In September 2013, TPG launched its own fibre-to-the-basement (FTTB) network that would service approximately 500,000 premises. The company’s move capitalised on a regulatory loophole to extend its established network to apartment buildings, and in so doing prompted a response from the NBN. The NBN Co was tasked to act as the exclusive wholesaler of the National Broadband Network, as it aims to promote healthy competition for the local telecommunication sector. In the apartment buildings equipped with this technology, TPG announced its plans to offer speeds approximately four times faster than those currently offered. It also plans to offer the same price as existing copper broadband services, which is purportedly testing the economic argument for NBN Co. TPG revealed FTTB construction in the CBD of Sydney, Melbourne and Brisbane.
The NBN Co is the government-owned company in charge of implementing the National Broadband Network. In March 2014, NBN Co revealed plans to roll fibre to apartment blocks partly as a response to TPG’s FTTB rollout. NBN Co revealed it was undertaking trials in conjunction with iiNet, M2, Optus and Telstra.
Shifting gears The entry of vertically integrated carriers such as TPG to lucrative populous areas such as apartment buildings serves to weaken this dynamic. The move by TPG is seen as a way to target the high value customers from the NBN, and in the process effectively reduces the financial viability of the NBN Co, particularly as it relates to the more remote areas. The universal wholesaling function supposedly under the control of NBN Co will ensure the viability of remote areas, as the larger margins of metropolitan areas will serve to partly subsidise regional areas with a smaller client base. TPG has consequently responded by indicating the benefits of its move as a means to promote healthy competition. Contingent on the outcome of TPG’s foray into its FTTB construction, other major telecommunication carriers are closely evaluating similar initiatives.