Telco competition may thrive under Abbott as TPG invests in 500,000 fibre connections

The announcement that TPG will invest more money in fibre optics due to the Coalition’s planned changes to the NBN are a signal the telecommunications market could change very rapidly under a Liberal-led government.

The decision to create a fibre to the node network instead of the more expansive fibre to the home scheme will open up opportunities for telco companies to invest more cash in controlling their own infrastructure.

The change is a huge strategic shift. Over the past few years, businesses like Telstra and iiNet have been focusing on customer acquisition under the assumption an NBN-led industry would eliminate infrastructure advantage.

“I don’t think TPG could have accomplished this under a Labor government,” telecommunications expert Chris Coughlan told SmartCompany this morning.

TPG made the investment announcement yesterday at its earnings briefing, saying the company would invest in fibre connections to 500,000 homes across five capital cities.

Sydney, Melbourne, Adelaide, Brisbane and Perth have been targeted for the roll-out. Initial contracts for the infrastructure have been pinned at $69.99 per month for speeds of up to 100 megabits per second.

The Coalition still plans to build a fibre to the node network (for example in apartment buildings), while copper networks would be used for connecting individual apartments. Customers will pay to have fibre connected to their homes.

This gap opens up opportunities for other telco providers, Coughlan says.

“The Coalition’s policy is to actually allow competition, regardless of the change in strategy on the NBN,” he says. “So this new move is in line with the Coalition’s plan.

“I don’t think TPG could have done the same under Labor.”

The shift in telecommunications policy allows for more players to build their own infrastructure, but as Coughlan points out, that can be a problem.

“You can have too many players targeting the same market,” he says, although he points out it’s unclear at this stage whether TPG – or any other business – has a good case for expanding its infrastructure network.

Waiting to see what the new government does in telecommunications may be necessary, he says.

“It could be we see the new government try to promote more changes in the way things are done.”

TPG also reported a 64% increase in net profit to $149.2 million.