TPG is one of Australia's largest Internet Service Providers. It has exploited a regulatory loophole in the NBN legislation to announce a roll out fibre to the basements of apartment buildings, a move that has inflamed the government-run NBN Co and led to threats of similar plans from the likes of Telstra, and others.

The loophole allows carriers to extend existing fibre networks by up to a kilometre. Because TPG already has extensive cables in many metro areas, it could reach up to half a million premises by extending them to nodes in the basements of inner city apartment buildings.

But now Morrow has announced that NBN Co will take on TPG directly by bringing forward its rollout of wholesale broadband to apartments and office buildings in Australia’s inner cities, the very places TPG was planning to implement its fibre. He says this is “a commercial response to emerging competition for high-value customers in these markets from vertically integrated telecommunications carriers.”

He is not waiting for the Vertigan report on NBN’s regulatory arrangements, due by mid year. In the absence of any firm guidance on the matter he is acting now.

“Preparations are underway to deploy the NBN – a wholesale network funded by taxpayers and open to all service providers – to inner city residential and commercial complexes in parallel with the NBN rollout in other parts of Australia, including priority areas currently under-served by fast broadband,” said Morrow in his statement announcing the plan.

“NBN Co’s push into high-density urban areas will allow consumers to benefit from the competitive market the NBN enables, and purchase broadband, telephone or other services from the retail service provider of their choice.”

Morrow said a list of initial priority areas will be announced in the coming weeks, and is expected to include Haymarket in Sydney, New Farm and Fortitude Valley in Brisbane, and South Melbourne. These are the very locations TPG has targeted. Morrow said NBN services are scheduled to be available to these premises by the middle of the year – less than three months away.

Morrow said NBN Co is concerned that rollouts of this type may require building owners to agree to exclusive supply arrangements and thereby limit competition at the retail level. And he is not afraid to name names – he mentions TPG specifically.

“The NBN levels the playing field for Australian telecommunications and creates real and vibrant competition. We can make this statement because the NBN doesn’t sell directly to consumers and is open to all retail service providers to use on equal terms.

“Vertically-integrated carriers – companies that both own networks and market to consumers – cannot offer those same guarantees. A building that signs up to TPG runs the risk of being left with only one retail service provider – TPG itself.

“We believe NBN represents the superior solution for building owners and the families and businesses they house. There are 44 retail service providers operating over the NBN, representing more than 90% of the retail broadband market.”

Morrow said the industry was very concerned about TPG’s actions and the fact that others may follow its example.

He said a recent survey of industry participants found that 47% of respondents were opposed to TPG’s plans to offer FTTB to apartments, 20% said TPG should structurally separate its network arm, and another 20% said it should offer wholesale access on reasonable terms. Just 13% said TPG should be allowed to exclusively offer its own services over its planned FTTB deployment.

“The verdict is clear. The NBN offers a once-in-a-lifetime opportunity to allow competition in Australian telecommunications to flourish. A clear majority of the industry is opposed TPG’s plans or wants the firm to be subject to competition constraints.”