Vital Signs: NBN’s new price plans are too little, too late


Lack of speed kills: finally NBN Co is thinking about a genuinely 21st century offering for customers.
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Richard Holden, UNSW

This week NBN Co announced pricing changes for the National Broadband Network.

It includes a new plan boasting a download speed of 1 gigabit per second and an upload speed of 50 megabits per second for $80 a month.

These are 20-fold improvements on the maximum NBN speeds now. Almost a decade since the first customers were connected, NBN Co is thinking about a genuinely 21st century offering in terms of speed and price.

The NBN is late, over budget and slow. Australia places 58th globally for fixed-line broadband speed. Not only do the NBN’s advertised speeds lag international standards but the actual speeds often don’t come close to what is promised.




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Customer interest as a result has been unenthusiastic. NBN Co may well need to take a massive write-down on its assets because they don’t look like they’re worth A$50 billion.

All of this was entirely predictable, based on politicians failing to remember three basic lessons from Economics 101.

1: Technology often outstrips imagination

The history of innovation is littered with examples of remarkably important things being invented with no clear purpose in mind, or by accident, and then exceeding our wildest expectations.

Penicillin and vulcanised rubber (which led to the tyre for automobiles) were both invented by accident. The world wide web was developed as a means of communication among particle physicists. Most of us carry around in our pocket a computer (mobile phone) roughly as powerful than the world’s faster supercomputer circa 1985. Those have turned out to be pretty useful.

When the Coalition decided to scuttle Labor’s NBN plan for fibre-optic cable to every premises, on the basis that “fibre-to-the-node” and using existing copper telephone wires to the premises would be much cheaper, this is what the chief spruiker of the Coalition’s NBN plan, Malcolm Turnbull, said about broadband needs in 2010:

There isn’t much or anything you can do with 100 Mbps that you can’t do with 12 Mbps for residential customers.

The breathtaking lack of insight and imagination in this comment is responsible in no small part for the Flintstonian broadband infrastructure Australia now has.

Prioritising speed of roll-out (which hasn’t even happened) over speed of internet (which sure has happened) was a massive mistake.

2: Positives justify subsidies

You having fast internet is good for me when we connect. When consumers can connect quickly to a business’s website that’s good for the business. It makes it more profitable for businesses to invest in their internet operations. This has benefits for other consumers and even other businesses.

A great illustration of this is in Dunedin, New Zealand, where there have been all sorts of business-to-business spillovers from the city having the fastest internet speeds in Australasia. The ABC’s Four Corners program has highlighted how this has revolutionised New Zealand’s video-game development industry, among other things.

Economists call spillover effects to third parties externalities. Pollution is a negative externality, while the benefit of fast internet is a positive externality.




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A sound business model for the NBN ought to recognise the positive externalities and ensure they are incorporated into the price mechanism, by offering a partial subsidy to encourage people to sign up. Like the reverse of a carbon price.

One of the NBN’s key problems is the way successive governments structured national investment in it. Setting up NBN Co as a quasi-corporate entity needing to make a commercial rate of return on the roughly A$50 billion investment in the network was a huge mistake. It was the opposite of providing a subsidy.

The telecommunications companies who retail the NBN have complained that NBN Co’s wholesale price points mean it is hard for resellers to make a profit. It’s a kind of quality death spiral: an unattractive product means fewer people buy it, leading to the product getting worse, leading to even fewer people buying it.

3: Uniform pricing doesn’t work

Finally, it’s never a good idea to charge everyone the same price when there are different costs to serve different people.

The idea was that higher returns from easy-to-service city homes would subsidise the higher costs of service homes in regional and remote areas. But city homes, precisely because they are cheaper to service, have other options. If not enough city customers signed up to the NBN, prices would be driven up, making the network even less attractive to city customers. It’s textbook adverse selection, just like in health-insurance markets.

The government tried to get around this by banning competition. But that’s never really possible, especially from technologies not yet invented. Like 5G. The 2010 business case assumed no more than 16% of households would go wireless. Oops.

As economic journalist Peter Martin wrote in 2011:

NBN will never make a return on the cost of its capital or meet its customer targets if it faces competition. Its corporate plan says so, at point 1: “The plan assumes effective regulatory protection to prevent opportunistic cherry picking […] the viability of the project is dependent upon this protection.”

What to do from here

Multiple governments have bungled the NBN. But there is a way to salvage things – a bit.

Holding constant the technology (fibre-to-the-node), the best thing the government could do is write down its investment massively – ideally so low that it can flog NBN Co off to someone who can be subject to access regulation – ensuring, like other utilities, ownership of infrastructure doesn’t stymie competition – and make a modest rate of return.




