TPG complains of 'wireless attack' by 5G on fixed line broadband

If only a certain telco had not dropped plans to create its own mobile networks, nor try to merge with the number three mobile operator.
Written by Chris Duckett, Contributor

Australian telco TPG has launched another defence of its fixed line assets, complaining that fixed broadband is under attack from 5G networks.

The defence was made in the face of a AU$7.10 monthly charge that would be placed on its assets if the Regional Broadband Scheme, also known as the broadband tax, were to be passed by the Australian Parliament.

Contained within the Telecommunications (Regional Broadband Scheme) Charge Bill 2019 (TRBSC), the broadband tax, as well as the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019, is currently before the Senate Standing Committees on Environment and Communications, which is due to report by February 21.

Echoing comments first made in 2014, TPG said in its submission that there was no reasonable basis for it to pay the tax, and not have it passed onto 4G and 5G operators as well. The telco said its previous comments had been proven, due to products such as Optus 5G Home being available.

"It is plain that these products compete with the National Broadband Network (NBN)," TPG said. "The explanatory memorandum to the TRBSC Bill relies on a 2015 ACCC report to state that mobile is not a threat to the NBN. It is certainly out of date.

"It is also certain that the wireless attack on fixed line products will accelerate when the ACMA auctions off the mmWave spectrum in the coming months."

See also: Snake and ladders as Australian broadband realigns towards NBN

TPG said it did not "submit" that the conclusion was taxing wireless operators, but to treat itself and wireless operators as a group.

This is a substantial turnaround from its July 2017 submission on the same topic when TPG said the broadband tax should be levied across the telco industry on all connections, as well as over-the-top service providers such as Google and Facebook.

"The cost will be passed on to consumers and risks consumers shifting their buying preference to other technologies such as fixed wireless or mobile that become comparatively cheaper because they are not subject to the tax," TPG said at the time.

"For the vast majority of consumers low-speed broadband is easily sufficient for their requirements and they see no benefit in paying more for higher speeds that they don't need. For example, the introduction of Netflix resulted in large increases in data usage and it remains one of the largest sources of data consumption despite only requiring a transmission speed of 3Mbps."

TPG complained in its latest submission that the broadband tax would favour companies with wireless networks such as Telstra and Optus.

The irony in this statement is two-fold.

First, TPG dumped its plans to build out its own mobile network in January 2019, claiming it was a result of the nation's Huawei ban, which resulted in it taking a AU$230 million accounting hit as a result.

Secondly, the company is waiting on a court decision widely expected to be made next month as to whether its blocked merger with Australia's third-placed mobile operator Vodafone can go ahead.

See also: TPG kept looking into 5G even though Teoh killed the project

During the case, the Australian Competition and Consumer Commission maintained a view that TPG would build a fourth mobile network if the transaction was denied.

Also hitting out at the broadband tax was merger partner Vodafone, however it also aimed up at its long-time whipping horse: The Universal Service Obligation which is set to disappear at the end of the rollout of the NBN.

"We have strong concerns with the Regional Broadband Scheme Charge Bill 2019 as it introduces yet another duplicative, complicated, and inefficient subsidy scheme on top of a spider's web of large, opaque, and anti-competitive transfers which already plague the industry," the company said.

"We find it surprising that the government is proposing to introduce yet another tax on the telecommunications industry without following through on the Productivity Commission's clear recommendations in its extensive review of the large, inefficient, and anti-competitive subsidy regime already in place -- the Universal Service Obligation."

Vodafone said it was absurd to consider the amount of money passed between Telstra, NBN, industry, and taxpayers, before it did exactly that.

The telco cited AU$2.3 billion in NBN migration payments to Telstra and Optus, which NBN blames for dragging down its profit numbers; rental payments from NBN to Telstra of AU$1 billion a year; taxpayer subsidies of around AU$15 per month per active NBN service totalling AU$96 million a month; taxpayer payments to industry of AU$406 million thus far as part of the mobile blackspot scheme; payments from industry to the government as part of spectrum sales; and payments to NBN made "via artificially high access charges".

In an earlier submission, Optus complained that the broadband tax would be extended to enterprise and government customers.

"The provision of services to enterprise and government customers over non-NBN networks does not displace any NBN Co protected revenue or preclude NBN Co from making sufficient revenue from its metro connections to internally cross-subsidy the fixed wireless and satellite networks," it said.

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