Turning up the heat on TPG

NBN Co has decided to tackle the threat posed by an upstart TPG Telecom by expediting its plans to connect apartments and office buildings to the NBN. The race to wire up the multi-dwelling units (MDUs) across Australia is on, with the ball now in TPG’s court.

After bemoaning the impact of TPG’s fibre-to-the-basement (FTTB) network before various review committees and the media, NBN Co has opted to take the fight straight back to TPG. It’s a welcome sign of intent from a company that has been on the back foot for a long time, but NBN Co will need to back up its lofty proclamation and deliver the product within the stipulated time frame.

Presumably, NBN Co chief executive Bill Morrow is confident that his new look team at NBN Co can get the job done.

A dose of commercial reality

This commercial response from NBN Co, as it awaits legislative and regulatory clarification, has been made possible courtesy of the updated statement of expectations handed down by the Coalition government last week.

Communications minister Malcolm Turnbull has been roundly castigated for his decision to pull the plug on Labor’s fibre-to-the-premises (FTTP) NBN and forge ahead without the benefit of a cost benefit analysis, however, without it NBN Co would not have had the ability to manifest its strategy to counter the cherry pickers like TPG.

It also allows the Coalition government to perhaps find a solution to the TPG problem without resorting to a lengthy legislative and regulatory rigmarole. Although, avoiding that outcome will really depend on what TPG decides to do next.

TPG Telecom has managed to deliver a salutary dose of commercial reality to NBN Co, as the post-election torpor at NBN Co allowed the telco to come in and fill the void.

That void has now been nominally closed, with Bill Morrow flexing his muscles to reinforce the fact that there’s a new sheriff in town and NBN Co is starting to think and operate like a commercial entity.

Pushing TPG into a corner

Part of that new found vigour is the concerted manner in which NBN Co is trying to push TPG into a corner.

The main thrust is the warning that TPG’s actions could limit competition at a retail level,

 “A building that signs up to TPG runs the risk of being left with only one retail service provider – TPG itself,” Morrow warned yesterday.

“The NBN represents the superior solution for building owners and the families and businesses they house. There are 44 retail service providers operating over the NBN, representing more than 90% of the retail broadband market.”

Last week, NBN Co chairman Ziggy Switkowski whistled a somewhat similar tune, telling ABC Radio that while NBN Co had a firm commitment to an upgrade path; operators like TPG may be less inclined to do so.

Combine these sentiments with the results of a Communications Day survey, cited by NBN Co yesterday, and the message becomes clearer -- TPG’s actions are reckless and put customers and other retail service providers at a disadvantage.

According to the CommsDay survey, 47 per cent of the respondents were opposed to TPG’s plans; 20 per cent said TPG should structurally separate its network arm; and another 20 per cent said it should offer wholesale access on reasonable terms.

Bill Morrow and his teams can perhaps take further heart from the statements made by iiNet, with the Perth-based internet services provider saying that it has no intention of following TPG’s footsteps.

According to The West Australian, the ISP is happy with the current state of play and that’s exactly what NBN Co, and for that matter Telstra and Optus, would like to hear.

NBN Co is turning up the heat on TPG, that doesn’t mean that TPG boss David Teoh will be obliged to comply, but it does give him something to think about.

A tangle of missteps

Does TPG really want to go toe-to-toe with the NBN Co, which is blessed with far larger resources to make their pitch to the public? Conversely, one has to wonder how we reached a scenario where a wholesaler like NBN Co is actually going to compete with a retail service provider to remain viable.

The answer to that lies buried in a tangle of political missteps, careless governance and unfortunate circumstance, but then again the entire NBN project is sailing ever deeper into uncharted waters.

For Bill Morrow and his team, the tough talk will now need to be backed up by resolute action

NBN Co has the chance to put the lessons learned so far during the FTTB trials into action and the rollout will have a fibre-to-the-premises (FTTP) component attached to it as well.

Keeping the option of running fibre straight to the dwellings is a handy trick to have up its sleeve for NBN, however, the Coalition government will most likely loath to utilise that option. It’s expensive, it takes time but it might prove to be a deterrent that NBN Co may choose to exercise, especially if TPG decides to call NBN Co's bluff.

This story was updated at 10:13 am