TPG’s Teoh joins telco CEO chorus criticising NBN’s enterprise ambitions

Criticises overbuilding by NBN Co in metro areas

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Martyn Williams/IDGNS

TPG’s CEO David Teoh is the latest telco chief to take exception to NBN Co’s push into the enterprise space.

In remarks prepared for the company’s AGM, Teoh said that TPG has “concerns about NBN’s increasing involvement in the business market in areas where there is already substantial existing fibre from numerous competitive carriers”.

“We don’t understand why taxpayer funds would be used to overbuild existing infrastructure in these areas,” the TPG chief executive said.

In October, Vocus CEO Kevin Russell expressed frustration at NBN Co’s push to roll out additional fibre in metro areas. “Vocus’ own Melbourne office exemplifies this problem,” Russel said during a CommsDay event.

“If you go into the communications room in the basement of 452 Flinders Street, you’ll find no fewer than six fibre providers that have invested capital to provide competitive services. And recently, NBN became the seventh. Is this really where NBN should be spending taxpayer dollars?”

The Vocus chief executive said that he saw a role for NBN in the enterprise market but not when it promoted use of its own fibre to the exclusion of other network operators.

In September Telstra’s CEO, Andy Penn, said that NBN Co seeking to increase share of the enterprise networking was a “little bit of a surprise” adding that Telstra had understood that the purpose of the NBN “was to provide broadband connectivity to every household in Australia not to build fibre for enterprise customers”.

NBN Co has been diverting capital from its core mission in order to deliver more fibre in CBDs, Penn claimed.

Similarly, Telstra chairperson John Mullen said that NBN selling directly to enterprise customers was “becoming problematic”.

“The original mandate for the NBN was that the NBN would be a wholesale provider only and would not favour or discriminate between retail service providers, or RSPs,” Mullen said.

“It certainly wasn’t envisaged that NBN Co would negotiate contracts directly with customers and encourage them to seek special deals from certain RSPs.”

“That, however, is what we are seeing today. Instead of remaining a wholesaler, the NBN is now going outside this mandate and is targeting our customers directly,” the Telstra chair said.

NBN Co’s leadership has rejected the accusation that it is diverting capital from its rollout across Australia and defended the company’s efforts to build its business revenue.

NBN Co has “never hidden” its intention to target businesses with its services CEO Stephen Rue said in October. The company says it has an industry engagement team but that it doesn’t directly sell to end users.

TPG ‘very comfortable’ with merger case efforts

TPG’s general counsel, Tony Moffatt, said that the company expects a Federal Court decision on its proposed merger with Vodafone Hutchison Australian (VHA) in late December or early February. The merger is opposed by the Australian Competition and Consumer Commission (ACCC), which argues that it will reduce competition.

The court action, launched by VHA but supported by TPG, seeks a ruling that the proposed merger will not be substantially lessen competition.

In its case, the ACCC has cited TPG’s previously stated ambition of becoming Australia’s fourth mobile network operator.

TPG announced in January 2018 it was ending the rollout of a mobile network. The telco cited the Australian government’s ban on use of Huawei gear for 5G as the reason, although the announcement came in the wake of the ACCC expressing qualms about the VHA merger’s impact on competition in the mobile space.

Moffatt said that TPG was “very comfortable” with the way it presented its case before the court.

“We had the finest competition lawyers working for us on the matter and we believe that we presented a very clear picture about our position when it comes to any future mobile strategy,” he told the AGM.

“There was once a technical solution that would have worked for us, but since the government's ban on the use of Huawei for 5G, there is no viable replacement technical solution suitable for TPG.

“If the merger is not approved, we will be looking at the other options available to monetise our spectrum and mobile assets.”

Moffatt said the company disagreed with “elements” of media reports on the case but did not offer details.

Copyright © 2019 IDG Communications, Inc.

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