Small telco exemptions are hurting retirees

Mark Gregory

The number of retirees having to pay high monthly fees for underperforming fixed connections to the internet is increasing at an alarming rate thanks to a small provider exemption originally designed to improve internet access for small business. It has become a major problem for retirees as they move into retirement villages or apartments.

Small providers of fixed line local access that provide less than 12,000 services are exempt from wholesale structural separation requirements under Part 8 of the Telecommunications Act 1997.

The number of small providers covered by the exemption appears to be increasing and data on the performance of the small providers is not available from the Australian Competition and Consumer Commission (ACCC).

From 5 March 2022, the ACCC increased the customer limit for the class exemption for small providers to 12,000 services.

Whilst this may not appear to be a large number of premises, the number of multi-dwelling units (MDU) such as apartments, retirement villages and suburban developments, affected by this rule appears to be growing quickly.

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If you were to ask the ACCC if the premises connected to the small providers were getting value for money, speeds close to the broadband plan tiers, and access to over the top services similar to what is available for premises connected to the National Broadband Network (NBN), the ACCC is likely to be unable to respond.

For retirees, what his means is that they’re forced to sign up to the small service provider that has the contract to provide fixed access internet into their retirement village or apartment building. Prices for internet access can be far higher than what is available for a connection to the NBN.

There is no monitoring of the performance of the small provider internet connections.

The Measuring Broadband Australia (MBA) program run by the ACCC to monitor the broadband performance of service providers offering connections to the NBN does not include small service providers.

One person in Western Australia volunteered to participate in the MBA and has had a dongle attached to the home router from the beginning of the MBA. Yet, no results have been presented for this premises in the MBA reports published by the ACCC, because the premises is connected to the NBN by a small service provider.

The ACCC’s MBA program has a large price tag: $12 million so far. Yet the outcomes of the MBA are arguably not cost effective.

Recently, the MBA was heavily criticised in an academic paper published by an Australian Professor at an international conference. The ACCC is yet to respond to the criticism.

Taxpayers should be concerned that the ACCC is not prepared to respond to the criticism of the expensive and underperforming MBA by Australian academics.

There is an urgent need for the government to hold an inquiry into the class exemption made possible by the Telecommunications Legislation Amendment (Competition and Consumer) Act 2020 (TLA Act).

The Department of Infrastructure states online that “As a general rule, Part 8 [of the Telecommunications Act] requires fixed-line superfast capable lines servicing residential customers to be wholesale only. However, from 25 August 2020:

  • networks servicing predominantly small business areas will no longer be subject to the separation rules
  • lines and networks that would otherwise be subject to structural separation requirements will be able to operate on a functionally separated basis subject to the approval of the Australian Competition and Consumer Commission (ACCC); and
  • the ACCC will be able to make class exemptions for small providers (up to 2,000 services, which could be raised by regulation to 12,000).”

Whilst a stated objective is to focus on small providers of fixed line access to small business, what is actually happening is a growing number of residential customers, mainly retirees, are being caught up in situations where there is only one provider of fixed line access.

Feedback that I’ve received is that the services can be overpriced and underperforming.

Some of the residential customers living in retirement villages and apartment buildings that are unhappy with the service offered by the monopoly fixed access provider have turned to 4G and 5G fixed wireless.

I received an email that asked if there were any alternatives to fixed wireless because Telstra had stopped offering 5G fixed wireless in the area. The reason provided by Telstra is that the 68 apartment MDU is close to a major airport.

The Department of Infrastructure indicates online that there are a number of networks affected by ministerial exemptions from the structural separation requirements in the Telecommunications Act 1997, including:

  • SmartFarmNet
  • Telstra South Brisbane Network
  • Telstra Specified Velocity Networks
  • TPG TransACT Upgraded VDSL Networks, and
  • TPG TransACT Very Small Scale Networks

Australia is slowly moving towards an all fibre NBN and increasing competition among the NBN service providers, so why should residential customers that live in MDUs be subject to a class exemption that can only be described as unsatisfactory.

There is a need for an urgent government inquiry into the structural separation exemptions and a strategy put in place, with supporting legislation, to ensure that every Australian irrespective of where they live or work can have access to competitive, open and fair fixed line access.

Mark Gregory is an Associate Professor in the School of Engineering at RMIT University.

Do you know more? Contact James Riley via Email.

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