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2014-07-28

TPG

Vertigan reports may spell trouble for TPG

The first of three reports from the federal government’s Vertigan inquiry into NBN-related policy questions has now been tabled.

 

While it does not directly tackle the question of TPG’s challenge to current NBN policy, its recommendations could spell trouble for the company’s competitive fibre roll-out.

 

TPG is in the process of building out a Fibre-to-the Building (FTTB) network which will use vectored VDSL to provide high speed broadband to multi-dwelling units within the NBN footprint.

 

Both NBN Co and Telstra have pointed out that by targeting these profitable sections of the market TPG’s actions will undermine NBN Co’s ability to provide the cross-subsidies needed to provide broadband access at nationally uniform prices.

 

Communications Minister Turnbull, on the other hand, does not much like monopolies. That’s the policy dilemma.

 

The report stops short of saying that the TPG roll-out should be stopped. But it does recommend that where vectored VDSL services are being offered the provider should be required to offer competitors access to the service at a wholesale level. The ACCC would also have a say in setting the price for such a service.

 

TPG’s current FTTB service ties customers in to using it exclusively at both wholesale and retail level – a position at odds with the structurally separated NBN model. And of course it sets its own prices.

 

Industry observers have differing opinions on the likely impact of the Vertigan recommendations on TPG’s business case, with some arguing the company would have anticipated such a move anyway.

 

Time will tell. Meanwhile it will not be until the full set of inquiry reports has been tabled that any changes to the current regulatory landscape are decided on.

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