TPG fiber project may face govt block

Dylan Bushell-Embling
05 Feb 2014

Major Australian ISP TPG Telecom could face government intervention to its plan to build fiber infrastructure to compete with the National Broadband Network.

Communications minister Malcolm Turnbull toldthe Australian Financial Review that the legality of TPG's project is being judged by a financial inquiry into the NBN, and a final decision will be made on whether the ISP can proceed once this review is complete around midyear.

TPG Telecom last year announced a plan to connect around 500,000 apartments in dense urban areas to an FTTB network, undercutting retail NBN services on prices.

This would see it competing directly with the NBN, because the network relies on dense urban areas to make up for its operations in less profitable rural areas.

Analysts have also estimated it could impact Telstra's value by up to A$150 million ($134 million) due to the impact the deal would have on its multi-billion dollar deal to migrate customers to the NBN.

While the former Labor government introduced legislation aimed at protecting the NBN that prohibits ISPs from “cherry picking” the most profitable areas with fiber build-outs, TPG had planned to exploit a loophole allowing extensions of less than 1km to networks built before 2010.

In opposition, Turnbull had been one of the most vocal opponent of the cherry-picking clause, and had repeatedly argued for free infrastructure competition. But his latest comments could suggest a policy reversal.

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