TPG seeks to end NBN monopoly

TPG seeks to end NBN monopoly

Summary: TPG has called on the government to allow it to compete against the National Broadband Network with its own fixed network in competitive areas.

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TOPICS: NBN, TPG, Australia
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Telecommunications provider TPG has argued to the Australian government's broadband cost-benefit analysis panel that it should be allowed to build out its fibre network to compete against NBN Co in competitive areas.

TPG's case was made in its submission (PDF) to the government's broadband cost-benefit analysis panel, headed up by Michael Vertigan, which will ultimately decide whether TPG will be allowed to continue with plans to roll out fibre to the basement for 500,000 apartments and businesses in metropolitan locations in Australia.

NBN Co has said that 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.

TPG said that keeping the NBN as a monopoly in response to needing to structurally separate Telstra's wholesale and retail armed would see the Australian economy "pay a very high price", and NBN Co "is never likely to be run as efficiently as a private enterprise".

"Infrastructure-based competition delivers the best outcome to end users. The NBN was not intended to be a fixed-line monopoly, and it should not be a fixed-line monopoly. Carriers (other than Telstra) who had invested many hundreds of millions of dollars building 'superfast' networks prior to 2011 were, and should remain, permitted to make use of those networks to compete with the NBN and other broadband providers," TPG said.

The loophole in NBN legislation around cherry picking of network builds that TPG is planning to use would allow TPG and its subsidiary AAPT to use their existing fibre networks to offer the fibre-to-the-basement service in places where it already has fibre.

TPG said that this will "bring speedy and positive outcomes for users", and TPG's rollout would not preclude NBN Co from rolling out the network, given that TPG doesn't expect to pick up all 500,000 premises.

"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.

The company said Telstra poses a much bigger threat than TPG with its existing transit, hybrid fibre-coaxial, and mobile networks.

In its submission (PDF), the Australian Competition and Consumer Commission (ACCC) also supported a return to infrastructure-based competition.

"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.

Telecommunications is a complex and highly dynamic industry, and therefore there may be benefits to be gained from encouraging network-level competition and innovation. The ACCC considers that non-NBN Co network operators should generally not be constrained from deploying networks in competition with NBN Co, including in new developments, unless there are particular circumstances which suggest it would not be in the interests of end users."

But the ACCC said that if NBN Co could not compete on price due to the need to subsidise serving higher-cost areas, the ACCC said this would be better served through explicit subsidisation to the non-commercial areas.

"This approach could address the dual questions of NBN Co being better positioned to respond to competitive pressure arising from infrastructure-based competition and the broader social objective of promoting the interests of consumers in non-commercial areas."

Telstra's submission to the panel, released today, supported its structural separation, but also called for an overhaul of the regulatory environment and products available on the NBN.

Topics: NBN, TPG, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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9 comments
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  • If you want to compete then compete.

    No cherry picking if they compete they should compete everywhere, unlike TPG (and the others) that couldn't be bothered installing DSLAM's in Katoomba.
    If they compete in Pyrmont they should compete in Broken Hill.
    Cherry picking is the un fairest of competition, and I as a Tax payer don't want to be left holding the bag at Broken Hill when TPG runs of with the profits.
    Kevin Cobley
  • Simple

    Broadband excise, sure TPG can build what ever they want on condition it is completely opwn access at regulated maximimum prices.
    However there should be a zoned excise.
    The high profit cheap and easy to provide have an excise of maybe $50/Month per customer service plus a data surcharge of maybe 50c/Gb, down threough the zones to being subsidies for the expensive to provide and rural and regional, satellite etc.

    That way the taxpayer won't be fleeced, the users will be paying for our National Communications network and the private sector borrowings and Shareholder dividends.

    The taxpayers funds can be used for health education and essential more important infrastructure and subsidies
    Abel Adamski
    • It is going to create extra cost

      to have a tiered payment system which will need to be administered by someone and then the funds redistributed. All of this needs to be paid for by the consumer in the end.

      The simplest system was what Labor envisaged of a restricted, single and separate wholesaler charging a uniform price for all retailers.

      If TPG is allowed to have a vertically integrated wholesale/retail business then it is only fair that Telstra be allowed to have the same. We are well aware how that has worked. Do we really want two?

      The Government needs to be telling TPG no and making the necessary legislative amendments as soon as possible to close any loophole.
      Bob.H-819a5
  • Want to have cake and eat others too?

    TPG/AAPT wants to cherry pick the sites it implements fibre. OK, but don't complain if Telstra and other carriers demand the same right! Want a level play ground - sure.
    tonye56
  • Advance social infrastructure

    I do not begrudge my tax$ been spent on providing broadband to difficult to serve rural areas - and accept that it will be a less-than-efficient government organisation doing it that will require an ongoing subsidy. What I do begrudge is my tax$ bankrolling a substantially less than efficient NBN Co competing with organisations that can do it a lot better. Frankly lets get rid of it and rather subsidise existing organisation able to do it a lot better.
    Rossyduck
    • Really ?

      "What I do begrudge is my tax$ bankrolling a substantially less than efficient NBN Co "

      Have you been imbibing the Conservative Bourbon or Bollinger rather than the Kool Aid, methinks affecting your reasoning.
      Yes NBNCo was naive to put their trust in Telstra and the private sector Contractors, however they were sorting out the issues. It was a 10 Year project replacing our dependence on the ageing higher maintenance copper.

      Remember that prior to sale of NBNCo, all limitations on competition were to have been lifted. Those limitations were only there to ensure the financial viability.
      Abel Adamski
    • Vested interest ?

      "Frankly lets get rid of it and rather subsidise existing organisation able to do it a lot better."

      Actually I partially agree, however I refuse to countenance taxpayer subsidy of private sector profits and dividends. Even if it takes Draconian legislation to enforce a whole of Nation upgrade at the private sectors cost.
      Why should we subsidise Mansions, BMW's and Rolls Royce's?
      Abel Adamski
  • What are you going to to Turnbull?

    Please. Enlighten us.
    The Guv
  • Que ?

    "I do not begrudge my tax$ been spent on providing broadband to difficult to serve rural areas"
    Read low profit expensive to provide and maintain, including suburban

    "less than efficient NBN Co competing with organisations that can do it a lot better."

    D what better.?

    You do realise what you propose is a patchwork of monopolies that will get in quick to lock in sites and customers, then they will be free of competitive pressure to ever upgrade over the decades ahead, apart from all the other operational issues.

    The wonderful ideological argument over competition and HFC using overseas as example completely ignores the salient reality that when that HFC was initially installed they only provided Pay TV, the only competition was with other Cable or Satellite Pay TV companies, not the comms infrastructure, which is why that infrastructure competition came to be.

    Take the US, look at the coverage maps. Pretty much a patchwork of monopolies. No one was particularly interested in investing in upgrades until Google came on the scene. Cities such as Chattanooga threw a spanner in the works, but the carriers with their political clout made even that approach close to illegal.
    Abel Adamski