NBN Co spending big to fight off cherry-picking telcos

“This is not just a TPG response plan. This is our plan to bring forward those revenues and also at the same time make it clear that we will respond to competitive threats.” Photo: Daniel MunozNBN Co is set to ramp up its spending to fight would be competitors such as TPG Telecom in an effort to shore up its profitability which it claims is under threat.

The strategy is part of NBN Co’s response to TPG Telecom’s plan to connect lucrative urban apartment-dwellers with a rival fibre to the basement network.

NBN Co will speed up the launch of its fibre to the premise and basement services for apartments and office blocks to stop TPG from locking customers and building owners into exclusive contracts.

TPG’s share price fell 26¢ on Tuesday to $5.69 per share.

NBN Co’s chief customer officer John Simon is in charge of the project and said the government-funded project had to act quickly to stop TPG and other telcos from destroying its business case.

“If TPG can do it then why can’t six or seven other players do it?” he asked. “Then all of a sudden what you find is the more commercial or lucrative sectors of the market get picked off and you end up with a swiss cheese network.

“This is not just a TPG response plan. This is our plan to bring forward those revenues and also at the same time make it clear that we will respond to competitive threats.”

Mr Simon said NBN Co would not slowdown its construction in regional and rural areas, instead it would ramp up building in metropolitan areas.

TPG’s planned network depends on a legal exception that lets networks built before 2010 to be extended by up to 1 kilometre giving them access to apartment and office buildings. Telstra, SingTel-Optus and Vocus Communications 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.

Mr Simon said the Federal Government’s latest statement of expectations was partly the catalyst for the new and aggressive plan.

While senior telco industry executives have expressed concerns that NBN Co is using taxpayer funds to shut down potentially competitive markets, Mr Simon said his priority was to keep the company profitable.

“In the absence of a clear statement about any regulatory position we have no choice but to protect the integrity of the plan NBN has and also remembering we have 43 other RSPs that are our customers…and if we didn’t do anything then effectively we’re diminishing our relevance,” he said. “It is taxpayer funded and that’s why it’s important we protect that investment and get the right return for the taxpayers.

“We have no other choice but to make sure we deliver services to these key market segments and also respond to competitive moves.”

TPG declined to comment.

TPG Telecom’s rivals have welcomed NBN Co’s move to tackle the company head on with a ramped up broadband construction rollout.

Perth-based service provider iiNet supported NBN Co’s latest push to take on TPG. Its head of regulatory affairs Steve Dalby said he was worried about TPG being both a supplier of services and competitor against his company in the telecommunications market.

“We have clarity on how we can deliver services to our customers over the NBN whatever the technology platform is but in terms of TPG we don’t have a relationship there,” he said. “So from our perspective we back NBN Co and say ‘get on with it’.

“TPG is a competitor and has a potential conflict of interest about being a supplier and competitor .. and its mandate is to act in the interests of shareholders [but] NBN Co’s mandate is to provide wholesale access to retail service providers.”

But Mr Dalby said the Federal Government had to bear some of the blame for NBN Co being forced to tackle TPG because it had not locked in its NBN plan.

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