Competition watchdog warns telcos against unfair tactics to lock in customers under the NBN

The Australian Competition and Consumer Commission has warned telecommunications providers against using unfair tactics to lure new customers or lock in existing ones when they connect to the National Broadband Network.

The warning came in the ACCC’s annual Telecommunications Report which was tabled in Parliament yesterday.

“The ACCC is also alert to the possibility that the establishment of the NBN may give rise to new consumer issues,” the report states.

“There is a risk that retail service providers may engage in unfair market practices to obtain new customers who may be reconsidering their current plan in light of new products offered over the NBN.”

The ACCC said there was a real risk the NBN will create an anti-competitive environment.

The competition watchdog warned locking customers into product bundles, which typically combine fixed line services, mobiles and internet services, may stop customers from being able to compare deals.

“While favoured by many consumers, bundles have the potential to harm competition,” the report stated.

“This may occur if bundles significantly reduce the movement of consumers between service providers, and therefore, limit the opportunity for new competitors to succeed.”

The ACCC reported prices paid by consumers for telecommunications services fell by 2.2% in real terms in 2011/12 but for the first time real prices for wireless internet services increased by 1.7%.

ACCC chairman Rod Sims said consumers should shop around to consider whether they would be better off with a different provider.

“Significant falls in these prices over the last five years are likely to be due to increased competition and ACCC reductions in the regulated wholesale price for mobile call termination,” he said in a statement accompanying the report.

Emma Harrison, senior associate at law firm King & Wood Mallesons, told SmartCompany the ACCC’s report signalled that year-on-year price decreases for voice and data services may be a thing of the past.

“While the telecommunications industry is going through significant changes with the introduction of the NBN, the ACCC is showing no sign of abandoning its focus on consumers,” she says.

“The report highlights that the ACCC is aware that the NBN may give rise to new consumer issues such as unfair market practices to obtain new customers who may be reconsidering their options as they migrate services to the NBN.”