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What should be done with the NBN in the long run?


Our super funds are always sticking up their hands for infrastructure investment. This would be a good one.

Ideally, though, the technology should be fixed. Fibre-to-the-premises was always going to be expensive, but it was also going to be fast, and as future-proof as we could get.

Lack of imagination and inability to think past 12 Mbps less than ten years ago should not hold the nation back now.The Conversation

Richard Holden, Professor of Economics, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Labor will prioritise an NBN ‘digital inclusion drive’ – here’s what it should focus on


File 20190410 2901 s8ixq7.jpg?ixlib=rb 1.1
People with poor broadband services spend more time in queues at the bank and for other services that should easily be accessible online.
from www.shutterstock.com

Julian Thomas, RMIT University

The national broadband network (NBN) has been a major issue in federal election campaigns for close to a decade.

And the 2019 version of the NBN bears little resemblance to the futuristic, egalitarian earlier editions.

Despite years of controversy, cost over-runs, and delays, the coalition government says our $50 billion national network is finally nearing completion.

But Labor’s Shadow Communications Minister Michelle Rowland has set out some different priorities should her party achieve government in the coming election. One of these is a “digital inclusion drive”, aimed at improving access to the internet for older Australians and low-income households.




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In addition, Labor is making no immediate commitment to replacing copper connections with fibre.

Instead, if elected, it will fund service and reliability fixes for those on the copper NBN, and impose service guarantees for small businesses and consumers. It will examine what has happened to the economics of the network, looking at its cash flow, pricing, capital structure, and future options for network upgrades.

Labor’s policy will disappoint those hoping for a fast-tracked return to that party’s original (2009) vision of high-speed fibre for (almost) everyone. But its 2019 plan is an important acknowledgement that network infrastructure is only one part of the NBN story.

Affordability and digital inclusion

The Australian Digital Inclusion Index (ADII) provides data on the affordability of internet services for Australians since 2014. It shows that recent, modest improvements seen by some households have been matched by declines in affordability for a number of Australia’s more digitally excluded groups.

The results for low-income households, single parents, people outside the labour force, Indigenous Australians, and people with a disability remain poor.

The good news for Australian consumers is that the pricing of mobile services has improved, reflecting competitive pressures and the reduced cost of delivery as a consequence of investment by network owners.

But when we look at fixed broadband services — the kinds of connections used by most households — recent price increases by NBN have led to a decline in the number of low-cost plans on the market. This change post-dates the most recent ADII report (2018), and the effects are beginning to work their way into the market.




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Communications costs matter

Communications services have a knock-on effect in many other areas of life and work.

Access to high-speed broadband can reduce the costs of using other services considerably. This makes critical activities like banking, seeking government information, looking for work, or studying much easier.

But when we speak of the cost savings linked with online services, we need also to bear in mind the flip-side of those savings: the much higher costs borne by those, often less well-off, citizens who must access services offline.

If an individual on a low income lacks electronic access to banking or government information, the cost of commuting to do these things in person can be prohibitive — and especially so for Australians living in remote or regional areas.

For children at school and adults in education or training, a lack of access to the internet means many will fall behind their peers, as access to educational materials and online content becomes a core part of the modern education experience. This has implications for Australia’s ability to take advantage of the next wave of digital transformation.




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Australia’s digital divide is not going away


Expensive for everyone

The costs of inequitable internet access are directly felt by many families, but the broader costs are borne by society.

And so digital exclusion now has the potential to be a drag on Australia’s economic growth and productive potential for decades to come.

For individuals, conducting activities offline may be time-consuming and expensive. But that’s also true for the government. It’s estimated that even taking half of government services online would save around A$20 billion.

Aside from the costs of lower productivity, economic growth and tax receipts, inequitable access means that the material savings from automated services may never be realised.

Affordable access to broadband also supports the cost effective delivery of core government and other services – such as health – to regional and remote locations.

Although addressing inequitable access will involve costs in the short term, effective policy measures to improve affordability are likely to generate considerable national benefits.




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How to improve affordability

At this stage Labor is not saying what it might do to improve internet affordability for low-income households.

The idea of writing down the NBN has been widely discussed. It does, however, have serious implications: it will be very costly to taxpayers.

It will also limit the ability of the NBN to invest in future network upgrades and threaten the economics of uniform national pricing, the NBN’s key promise of equity for regional and remote Australia.

That could mean a return to the pre-NBN communications landscape, with regional and remote Australia relying on increasingly obsolete communications infrastructure while metropolitan Australia moves ahead.




