TPG seeks to end NBN monopoly

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

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.