day before it was expected to reveal its decision.

“We apologise unreservedly for this unfortunate and serious incident,” ACCC chief operating officer Rayne de Gruchy said.

“We have thoroughly reviewed all of the processes and information technology systems that led to this error, and we want to assure our stakeholders this incident will not be repeated,” she said.

The publication of the decision to reject the merger sent the share price of both TPG and VHA’s 50 percent stakeholder Hutchison Telecommunications tumbling.

The ACCC said it had conducted a full investigation into the incident and claims that a fault in its website CMS, which has now been rectified thanks to a software patch, was to blame.

According to the regulator, when the information relating to the merger was being put into the back end of the mergers register, a third-party user was trying to access the existing webpage at the same moment as it was being updated.

“Instead of the new information being treated as draft content requiring internal approval, the flaw meant the content was live for eight minutes,” the ACCC said in its statement.

The information went live just before 3PM, giving the ACCC the opportunity to quickly issue a statement confirming the merger decision to both the Australian Securities Exchange (ASX) before the end of the trading day.

The ACCC’s rejection of the merger, which could effectively put an end to TPG’s ongoing efforts to become a major player in the country’s mobile telco market, saw VHA and TPG move to launch legal action against the regulator over the decision.

VHA CEO Iñaki Berroeta said on 9 May that the company remains firmly committed to the merger.

“VHA respects the ACCC process, but we believe the merger with TPG will bring very real benefits to consumers.  We have therefore decided that VHA should, together with TPG, pursue approval of the merger through the Federal Court,” said Berroeta.

The merger agreement between VHA and TPG has been extended to 31 August 2020 to allow the legal proceedings to run their course before the proposed deal lapses.