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A direct increase in cash payments is likely to improve living standards materially for those in poverty, but more money for low income households doesn’t necessarily mean that broadband will be within their reach.

The creation of a concession at a retail level would make the telecommunications companies responsible for selling products at a cheaper rate, which in an era of reduced margins appears unlikely to occur.

Also, a series of retail concessions can lead to consumer confusion, as the scope of each scheme and the discounts on offer vary wildly. We’ve seen these problems in the energy sector.

Another option is to create a wholesale concession, a measure that has been promoted by consumer advocates. This would involve the government paying NBN to put a wholesale product into the market that retailers could purchase and retail to low income households.

A nationally uniform concessional service would allow retailers to compete in offering affordable services to low-income households, boost NBN take-up and consequently its revenue and financial viability.




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Focus on inclusion

While the introduction of a concessional arrangement would involve government picking up a part of the tab for service delivery, it offers sizeable benefits.

By ensuring NBN access for low-income households, the government avoids forgoing a large proportion of the savings that should accrued from the digital transformation of government services (and the benefits to be gained from improving services).

It would also prevent a lower take-up of NBN services and revenues. Without such an arrangement, questions will continue to be raised about the financial viability of NBN, its repayment of outstanding debt to government and whether there needs to be a write-down.

The take up of broadband has historically seen improvements in average household income, productivity, and the creation of new kinds of work and services.

In order to maximise the benefits of the current wave of digital change, we’ll need a broader public debate, that goes beyond the relative merits of fibre and 5G.

Policy will need to address the challenge of affordability, invest in digital literacy, and ensure that all Australians can access the services that they need.

While there are many improvements that can and should be made to our national network infrastructure, a focus on the larger problem of digital inclusion is both welcome, and overdue.The Conversation

Julian Thomas, Professor of Media and Communications; Director, Social Change Enabling Capability Platform, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

If the NBN and Snowy Hydro 2.0 were value for money, would we know?


Rosalind Dixon, UNSW and Richard Holden, UNSW

When Malcolm Turnbull wrote to his electorate last week outlining his
achievements he listed economic growth, jobs, same-sex marriage and a number of really big construction projects including the Western Sydney airport, Melbourne to Brisbane inland rail, and Snowy Hydro 2.0.

Some people will like those and other big projects, some will not. But, combined, they are going to cost more than $75 billion over the next ten years, so it is worth asking as a separate (threshold) question whether they are likely to be value for money.

For some of them, such as the National Broadband Network or the Gonski education
reforms, its worth asking whether we might get better value if we spent even more. Turnbull’s downsizing of Labor’s original NBN plan made it cheaper, but not necessarily better.

For goods provided for a social purpose, value for money is about more than profit. But social returns often get left out of the equations because they are harder to measure. In a paper to be launched on Monday night as part of the University of NSW Grand Challenge on Inequality, we put forward a mechanism for considering both together.

How it’s done in the private sector

In the private sector any significant investment decision requires a summation of future costs and benefits discounted (cut) by a few per cent each year to accord with the reality that future costs and benefits matter less to us than immediate payoffs or costs.

If the project makes sense when the discount rate is set at or above the firm’s cost of capital (or hurdle rate of return) it is worth agreeing to. If its benefits are so far into the future that they only make sense with a very low discount rate it is said to be not worth proceeding with.




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There is no reason why we can’t do the same for public sector projects as well, although assessing the benefits is complicated.

This is where the revolution in empirical economics and social science over the last two decades comes in.

How to measure what’s hard to measure

Consider a proposal to lengthen the school day by two hours. The costs are relatively easy to calculate: some more teacher time, slightly larger utility bills. Maybe some more pencils.

The benefits are more complex. Does a longer school day lead to better educational outcomes? What does that lead to late in life? How can we tell?

Modern social science has a well-refined method for answering these questions – the randomised controlled trial. Take 50 randomly selected schools and lengthen their school day, then compare the outcomes on standardised tests to a group of control schools. This reveals the true, causal impact of a longer school day on test scores.

Test scores are obviously not an end in themselves, but these can then be mapped all the way through into high school and post-secondary outcomes, and then into labour market and later life outcomes. This would naturally involve understanding the impact on earnings, but also outcomes such as crime and physical and mental health.

Answering these questions persuasively is what modern social science, armed with amazing data and great computing power, does extremely well. Just as a pharmaceutical trial gives one group, say, heart medication and another group a placebo, randomised trials can increasingly guide public policy.

Trying it out

Our study includes a demonstration of that sort of analysis on the money that will spent on the National Broadband Network and the National Disability Insurance Scheme.

