Could TPG end up partially subsidising NBN for Qantas Wi-Fi?

NBN Co placed in a potential conflict of interest under new regional broadband tax

Earlier this year, I made a submission to the Government’s consultation on the Telecommunications Reform Package.

I’ve been meaning to write a summary for some time.  I thought I’d whip one up together after it was announced that the Government planned to introduce the legislation next month despite not responding to the submissions.


As part of the reform package, the government planned to introduce a $7.09 charge per line to most fixed line “superfast” broadband services (defined as 25 Mbps download speeds or greater).

This is to help subsidise the cost of nbn’s fixed wireless and satellite networks — primarily servicing regional and remote communities around Australia.

The NBN fixed line footprint is expected to be the primary contributor of the tax.  However, other operators such as TPG with its fibre to the building network will also be hit.

NBN Co’s commercial interest

The problem is that the NBN satellite network is no longer solely about the delivery of broadband services to regional areas.

It now has other commercial interests — including the Satellite Mobility product which allows commercial entities like Qantas to tap into the satellite network for the delivery of in-flight Wi-Fi.

This could mean that a provider like TPG could be paying taxes which help subsidise the provisioning of Wi-Fi services on a Qantas aircraft.

No restrictions on subsidy for regional broadband only

The proposed bill had no restrictions that the funding must only be used to provision broadband services to regional areas — as I explained in 2.1.5 and 2.1.6 of my submission.

So, NBN Co is placed in a conflicting conundrum.  It can spend its subsidy funds on improving the quality of satellite services to regional communities like relaxing the Fair Use Policy with no additional revenue.

Alternatively, it could spend it on developing new revenue streams through commercial products like the Satellite Mobility product — competing with the likes of Optus who also have satellites in the sky.

My suggestions?

In my submission, I suggested:

  1. The Bill should make clear that the funding made available through the Regional Broadband Scheme is not available for services where the primary purpose is not to deliver broadband to regional communities.
  2. The strict Fair Use Policy (FUP) imposed by NBN Co on its Satellite network means the quality is still not directly comparable to fixed-line super-fast broadband services.As a condition of the Regional Broadband Scheme funding, the funding recipient should prioritise upgrades to the capacity and service reliability of rural and regional customers over the development of supplementary products like the Satellite Mobility product.
  3. Ensure similar protection is afforded to services delivered by means of the NBN Fixed Wireless network.

Full submission

TPG licences hint at LTE fixed wireless trial in Bendigo

New 3.6GHz “point to multipoint” licence at existing Vodafone tower suggests trial LTE deployment

Australia’s second largest telco, TPG, was granted a number of apparatus radio licence covering parts of the Bendigo area in Victoria.

These new licences, issued on 21 March 2017 by the ACMA, are in addition to the spectrum licences owned by TPG to operate in the 1800 MHz and 2.5 GHz bands.

Whilst apparatus licence are typically issued for one year, the TPG licences are only valid until late October this year — hinting at a short-term trial.

(more…)

Inside an NBN node at Umina Beach

Anti-cherry picking limiting consumers in FTTN

Whether you like it or not, NBN Co’s business case benefits from the so called “anti-cherry picking” laws — or Telecommuncations Act 1997, Sect 141B to be exact. It basically gives monopoly provisions for NBN Co to build a “superfast carriage service” (basically an internet connection able to normally deliver 25Mbps or greater speeds) without competition from other carriers. This gives NBN Co the ability to cross-subsidise and create uniform pricing across Australia.

The fundamental problem with Section 141B in this new MTM network architecture being undertaken by the new NBN management is that consumers no longer have a choice of speeds. Australians covered by the FTTN/dp/B and HFC components of the “new” NBN network will only ever be able to get what NBN Co delivers to them.

The issue…

Just to illustrate the issue here… For argument’s sake, you’re sitting at the fringes of a copper Distribution Area (DA) and your service gets peak speeds of 25/5 Mbps thanks to NBN Co’s“innovative” Vectored VDSL2+ FTTN rollout. Now, say in 2017… the company you work for has migrated to a cloud-based computing system that would greatly benefit from having burst capacity of 100/40Mbps so the internet doesn’t congest significantly when you start working. The problem is — no other competing network builder can come along and build a faster (and cheaper, especially in metro areas) fibre network for you — no matter how much you pay. Even small businesses can not get access to alternative “superfast carriage service” other than that provided by NBN Co.

Legal definition of Superfast
Defining superfast; 25/5Mbps is legally superfast under the Telecommuncations Act 1997

It works for an FTTP-dominated network

This framework was perfect under a universal and uniform fibre service that’s able to deliver services beyond the typical needs of a 2014-household. It keeps NBN Co’s monopoly and business case for cross-subsidy… and Australian residents and small businesses need not be worried by the restrictions of law on their ability to upgrade to higher and more reliable speeds since the GPON specification is future-proof with a backward-compatible XGPON upgrade path already available.

Just not FTTN…

But clearly, this does not work in an FTTN-dominated NBN. All residential and small businesses are legislatively bound in what their internet connection speeds achieve, that is, you will get at best what NBN Co is able to provide (a best-effort 25/5Mbps service). And if you think about it in the context of 2017 and beyond, that’s not a lot.

But without the current laws, NBN Co can’t possibly have a profitable business case. Its cross-subsidy plan for the rural fixed-line, fixed wireless and satellite services would crumble.

It’s a tough gig, but a self-inflicted gig

The Minister for Communications, Malcolm Turnbull, has a tough weight to balance. With the economical viability of NBN Co to struggle with, the party ideology of a free market and a self-imposed ideology of an FTTN network — one would wonder why we didn’t just stick with FTTP…

Disclaimer: this is based on my understanding of the Telecommunications Act 1997, Section 141B. Feel free to correct me if you believe what I’m asserting is incorrect — politely of course 😉