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TPG fibre roll-out gets green light

TPG’s roll-out of Fibre to the Basement (FTTB) can go ahead following a recent finding by the Australian Competition and Consumer Commission (ACCC). But the company will face ACCC regulation of its network.

The ACCC has found that TPG’s plans do not breach laws introduced by the former Labor government to protect NBN Co from competition.

These laws made it illegal for carriers to use new networks (or upgrade existing ones) to supply superfast fixed network services to residential and small business customers except on a wholesale, open access basis.

An exception was made for networks in existence before 1 January 2011 where the network already reached within a kilometre of a customer premises.

Telstra and Optus of course had such networks, but this problem was dealt with separately – essentially by buying Telstra’s and Optus’ fixed access network customers. Meanwhile TransACT’s FTTP assets were rolled into NBN Co.

But TPG was left outside the tent and last year it announced it would target 500,000 premises in multi-dwelling units with a high speed FTTB service.

Such a move has the potential to undermine the economics of the NBN which involve cross-subsidisation of rural and regional services from profitable high density urban markets. It remains to be seen how this issue will be addressed.

The ACCC will now begin an inquiry aimed at “declaring” the TPG network i.e. obliging TPG to offer a wholesale service at ACCC-regulated prices. It will be interesting to see how the Commission manages the balancing act this will involve – between facilitating competition, which is after all supposed to be its brief, and protecting the current NBN monopoly model which to date it has supported.

In a parallel development, Communications Minister Malcolm Turnbull has signalled that he may introduce legislation requiring functional separation of TPG – and any similarly placed carrier. This would involve TPG having to place its fixed network assets into a separate entity with its own management, staff and business operations.

Telstra – whose structural separation (i.e.  to transfer its customers to NBN Co) only comes into effect once the NBN is operational in any given area – will no doubt be watching these moves keenly.

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