We find that, taking into account social benefits such as telemedicine and the expansion of skills, the money being spent on the NBN will make sense even at a very high discount rate of 15.2%. Labor’s original more expensive fibre-to-the-premises model would have made sense at an even higher discount rate of 21.1%.




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The benefits of the National Disability Insurance System are harder to measure. But, when account is taken of the value of reducing stress in carers and value of independence to those being cared for, it too becomes worthwhile at reasonable discount rates.

Politics, and political debate, will still need ultimately to control these sorts of investment decisions.

But the debate would be far better if we had a common language for assessing the relevant costs and benefits, and a more principled way of prioritising the competing demands on the public purse.The Conversation

Rosalind Dixon, Professor of Law, UNSW and Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

What should be done with the NBN in the long run?


Mark A Gregory, RMIT University

The National Broadband Network (NBN) should be built and fully operational by 2022, having cost about A$50 billion. The question will then be whether the government should retain the NBN or sell it off.

The current government has laid the groundwork for NBN to be broken up and sold off. But this could end the NBN’s positive disruption of the telecommunications market, which includes lower prices, increased competition, improved access for consumers and more services being offered.




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In a recent paper I outlined four options for the NBN:

  • government retains the NBN
  • sell NBN as a single entity
  • disaggregate NBN technologies and sell them separately
  • disaggregate NBN technologies, excluding satellite and fixed wireless, and sell off separately.

Breaking up the NBN could result in the creation of geographic monopolies, hurting rural and regional consumers especially.

Telstra’s recent decision to hive off its infrastructure into separate companies gives Australia the opportunity to do what New Zealand has done: create a new, publicly listed company that contains the NBN and parts of Telstra’s infrastructure.

But there is a valid argument for the government to retain NBN Co. as a government enterprise beyond the NBN rollout.




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The NBN has brought about an unprecedented period of positive change in the telecommunications market. But there is more to be done, including a further reduction in the digital divide between urban and regional and remote areas, and upgrading from fibre to the node to fibre to the curb or fibre to the premises.

By retaining ownership of the NBN for the next decade, the government could provide a stable level playing field upon which the telecommunications market can thrive.

For the major carriers, the focus over the next decade will be to build competing 5G networks. The sale of the NBN during this time could return the industry to the chaos that existed before the NBN.

Who would buy the NBN?

The first major concern for anyone buying part of the NBN is the A$15 per customer per month paid to Telstra for a majority of the fixed connections to the NBN.

This is a payment for the use of Telstra’s existing infrastructure, such as the ducts that run along streets and the telephone exchanges where NBN systems are now located.

This payment is a major impediment to the NBN having a successful business model. There is some doubt whether Optus, Vodafone or TPG would bid for part of the NBN knowing that they would be required to make a monthly payment to Telstra for most of the customers they connect.




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Telecommunications networks are a “natural monopoly”, similar to roads, rail, gas and electricity. This is because of the high startup costs of building the networks, especially for the segments closest to homes and businesses (also known as the last mile).

In high-value urban areas it is possible to build financially viable infrastructure that competes with incumbents. But this does not solve the problem of competition in lower-value outer urban, regional and remote areas.

No solution to this problem has been forthcoming. This is one of the reasons the NBN came into being in the first place.

How do you break up the NBN?

Outside of the high-value urban areas there is no guarantee of infrastructure-based competition, so regulation is required to ensure broadband in those areas keeps up with what is offered in the high-value urban areas.

The government has already introduced a levy to subsidise the cost of providing broadband in regional and remote areas. But more needs to be done to ensure regional and remote telecommunications is improved continuously.




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Breaking up the NBN will also likely result in smaller geographic monopolies, with different technologies used in each network – fixed wireless, satellite and transit etc.

So rather than have one infrastructure monopoly (NBN Co.) wholesaling products and services, we could end up with the bigger telcos becoming monopoly providers by purchasing one or more of the technology footprints.

Consumers, especially those in regional and remote areas, will likely be hit with steep price rises with the end of uniform national wholesale pricing.

The New Zealand option

Telstra has announced that it is creating a standalone company called InfraCo, that will be:

… accountable for our copper and HFC networks; all our fibre network that is not dedicated to supporting mobiles; all ducts, pits and pipes; property including exchange buildings and data centres; and international and domestic subsea cables. These assets will be combined with Telstra Wholesale and the teams in Telstra Operations that provide services to NBN Co.

This provides Telstra with the opportunity to participate in the future sale of the NBN. Telstra could spin off InfraCo as a separate ASX-listed company, take on infrastructure investors for a future purchase of the NBN, or part of the NBN, and effectively follow what happened in New Zealand with Telecom New Zealand becoming Spark (retail/mobile) and Chorus (wholesale).

