In a few days, it will be one year since TPG announced that it would cherry pick low-cost, high value apartments as part of its fibre-to-the-basement rollout. Other carriers have indicated that if TPG was allowed to proceed, they would follow suit.
This threatens NBN Co’s ability to provide high speed broadband to all Australians, no matter where they live or do business.
This is because NBN Co needs densely-populated, profitable areas to subsidise the rollout of broadband to Australians living in higher-cost regional and remote areas.
The threat posed by cherry-picking should not be underestimated. NBN Co Chairman, Ziggy Switkowski has previously indicated that the effect of this on NBN Co’s business case is profound—up to 10%. Unchecked, the TPG saga has the potential to punch a big enough hole in NBN Co’s business case to bring the whole thing on budget.
This problem has arisen because Malcolm Turnbull failed to properly consider the consequences of his second-rate broadband policy prior to the election.
TPG announced its decision on 17 September 2013, just ten days after the 2013 federal election. It was a direct result of Coalition policy.
A fibre-to-the-basement rollout was no threat to Labor’s world-class fibre-to-the-premises network, but it could compete with Malcolm Turnbull’s cheaper, second-rate network. An FTTB rollout also meant that TPG would have a monopoly on the buildings it selects because two providers can’t both use the copper for vectored VDSL.
Paralysed by ideology, Malcolm Turnbull flicked the hard decisions to the Vertigan Panel and the ACCC. Today the ACCC shrugged its shoulders, and the Vertigan Panel’s (delayed) suggestion is too slow to be practical.
Finally, after a year of hoping the issue would go away, or be dealt with by the ACCC, today we have had some action from the Minister. But Turnbull’s move raises more questions than it answers.
Will this be enough to deter cherry picking? How will Telstra respond in the context of the renegotiations of the Definitive Agreements? (Telstra gets payments from NBN Co when customers are switched over from Telstra’s copper network—Telstra will presumably forego those revenues if NBN Co rolls out FTTP and pinches customers from TPG). What exactly does “functional separation” mean?
One thing is clear: Malcolm’s Turnbull’s indecision has implications for NBN Co’s business case.
This explains why the Minister has been sitting on NBN Co’s 2014-17 Corporate Plan for more than three months and is refusing to release it.
Rather than further dithering and half-measures, Malcolm Turnbull needs to act decisively.
He should release NBN Co’s 2014-17 Corporate Plan immediately and come clean on the effect his indecision has had on the rollout of the NBN to all Australians.