NBN Co puts blowtorch on TPG

NBN Co prepares evidence to report TPG Telecom to the competition regulator.

NBN Co is preparing evidence to report TPG Telecom to the competition regulator in a bid to stop the budget broadband provider from building a rival network targeting half a million of the nation’s most lucrative apartments.

Just a day after revealing that it had decided to tackle TPG’s broadband play by accelerating its own plans to connect apartments and buildings to the new network, NBN Co boss Bill Morrow confirmed to The Australian the company was also exploring legal options to halt its rival’s construction efforts.

“We are still researching this but we believe that there is ample evidence that would suggest that they (TPG) would be in violation of the Telecommunications Act,” Mr Morrow said.

“So our next step is to make sure that we can conclude that if that evidence exists we will go to the Australian Competition & Consumer Commission and ask them to take a review of it.”

It is understood the NBN Co is compiling evidence to show that TPG has run afoul of provisions in the act that prohibit telecom companies building new infrastructure to compete with the NBN.

Under TPG’s plans, which were first unveiled in September last year, the company is using its existing fibre networks to connect half a million apartments to internet services capable of download and upload speeds similar to that of the NBN.

Telstra, Optus and other telecom companies have said they would be interested in using the same loophole to deploy similar networks in competition with NBN Co if TPG is allowed to do so.

TPG did not respond to calls for comment.

The government is awaiting advice from the Vertigan cost-benefit analysis of the NBN before deciding whether to outlaw TPG’s approach.

But it is understood TPG has already ­received legal advice, which it says keeps it in line with a loophole in the act allowing superfast broadband networks that existed before January 2011 to be “extended” 1km in length.

NBN Co, however, remains concerned its ability to cross-subsidise construction of the NBN in the unprofitable rural and regional areas will be undermined if TPG and others are allowed to cherry-pick more lucrative metro areas.

“TPG is nothing more than the crack in the dam,” Mr Morrow said. “But if there is infrastructure competition that comes in to cherry-pick within these premium areas, the cost overall of building the network then goes up.

“I see one of three things happening: one, no competition at the infrastructure level (which requires) parliament to change the Telecommunications Act; two, we charge this levy on anybody that is in the higher margin areas, so they pay their fair share of the subsidy to support rural areas; or three, the government changes its position to authorise tax subsidies on a perpetual basis in rural areas to allow them to pay the same price for services in the metro areas.”