At this point NBN Co has a couple of advantages. Photo: Rob Homer
The delivery of high-speed broadband to Australia's business and consumers has turned into a race between the government-owned NBN Co and an upstart competitor, David Teoh's TPG.
The national broadband network (NBN) needs to corral the lucrative customers and keep them from being picked off by rivals, and the surest way to achieve this is to get to them first. But it's a complication the NBN doesn't need.
Since arriving at his desk two weeks ago, the new head of NBN Co, Bill Morrow, has been busy putting out dangerous spot fires and dousing the more dangerous execution and delivery bonfires that his predecessors had left unchecked.
The biggest issue to fix straight up is the fact that many of the homes or businesses that the NBN has passed cannot be connected or face long delays. This second group numbers more than 21,000 premises that have ''hold orders'' attached. Meanwhile about 94,000, or a third, of all the premises passed have not yet been able to get the service.
In previous years critics argued that consumers were not taking up the NBN service. It now seems they want it but many can't get it.
The issues the NBN has faced around contractors and construction have been well documented, and when Morrow fronts the public on Wednesday he will need to have a well articulated plan on how he can smooth the execution of this huge infrastructure project.
Morrow is a commercially savvy operator and there is no better way to put a construction project back on schedule than by using a commercial stick. In the first instance NBN Co plans to compensate its retail telecommunications customers though penalty payments if the service is not connected in the time agreed. Morrow's commercial instincts will also be to respond to competitive threats - such as the one from TPG.
Readers could be forgiven for wondering how the NBN wholesale monopoly could have a competitor. But TPG has found a regulatory loophole that allows it to offer its own fibre network directly to consumers. Indeed, there is nothing preventing other retail telcos from mimicking TPG's plans.
TPG's idea is to roll out its own fibre to a series of high-density/high-rise office and apartment blocks on the fringes of large CBDs.
It's called cherrypicking. An operator can run fibre to the basement of a building, thereby reaching all the commercial and residential tenants cost effectively. These are exactly the types of customers NBN Co cherishes as well. Its response is to race TPG down the street to get to these customers first.
At this point NBN Co has a couple of advantages: it's the first mover so has a head start; and it can offer each business or resident connection to the actual home or office, rather than just to the basement.
These connections provide the kind of revenue that NBN Co needs to make its business case and connecting these high-density buildings earlier will boost cash flows faster than concentrating on single dwellings or those with greater needs.
This won't divert resources from its existing schedule of rollouts, but it will amp up the pace of the overall project. Meanwhile it will be looking to Communications Minister Malcolm Turnbull to close the loophole or the Australian Competition and Consumer Commission to regulate any cherrypickers' pricing.
NBN Co argues that a building that signs up to the TPG service runs the risk of being able to get its telco service only from TPG; while a building served by NBN Co can access any number of retail service providers.
Against the backdrop of these enormous issues, the NBN has to recut its commercial deal with Telstra.
Under the previous government the NBN fibre was to run all the way to the home. Under the Coalition's cheaper NBN the last leg of the service will be carried by Telstra's copper-wire network.
NBN Co chairman Ziggy Switkowski is suggesting the NBN would prefer to own the copper. He told the ABC last week: ''I think those negotiations should lead to a situation where the copper network, the ownership, is transferred into NBN … and then we get to invest in it, provide infill where it's needed, upgrade progressively over time so those consumer needs for ever-higher bandwidth - which we know are going to grow spectacularly - can be met by those networks.''