Cherry-pick undermines NBN business case: Switkowski

No, really?

By Richard Chirgwin

Posted in Policy, 12th March 2014 03:32 GMT

NBN Co chief Ziggy Switkowski has told a Senate committee that “cherry-picking” network rollouts planned by TPG and mooted by Telstra do, indeed, pose a threat to its own business model.

TPG Internet stated last year that it wanted to extent its metro fibre networks to residential apartment basements, using existing copper to run from the basement to individual premises. That has led Telstra to state in February that it is considering a similar scheme in response to the upstart's business.

Under questioning by Senator Stephen Conroy, Switkowski said that having as many as half a million households connected to other infrastructure providers could well be “problematic” for the NBN business case, particularly considering the rapid rollout TPG is pursuing.

“If we think that we're going to connect approx 10 million premises, and organisations like TPG capture 500,000 high-value customers, there's an economic impact of that. If you amplify that with the inclusions of other infrastructure-based competitors, the economics of the NBN could be severely impacted,” he said.

He said while NBN Co hadn't fully modelled the possible impact, the cherry-picking competitors could damp NBN Co's revenues by between 5 and 10 per cent. The company will be presenting data of different industry models to the cost-benefit analysis that's due to report midyear, one of six the government has commissioned since taking office.

Switkowski said a regulatory response is one possibility, or alternatively, NBN Co could run apartment basement fibre to forestall the TPG/Telstra moves.

NBN Co is conducting its own basement-fibre trials. The company announced today that iiNet, M2, Optus and Telstra have signed up for a three month trial of its basement-fibre-plus-VDSL2 offering.

This covers eight buildings, "a mix of apartments, retail and office buildings", in the Melbourne suburbs of Carlton, Parkville and Brunswick. ®

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