‘Wireless attack’ on NBN’s fixed-line broadband will continue, TPG says

Growth of 5G means levy targeting fixed-line broadband makes no sense, telco argues

TPG Telecom logo / abstract communications network
TPG Telecom / Thinkstock

Telco TPG says that there is a “wireless attack” on fixed-line broadband services that will only “accelerate” as more spectrum is made available for 5G services.

The Australian Communications and Media Authority (ACMA) is currently preparing to auction off 2.4GHz of mmWave spectrum, which will be employed by Australia’s telcos to deliver the next wave of 5G services.

In a submission lodged with a parliamentary inquiry late last year, TPG cites three wireless offerings that it argues are clearly competing with NBN services.

The examples given by TPG are Telstra’s aggressive rollout of 5G services, which includes plans with up to 150GB of data included, Optus’ 5G-based wireless home broadband service (which has a price point matching the telco’s NBN50-based product), and a wireless home broadband based offering from Exetel, based on Optus’ mobile network, that offers 250GB of downloads for $69 a month.

The examples are used by TPG to bolster its case against the government’s proposed Regional Broadband Scheme (RBS): A levy intended to help subsidise the cost of the “non-commercial” services operated by NBN Co.

The government unveiled the RBS in 2016. If implemented it will charge telcos providing “superfast” fixed-line broadband services (those capable of 25Mbps+ downloads) a monthly fee.

The current RBS plan involves a $7.10 levy per superfast service. That levy will be used to defray the cost of NBN Co providing fixed wireless and satellite services.

The plan to introduce the RBS followed in the wake of other rules for telcos to help protect the NBN from rival network operators providing NBN-equivalent fixed-line services in locations, such as major metropolitan areas, that have high margins and/or a low cost to serve.

However, the scope of the RBS — which is yet to be passed, with the enabling bill only reintroduced in parliament’s lower house in November — does not extend to wireless or mobile services (nor to exchange-based DSL services). The government in 2018 said it saw no pressing need to extend the scheme to cover wireless.

TPG has long argued that the real threat to NBN Co’s viability is wireless services. The company believes that the mobile services from Telstra and Optus, including 5G, are the biggest competition to the NBN and that there is “no reasonable basis” to impose a levy on fixed-line broadband but not fixed or mobile wireless services based on 4G or 5G.

TPG in January 2019 announced it would cease to roll out Australia’s fourth mobile network, blaming the government’s decision to ban Australian telcos from using Huawei equipment to deliver 5G services. The decision to no longer build a mobile network is a key factor in a case currently before the Federal Court, which was launched by Vodafone Hutchison Australia, which is seeking to merge with TPG in opposition to a decision of the Australian Competition and Consumer Commission (ACCC).

In its submission, TPG said that it wasn’t arguing that non-NBN wireless services should be taxed. “TPG’s submission is that it makes absolutely no sense to tax the small number of fixed line competitors to the NBN at the same time as ignoring the wireless competitors,” the company argued.

Instead, it believes the government should look at the Universal Service Obligation (USO) model, whereby copper-based landline services and payphones are currently funded by an industry-wide levy (the USO has its own share of controversy).

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