ACCC won't stop TPG's fibre-to-the-basement NBN threat

Australia's competition watchdog will not prevent telecommunications company TPG from rolling out fibre to the basement in metropolitan areas directly in competition with NBN Co.

TPG will not be prevented from rolling out fibre to the basement (FttB) to 500,000 premises in apartment blocks in Australian metropolitan areas, the Australian Competition and Consumer Commission (ACCC) has ruled.

TPG announced plans in September last year 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.

The company has already commenced construction of the network in Pyrmont, Ultimo, Sydney CBD, Southbank, Docklands, Melbourne CBD, Fortitude Valley, and Brisbane CBD, with live customers already on the service.

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 ACCC investigated TPG's plans, and today said that TPG's rollout is permitted under the level playing field provisions in the Telecommunications Act, because TPG's networks were in place before the cut-off of the new anti-cherry-picking laws that came into effect in January 2011.

"Having carefully examined TPG's plans, the ACCC does not propose to take further action in relation to TPG's planned fibre-to-the-basement network rollout to supply residential customers in high-rise buildings in Brisbane, Sydney, Melbourne, Adelaide, and Perth," ACCC chairman Rod Sims said in a statement.

"The ACCC has reached this decision based on information and evidence that TPG's networks were capable of supplying super-fast carriage services to small business or residential customers at January 1, 2011, and confirmation that TPG is not extending the footprint of these networks by more than 1 kilometre."

TPG acquired a significant amount of fibre networks in CBD locations as part of its takeover of AAPT .

Sims said that the ACCC is now commencing an inquiry into whether services such as TPG's fibre-to-the-basement network should be subject to access regulation, which would force TPG to open up its networks to wholesale access, something that the company is not currently allowing for.

Communications Minister Malcolm Turnbull indicated that the government would not wait for the ACCC to finish its inquiry, however, and would forge ahead with plans to make TPG go wholesale after a short consultation with industry.

"The public inquiry process for declaring a category of telecommunications services can take up to a year ... which creates a window of potential instability and industry uncertainty. I am therefore proposing to consult industry in coming weeks on a new telecommunications licence condition, which will apply to all carriers. Under existing arrangements, affected carriers must be consulted for at least 30 days prior to the new licence condition being finalised," he said.

"The licence condition would require owners of high-speed networks affected by the ACCC's declaration process to functionally separate their wholesale operations, and to provide access to competing service providers on the same terms as it is provided to their own retail operations.

"This licence condition would remain in place for two years — allowing the ACCC to undertake its declaration inquiry, the recommendations of the Vertigan panel to be properly considered, and long-term regulatory arrangements for the sector to be settled."

The Vertigan panel's regulatory report, and the government's response, are due out any day now.

NBN Co has indicated that it will be unable to roll out fibre to the basement in buildings where TPG has rolled out its own network first.

In the meantime, NBN Co CEO Bill Morrow announced in April that the company will accelerate plans to roll out fibre to the basement in the locations where TPG has announced its plans as a "commercial response" to the threat posed by TPG's broadband project.