11 September 2014. The Australian Competition and Consumer Commission announced today that it has completed its investigation into a complaint that TPG Limited’s (TPG) plans to connect large apartment buildings in metropolitan areas to its existing fibre networks and to use fibre-to-the-basement technology to supply high speed broadband services to residents of those buildings would be in breach of the ‘NBN level playing field provisions’ in the Telecommunications Act.

The ACCC does not intend to take any action to prevent TPG implementing its plans having concluded that TPG’s planned rollout is permitted under the Telecommunications Act.

The ‘NBN level playing field provisions’ prohibit the use of networks other than the NBN to supply high speed broadband services to small business or residential customers, unless the network operator supplies on a wholesale basis only and is subject to open access obligations.

However, networks that were capable of being used to supply high speed broadband services to small business or residential customers as at 1 January 2011 are not caught by the level playing field provisions, provided they are not extended more than a kilometre from the network footprint as it was at 1 January 2011.

“Having carefully examined TPG’s plans, the ACCC does not propose to take further action in relation to TPG’s planned fibre to the basement network rollout to supply residential customers in high-rise buildings in Brisbane, Sydney, Melbourne, Adelaide and Perth,” ACCC Chairman Rod Sims said.

“The ACCC has reached this decision based on information and evidence that TPG’s networks were capable of supplying superfast carriage services to small business or residential customers at 1 January 2011, and confirmation that TPG is not extending the footprint of these networks by more than one kilometre.”

“The ACCC will now conduct a declaration inquiry into whether a superfast broadband access service like the type to be provided by TPG over its fibre-to-the-basement networks should be the subject of access regulation. Amongst other matters, the inquiry will consider whether regulation is necessary to ensure that consumers in TPG connected buildings can benefit from competitive retail markets for high speed broadband services,” Mr Sims said.

In June 2014, the Vertigan Committee recommended in its initial advice to Government that the ACCC should commence a public inquiry with a view to declaring vectored VDSL services.

BACKGROUND

Investigation into ‘NBN level playing field’ complaint

In April 2011, the Commonwealth Parliament enacted Parts 7 and 8 of the Telecommunications Act, which are colloquially known as the ‘NBN level playing field provisions’, or the ‘anti-cherry picking provisions’.

The NBN level playing field provisions prohibit network operators from using new networks to supply superfast carriage services to residential or small business customers, or upgrading or altering networks that were in existence as at 1 January 2011 to make them capable of supplying those services, unless they supply on a wholesale basis only and are subject to open access obligations.

A superfast carriage service is defined as a service capable of ordinarily operating at a ‘download speed’ of 25 megabits per second. 1 January 2011 is around the time that the level playing field provisions were first introduced into Parliament.

However, networks that were capable of supplying superfast carriage services to residential or small business customers at 1 January 2011 can still be used for that purpose without triggering the NBN level playing field provisions.

These networks may also be extended and have additional buildings connected to them, provided that no point on the extended network is more than 1 kilometre from the network as it stood at 1 January 2011.

Where a network is subject to the NBN level playing field provisions, the network operator will be subject to similar regulation as NBN Co in terms of being required to operate on a wholesale only and open access basis.

In September 2013, TPG announced plans to extend existing fibre networks that it owns in Adelaide, Brisbane, Melbourne, Perth and Sydney, and that it would connect to large apartment buildings.

The buildings are to be connected by running fibre pairs from TPG’s fibre cables into the building’s communications room. In the communications room, TPG is to also install additional network equipment so that building residents can use in-building copper cabling to acquire a carriage service to their premises. This network configuration is referred to as ‘fibre-to-the-basement’. TPG intends to supply very high bit rate digital subscriber line (VDSL) services to residents of the building who wish to switch over to the TPG network.

In announcing the plan, TPG’s stated intention is for its VDSL services to be potentially available at 500,000 premises. TPG has confirmed that all points of the network will be within one kilometre of the network footprint as it stood on 1 January 2011. The ACCC will monitor TPG’s compliance with this footprint boundary.

In April 2014, the ACCC received a complaint that TPG’s plans would breach the level playing field provisions. The principal concern expressed in the complaint was that TPG’s pre-existing fibre networks were not capable of supplying superfast carriage services to residential or small business customers as at 1 January 2011, and that TPG was, by proceeding with its current plan, or in combination with other investments made after 1 January 2011, seeking to make those networks capable of supplying superfast carriage services to those customers without complying with the level playing field provisions.

Declaration

Under Part XIC of the Competition and Consumer Act, carriage services can be made subject to access regulation by the ACCC ‘declaring’ the service. The ACCC is able to declare a service where it has first conducted a public inquiry into whether to do so, and it is of the view that declaration would promote the long term interests of end-users.

In June 2014, the Committee undertaking an independent cost benefit analysis of broadband and review of regulation (the Vertigan Committee) recommended that the ACCC should commence a public inquiry with a view to declaring vectored VDSL services and making wholesale bitstream services available to access seekers. Vectoring is a technology that allows VDSL networks to increase the data throughput that a copper connection can deliver.

The Vertigan Committee recommendation followed a submission provided by Communications Alliance, the primary industry body for the Communications Industry, which expressed concerns that multiple operators building vectored VDSL networks to serve the one area would compromise the reliability and performance of end-user services as compared to where one network was installed.

The ACCC will consider declaring vectored VDSL services as part of the superfast broadband access service declaration inquiry that has now commenced.

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