NBN Co seeks ‘early resolution’ of TPG fibre threat

If Telstra decided to compete with NBN Co infrastructure, there would be ‘significant implications’

The company in charge of rolling out and operating the National Broadband Network has called for a speedy resolution to the issue of infrastructure-based competition. NBN Co raised the spectre of cascading consequences from a decision to allow infrastructure-based competition in a submission to the Vertigan panel.

The NBN Panel of Experts — also known as the Vertigan panel after its chair, Michael Vertigan — has been charged by the government with conducting a cost-benefit analysis of the NBN and a review regulation relating to the network and its rollout.

NBN Co has provided the panel with a supplementary submission that responds to issues raised by other parties in their responses to the Regulatory Framing Paper. The panel released Regulatory Framing Paper in February.

“The more infrastructure competition NBN Co faces, including of the kind contemplated by TPG, the more severe the adverse impact on NBN Co's business case and its ability to deliver on its social policy objective of facilitating the provision of high-speed broadband at affordable prices to all Australians,” NBN Co’s submission states.

TPG has begun rolling out a fibre-to-the-basement offering that could reach some 500,000 premises in urban areas that are considered high-value. There are live FTTB trials being conducted with TPG customers, and construction is taking place in Brisbane, Melbourne and Sydney.

The rollout of FTTB appears to run counter to the intention of anti-cherry-picking provisions, which are intended to prevent ISPs from undermining the NBN by building competing infrastructure in low-cost or high-margin areas.

“While the issue of infrastructure competition is a policy decision for Government, NBN Co encourages the early resolution of this issue,” NBN Co’s supplementary submission to the Vertigan panel states.

“The extent to which NBN Co is likely to face infrastructure competition is a source of ongoing uncertainty for NBN Co, Telstra and the rest of industry and is rendering it difficult to make decisions on key commercial issues.”

NBN Co warned that if infrastructure-based competition is allowed, “to the extent that Telstra is allowed to compete with NBN Co as a provider of fixed network infrastructure, this may have significant implications for Telstra’s incentive as a supplier of network infrastructure to NBN Co which may, in turn, affect the efficient rollout of the NBN.”

The company also rejected TPG’s claim that NBN Co may be unable to operate on a commercial basis: “NBN Co strongly rejects TPG’s arguments in this regard, which appear to be intended to divert attention from TPG's own plans. It is common sense that TPG’s plans for a FTTB rollout to approximately 500,000 premises will adversely affect NBN Co's business case by reducing the revenues that NBN Co receives from high-value customers residing in the low-cost areas of Brisbane, Melbourne and Sydney.

“In turn, this will adversely affect NBN Co’s ability to deliver on its social policy objective to facilitate the provision of highspeed broadband at affordable prices to all Australians regardless of where they reside.”

In addition to addressing the infrastructure competition with the submission to the Vertigan panel, NBN Co earlier this week issued a commercial response to TPG’s FTTB rollout. The government-owned NBN wholesaler revealed it would step up its rollout of fibre in inner-city Brisbane, Melbourne and Sydney to compete with TPG.

NBN Co’s new CEO, Bill Morrow, warned that buildings that sign up for TPG’s FTTB scheme could be stuck with a single retail service provider.

The company yesterday also proposed that TPG and other infrastructure competitors cross-subsidise the rural NBN build.

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