TPG fibre plan a threat to NBN: Switkowski

NBN Co chairman Dr Ziggy Switkowski has urged the government to address the apparent loopholes that ISP TPG Telecom is seeking to exploit to build competing fibre infrastructure to the NBN.

In comments to the Senate Estimates Committee, Switkowski said if infrastructure companies are allowed to circumvent anti-cherrypicking legislation and lay fibre-to-the-building (FTTB) to apartments in profitable urban areas, it would have a “severe impact” on the NBN’s financial prospects.

TPG announced in September that it plans to lay fibre to the basements of a number of apartment blocks in Sydney, Melbourne, Brisbane, Adelaide and Perth, giving it a reach of over 500,000 premises.

The previous Labor government introduced NBN legislation aimed at preventing infrastructure duplication and protecting NBN Co from rival infrastructure providers able to ‘cherrypick’ and build fibre only to denser, more profitable urban areas.

But the legislation includes loopholes allowing infrastructure companies to build out fibre if they allow others to access it on an open basis, if they offer speeds below 24 Mbps and/or if they are making extensions to existing networks spanning under 1 km.

A TPG spokesperson told ITNews last year that the company is considering each of the three options to conduct its FTTB rollout.

TPG already has a significant fibre footprint, and late last year the company acquired 11,000 km of inter-capital fibre through the $450 million acquisition of AAPT from Telecom New Zealand.

During the estimates hearing, Switkowski said NBN Co had yet to conduct a thorough economic analysis of the potential impact of TPG’s plan. But as reported by Fairfax Media, he warned that the “economics of NBN Co would be severely impacted” by the move.

“If we have hinted that we’re going to roll by 10 million premises, and TPG and others capture 500,000 high-value customers, that’s an impact of 5% to 10% alone, which you can amplify with other infrastructure-based competitors,” he said.

Switkowski also stated that TPG has already started rolling out fibre to apartment buildings in Sydney.

The Australian Financial Review quotes Department of Communications secretary Drew Clarke as stating that Switkowski has asked the government to accelerate efforts to find a solution to the problem, including potentially closing the loopholes. Complicating matters is the fact that TPG’s is a private investment that is “not breaking any rules as we can determine it”, he said.

The government’s decision on the loopholes is likely to be influenced by the outcome of the ongoing cost-benefit analysis of the NBN project being conducted by the Vertigan Committee. Clarke said the government is considering asking the panel to provide advice over the FTTB issue before the final report is completed.

Switkowski also told the senate estimates committee that TPG and other companies planning similar infrastructure investments are placing themselves at risk - risk that the government may close the loopholes and the risk of competition from NBN Co, which is conducting its own fibre-to-the-building trials.

Indeed, NBN Co announced last week that ISPs iiNet, M2, Optus and Telstra have signed up for a three-month pilot of FTTB delivery of NBN services via VDSL2 vectoring equipment. The company has installed this gear in eight high-rise buildings in the Melbourne suburbs of Carlton, Parkville and Brunswick.

Conroy separately used the hearing to ask Switkowski to track down anonymous NBN staffers leaking to the media, singling out those quoted in a Daily Telegraph article blaming him for changing the eligibility criteria for NBN Co’s Interim Satellite Service (ISS) - allegedly leaving thousands of rural Australians without NBN access. NBN Co stopped taking new subscriptions to the ISS in February after the 48,000 subscriber limit was reached.

Image courtesy of ActiveSteve under CC