TPG withdraws NBN competitor product after Turnbull's ruling

Telecommunications company TPG has removed its fibre-to-the-basement (FttB) product from sale in order to accommodate changes required to meet a new direction from Communications Minister Malcolm Turnbull to provide a wholesale product over the rising alternative to the National Broadband Network (NBN).

After acquiring a large number of fibre backbone networks from its AAPT purchase, TPG began connecting some of the 500,000 apartments the company plans to roll out its fibre-to-the-basement services to in Australian capital cities in September last year.

The move, using a loophole in NBN legislation, was not opposed by the Australian Competition and Consumer Commission. Such networks have the potential to undermine the cross-subsidised business model for the NBN, where the "capped" price for services in the bush is subsidised by higher-usage from places with higher uptake and those areas where cost to roll out the network is significantly lower.

As a result, Turnbull said that he would move to create a carrier licence condition that companies operating such networks must have separate wholesale and retail arms, and offer wholesale products on the same terms and prices as offered to its retail arm.

In December, the minister then said that companies must have the wholesale products on sale from January 1, 2015, but would have until July 1, 2015, to functionally separate the wholesale and retail arms. The delay was designed to give infrastructure owners time to transition to the new rules.

However, it appears that just over two weeks was not long enough for TPG to develop a wholesale product on its fibre-to-the-basement network. As first reported by Fairfax, TPG has withdrawn its fibre to the basement product from sale for the time being.

"On December 14, 2014, we were advised of a regulation that precludes us from selling our FttB products after January 1, 2015 unless we have taken certain steps. There has been insufficient time to complete those steps before January 1 so until we complete the required changes we are required to remove our FttB products from sale," the company stated on its website.

A spokesperson for Turnbull's office directed ZDNet to the minister's statements in September and December on the carrier licence condition, and said that TPG was given a number of months' warning of the changes.

"The government consulted on the draft carrier licence condition determination for 30 days, commencing October 14, 2014. It is not correct to suggest that industry only became aware of this in mid December. Eighteen submissions were received, including one from TPG," the spokesperson said.

"The government revised the draft carrier licence condition in light of submissions made by industry. This included introducing a six-month transitional period, from January 1, 2015, to provide carriers with additional time to meet certain conditions. Whilst the requirement to offer wholesale services commenced on January 1, there is an additional transition period for functional separation of retail and wholesale functions."

It is understood that TPG is open to offering wholesale products on its FttB network, so the move to withdraw the product is likely only a temporary situation until the company has been able to develop a wholesale product.

iiNet CEO David Buckingham confirmed in October that the ISP is in talks with TPG to sell broadband on TPG's networks.