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Net war looms

Saturday, 4th January, 2014

By By Darrin Manuel

The sluggish rollout and reduced speed of the National Broadband Network has prompted telecommunication companies to take matters into their own hands, and it could mean bad news for the bush.


In September internet service provider TPG announced its plans to extend its fibre optic network to the basements of 500,000 apartment blocks in Sydney, Melbourne, Adelaide, Brisbane and Perth.


Last month telecommunication companies Vocus and Optus also expressed interest in offering a similar service.


Under current laws instituted by Labor, any network that serves non-corporate customers must offer the same prices and terms as the NBN, or be subject to a speed limit.

However any extensions of 1km or less on a network built before 2010 are exempt from the regulations. This allows companies such as TPG to branch off of their existing business fibre optic networks to offer cheap, super-fast broadband to private customers in major cities.

So why could this be a problem for Broken Hill?

The cost of delivering the $41 billion NBN to remote centres such as Broken Hill is supposed to be subsidised by profits reaped from city customers.

If private companies are able to snap up the profitable urban customers, the NBN could go from being a long-term positive financial investment to a multibillion dollar expense for the federal government.

It also begs the question of whether it will put financial pressure on the government if it prioritises rural areas while private companies are capturing the lucrative capital city customer base.

Telstra’s head of wholesale Stuart Lee recently warned that moves like the one being made by TPG had the potential to undermine the whole business model for the NBN, but TPG chief David Teoh disagreed and cited the benefits of healthy competition in the internet market.

Federal Member for Farrer Sussan Ley was also unperturbed, and said she remained confident in the coalition’s ability to deliver on its broadband promises.

“What TPG ends up doing with apartments in Sydney, or anywhere else, should have no effect on the delivery or price of better broadband here,” she said.

The competition to secure city internet users is unlikely to subside in the future.

The current laws that prevent companies from competing with the NBN for residential customers were drawn up with Labor’s super-fast 100 mbs Fibre To The Home (FTTH) model in mind.

With the coalition’s Fibre To The Node (FTTN) plan set to deliver speeds at only half those promised by Labor, it seems unlikely the government could continue to place restrictions on businesses who wish to provide faster internet to residential customers in future.

It is believed the coalition government could amend the legislation and dump the restrictions by as early as mid 2014.

Meanwhile, a review and plans for the NBN will be finalised by the coalition in coming weeks, and will list which regions and towns will receive priority in the next rollout.

Regardless of whether Broken Hill makes the list, Ms Ley said the city epitomised Labor’s mishandling of the NBN.

“It’s now five years since Labor promised Broken Hill would be right up the top of its fast broadband rollout plans,” she said.

“If there’s a clearer example of the former government’s inability to deliver on the NBN than here, I’d like to see it.”

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