Telco war erupts: Vodafone accuses NBN Co of wasting billions on ‘overbuilding’ its network

Vodafone owner TPG has slammed government-owned NBN Co for ‘overbuilding’ its network, accusing it of squandering billions in taxpayer funds on an unnecessary rollout.

Vodafone owner TPG says Canberra is already serviced by a competitive wholesale telco, making the NBN rollout in the city unnecessary and costly.

A new telco war has erupted in the nation’s capital, with Vodafone owner TPG accusing government-owned NBN Co of “overbuilding its network” and wasting taxpayer dollars.

TPG says Canberra is one of the most expensive places to roll out NBN fibre, costing almost $6600 per premise, mainly due to challenges such as backyard power poles and rocky terrain.

The nation’s third biggest telco argues such costs are unnecessary given its Vision Network – which it sold to Macquarie-backed Vocus for $5.25bn, with the deal expected to settle in coming weeks – is already available in Canberra and can provide up to 1Gbps connection speeds.

It says this means the government is effectively spending billions of dollars to “build over the top” of a commercial wholesale network.

TPG general manager of fixed-line product Andrew O’Connor said Vision was available to retail telcos – such as Superloop, Airtel and Infinite – making the NBN rollout in Canberra unnecessary and costly to taxpayers.

“The case in Canberra is a really good one to focus on. It costs over $6500 to get an NBN service up and running over there, which just seems massive in terms of cost, when there’s already a network that is running and providing speeds of up to 1Gbps,” Mr O’Connor said.

“Fundamentally, that $6500 needs to be recouped. It’s an investment that any business would need to recoup over time, and the way they’re going to recoup that is with high pricing. “Vision would have already spent that cost, and then able punt that back to their independent retailers, and in turn get great pricing for customers already.”

To prove its point, TPG’s main brands – Vodafone, iiNet and TPG - have embarked on what it says is its most aggressive marketing campaign, offering a free 500Mbps internet connection to new customers on the Vision Network for the first six months, after which pricing is $79.99 a month.

It costs about $6600 to connect a house to the NBN in Canberra.

It comes after NBN Co told a Senate estimates committee in late 2022 why rolling out fibre in Canberra was costly and difficult.

“Firstly, there are higher costs associated with the existing aerial architecture where lead-in cables are fed to the premises from backyard power poles,” NBN said.

“Around 86 per cent of the remaining footprint in the ACT have a connection delivered this way. Secondly, the high prevalence of rock in the ACT also results in higher build costs.

“Approximately 92 per cent of the remaining footprint in the ACT lies in high rock areas. These factors materially increase the cost per premise to deploy fibre compared to other states and territories.”

But last year NBN Co said residents living in the same street in western Sydney might have to pay almost $10,000 to be connected to its fibre network, while neighbours would be able to access the high-speed broadband for free.

Senator Dave Sharma said at the time he had received complaints from constituents who had had to pay more than $9000 to be connected while others enjoyed access free of charge.

In response, NBN chief network officer Dion Ljubanovic said: “There are areas within the footprint that are highly uneconomical for us, and that’s determined based on pit and pipe infrastructure that’s available in certain parts of suburbs and areas that may not be.

“So there are areas where potentially some parts of streets and communities won’t be able to get or be part of the 3.5 million upgrade program at this point in time because of the nature and the costs associated to get fibre deeper into those areas. So there may be that situation where customers are on the edge of our upgraded program.”

TPG has been one of NBN Co’s biggest critics. TPG chief executive Inaki Berroeta said in February that Australians were paying $8 extra a month – or about 10 per cent the cost of a 50Mbps broadband plan – to subsidise NBN Co, a government-owned telco he branded a “900-pound gorilla”.

“Not only does Vision compete with the 900-pound gorilla of the NBN, but it must also pay a tax in the form of the Regional Broadband Scheme. Let’s not beat around the bush here, the RBS is a tax designed to protect and subsidise the NBN’s business case,” Mr Berroeta said.

“This regulation decreases competition by making private marginal investments difficult, particularly to compete against NBN in regional areas. It is also a poor deal for most broadband consumers as it costs them $8 a month on their home internet bill.”

Originally published as Telco war erupts: Vodafone accuses NBN Co of wasting billions on ‘overbuilding’ its network