As Communications Minister Malcolm Turnbull's cost-benefit analysis panel mulls options to close a loophole in telecommunications network legislation that is allowing TPG to build out its fibre-to-the-building (FttB) network in metropolitan locations across Australia, the company has announced it is already conducting live trials with customers.
TPG announced the plans in, to deliver FttB services to 500,000 units across Sydney, Melbourne, Brisbane, Adelaide, and Perth, which would place it in direct competition with the government's National Broadband Network (NBN) rollout.
TPG told investors today that the rollout was "progressing", with construction already underway in Pyrmont, Ultimo, and the Sydney CBD in New South Wales; Southbank, Docklands, and Melbourne CBD in Victoria; and Fortitude Valley and Brisbane CBD in Queensland.
TPG also noted it has live customers testing out the service. TPG declined to comment further on the trial.
TPG also announced its NBN plans, starting at AU$59.99 per month for unlimited data on a 12Mbps down, 1Mbps up service. Including installation and delivery, the first month's charge is at AU$189.94.
For a 100Mbps unlimited data service, customers can expect to pay AU$89.99 per month, and AU$219.94 in the first month.
The proposal is exploiting a loophole in NBN legislation that was implemented to prevent companies from rolling out new high speed networks in places where it is cheap to do so, and therefore be able to undercut the NBN's pricing model, which evenly distributes the cost of services between metropolitan and regional Australia. TPG is believed to be using a loophole that allows it to use its existing fibre assets without actually expanding the existing network.
The government has indicated it is considering closing this loophole, but will wait for the completion of the Michael Vertigan cost-benefit analysis report due to be handed to the government mid-year.
In a submission to the Vertigan panel,that its plans will bring a speedy and positive outcome for users, and would not prevent NBN Co from rolling out its own network in those locations and competing against TPG.
"In the case of the TPG FttB build, TPG anticipates reaching a potential 500,000 premises. Many of those premises will be entrenched HFC customers, due to their requirement for Foxtel Television. Of the remaining addressable market, TPG might reasonably only expect to be successful in securing a percentage of the customers," TPG said.
NBN Cothat the move potentially undermines NBN Co's business model where TPG could woo low-cost, high-use customers in metropolitan areas, while NBN Co picks up only the customers in uncompetitive areas of regional Australia where population size is lower, and cost to deploy is significantly higher.
The Australian Competition and Consumer Commission (ACCC) has said, however, that infrastructure-based competition benefits consumers.
"Where it is economically efficient, infrastructure-based competition is likely to promote the long-term interests of end users. Where efficient network duplication can occur, competition between networks can drive dynamic efficiencies in terms of product differentiation, innovation, and timely investment," the ACCC said.
It comes as the Vertigan panel last night released a second discussion paper (PDF) outlining proposed changes to fixed line access regimes, and NBN legislation, including calling for a review of the law requiring NBN Co to only operate on layer 2 of the OSI stack, and whether it would be more efficient to replace the legislation with oversight from either the ACCC or the minister to ensure NBN Co doesn't creep into other layers in providing services to its customers.