TPG's fibre endgame: a winning strategy?

TPG Telecom’s fibre-to-the-basement network may or may not see the light of day, but that hasn’t stopped the telco from pushing ahead with its strategy.

TPG’s boss David Teoh isn’t really prone to flippant endeavours and his latest statements to the press reinforce the telco’s combative stance on the matter.

According to Teoh, NBN Co shouldn’t be treated as a protected species and its economic viability shouldn’t come at the expense of competition.

Which is fair enough, given the assets TPG has in its possession and is now selectively extending.

But TPG has now managed to put the Coalition Government on the spot, antagonise Telstra and effectively set in motion a comprehensive regulatory rethink.

Just what outcome TPG is hoping to engineer is a mystery. 

The eventual fate of the network now depends on the recommendations made by the Michael Vertigan-led committee, examining the legality of TPG’s plan, the telco has used its half-year results presentation to provide a FTTB status update.

It’s an update that should make uncomfortable reading for NBN Co, because TPG’s plan to connect 500,000 apartments across the country is gathering pace.

TPG has started construction and is conducting live trials of the FTTB network in Sydney CBD and its inner-city suburbs of Pyrmont and Ultimo; in the Melbourne CBD and its suburbs of Southbank and Docklands; and in Fortitude Valley and Brisbane CBD.

The purported cherry-picking game for TPG is off to a good start and is unlikely to slow down. If anything, it’s in TPG’s best interests to get as many units connected before legislative barriers are put in place.

And the barriers might be necessary to provide NBN Co enough time to dig itself out of the mire, even if it means the Coalition's ideological preferences will be compromised.

So, the expedited response from the Vertigan committee may well suggest turning off the tap for TPG and any other operator with similar aspirations.

That outcome doesn’t necessarily have to be bad news TPG, especially if it can squeeze a healthy compensation for its troubles.

Changing the regulation is unlikely to be a rapid-fire exercise and, until then, there’s nothing stopping TPG from building its network.

If and when the loophole is closed, TPG will ponder the prospect of extracting its fair share for the investment it has made and it’s difficult to see how the government could deny the telco its fair due.

The fact that the regulatory landscape is a mess isn’t exactly TPG’s fault. It’s hard to justify penalising the telco for its endeavour, especially when it’s all by the book.

It’s hard to say if this is the outcome TPG had on its mind all along.

Presumably it would have been cognisant of the trouble the FTTB network was going to cause for NBN Co’s business model. In addition, it’s unlikely that TPG didn’t envision a scenario where the likes of Telstra and Optus would follow its footsteps.

TPG’s FTTB network might be bad news for NBN Co, but a Telstra FTTB service will probably make life hard for TPG as well, although TPG would presumably leverage its position as a mid-market provider and compete on price.

We will have to wait and see just what TPG and Teoh’s endgame is and the telco’s latest statements should provide an extra sense of urgency to the Vertigan committee to make a ruling either way.

The uncertainty around the fate of the NBN only grows larger and tackling the TPG situation just might be the first step in a long road for the Coalition.