NBN Co has outlined plans to run fibre networks to individual units in apartment blocks, in an effort to combat the potentially “severe” impact of the fibre-to-the-basement efforts of TPG and Telstra.
TPG revealed last September it would roll out fibre to the basements of around 500,000 apartment blocks across five Australian cities to expand the number of buildings connected to its existing network.
The David Teoh-controlled telco has started the project, which mimics the Coalition Government’s own plans for FTTB for apartment buildings.
Telstra followed TPG’s announcement revealing its own plans to look at a potential FTTB rollout in order to remain competitive in the telecommunications market. The incumbent telco said nothing in its definitive agreements with NBN Co ‘overly prevented’ it from an FTTB play.
TPG’s rollout exploits a loophole in the anti-cherry-picking legislation created by the former Labor government to stop private operators from picking off high-density, low-cost areas to build or upgrade high-speed fixed networks before the arrival of the NBN.
But network builders can fall back on certain exemptions, not including a Ministerial exemption: cherry-picking is allowed if they provide wholesale access to their network for others to offer retail services on, and also if they offer speeds lower than 24 Mpbs.
Network operators are also allowed to make extensions to networks built before January 2011 as long as the extension covers no more than 1km.
In a Select Committee on the National Broadband Network hearing in Sydney today, NBN Co chief Ziggy Switkowski admitted such manoeuvers could have a “severe” impact on NBN Co.
“If we think that we’re going to connect 10 million premises, and organisations like TPG catch 500,000 high-value customers, that has an economic impact at the 5 to 10 percent level,” he said.
“If you amplify that with the inclusion of other infrastructure-based competitors, the NBN would be severely impacted.”
TPG's plans would be allowed under current Government policy, he said.
“The policy says NBN Co will be the exclusive wholesale provider of the national broadband network. And it’s a policy we are implementing,” he said.
“If there are infrastructure-based enterprises who want to test the limits of that policy, they take a risk that NBN Co will respond in some way as was the original construct.”
Committee member and former Communications Minister Stephen Conroy said exploitation of the loophole in the legislation needed an ‘urgent’ fix.
“[That] needs to be done relatively quickly, because TPG are in the basements of buildings in Sydney right now. And it’s actually happening now,” he said.
Responding to Conroy’s suggestions of a potential fibre to the apartment approach to “reduce the threat”, Switkowski said that was “exactly one of the probable scenarios” NBN Co was considering.
He said he shared Conroy’s concern that the rapid deployment of the TPG FTTB rollout could become problematic unless immediately dealt with.
“The current cost benefit analysis is going to explicitly consider infrastructure-based competition and implications on industry structure and economics of the NBN. Our contributions will be to lay out the consequences of different industry models,” he said.
“We could roll fibre to the basement and utilise existing wiring in the building ... we already have a trial underway to that effect. We haven’t contemplated any reaction that might be specific to the examples you’ve given, but clearly that’s an option,” he said.
Last October NBN Co announced a trial of FTTB in ten multi-dwelling units including apartment blocks and shopping centres in several north Melbourne suburbs.
The trial began earlier this year and will last three months. NBN Co announced today it had partnered with iiNet, Telstra, Optus and M2 for the project.