If Telstra splits into two ASX-listed companies so that InfraCo can purchase the NBN, the result would be a company with about A$10 billion in revenue and A$30 billion in infrastructure assets. This would be a viable company that is able to service the government debt repayments while making a reasonable return to shareholders.

It is likely this outcome would be more palatable to the rest of the telecommunications industry because the positive disruption to the market caused by the NBN would continue.




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If the NBN is sold off, the focus must shift to the telecommunications legislation and regulations, setting a minimum broadband connection speed and capacity that infrastructure wholesalers are to provide without penalty, and focusing on how to further reduce the digital divide between urban and regional and remote areas.

The ConversationThe key for a future government decision on what to do with the NBN is that it should not be considered in isolation. There are a number of linked issues, including the universal service obligation, universal access, foreign ownership restrictions and wholesale competition.

Mark A Gregory, Associate professor, RMIT University

This article was originally published on The Conversation. Read the original article.

Telecommunications Ombudsman reports surge in complaints about services delivered over NBN


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NBN Co chief executive Bill Morrow will present an upbeat account of the network’s impact in a speech on Tuesday.
AAP Image/Supplied by NBN Co

Michelle Grattan, University of Canberra

The government has strongly challenged the Telecommunications Industry Ombudsman (TIO) after its report showed complaints about services delivered over the NBN surged by 204% in the second half of 2017, compared with the same period a year earlier.

Communications Minister Mitch Fifield also announced details of a review, earlier flagged, of the telecommunications consumer protections framework, saying the high level of complaints about telecommunications services generally showed “the existing model for complaints handling and redress is not working”.

Fifield said the way the information regarding the 22,827 complaints about services delivered over the NBN was presented in the TIO report, released Tuesday, “could give the impression that responsibility for this figure rests with NBN Co”.

But advice to the government from NBN Co was that of these complaints, less than 5% were sent to NBN Co as complaints to resolve.

The NBN has been been heavily criticised for a slow rollout – although it says it has met every target for the past 14 quarters – low speeds and connection problems, generating high levels of complaints.

The six months to December saw a 39% increase in NBN premises activated.

The government and NBN Co are also focusing on the 16% fall in the rate of complaints about these services from the first to the second half of 2017.

In January to June of 2017, there were 19,683 complaints about services delivered over the NBN, making the picture better for the NBN when comparisons are made between the first and second halves of the year.

But the TIO report warns generally about comparisons of the two halves of the same year because of seasonal variations, preferring to compare the same period of each year. The government rejects the seasonal variation argument, saying the TIO itself has previously made comparisons within a year. It also believes the TIO is letting retailers off the hook.

The TIO is an industry-funded complaints resolution body. The NBN is not represented on its board.

The TIO report includes complaints for the six months to December covering mobile and fixed line telephony and both pre-NBN and NBN broadband.

It received nearly 85,000 complaints in total, which was a 28.7% rise over the same period in 2016. There was a 30.7% increase in complaints from residential consumers, and a 15.6% rise in those from small businesses.

Total complaints decreased from the 92,000 in the first half of 2017.

Fifield said that no matter who was the responsible party, the complaints figures were too high. “The current model for protecting consumers needs reform”.

The review, to provide for the post 2020 environment, will be undertaken in three parts to ensure consumers

… have access to an effective complaints handling and redress scheme;

… have reliable telecommunications services including reasonable timeframes for connections, fault repairs and appointments, as well as potential compensation or penalties against providers;

… are able to make informed choices and are treated fairly by their providers in service, contracts, billing, credit and debt management and switching providers.

Meanwhile chief executive of NBN Co Bill Morrow will present an upbeat account of the network’s impact in a speech at the National Press Club on Tuesday.

He will say the network generated an extra $1.2 billion in economic activity in 2017 and is encouraging more women to become their own bosses.

Morrow, who is leaving his job at the end of the year, will present figures prepared by the economic advisory firm AlphaBeta, using census data, modelling and polling to estimate the impact of the network – labelled “the nbn effect”.

He will say that “nbn-connected women are becoming self-employed at twice the overall rate of self-employment growth in nbn areas.

“In percentage terms, these results are stunning. The number of self-employed women in nbn regions grew at an average 2.3% every year, compared to just 0.1% annual average growth in female entrepreneurs in non-nbn areas.

“If this trend continues, up to 52,200 additional Australian women will be self-employed by the end of the rollout due to the ‘nbn effect’”, he will say.

The 2017 overall $1.2 billion estimated increase in economic activity – through new jobs, businesses and greater productivity – excludes the economic stimulus of the rollout itself.

“By the end of the rollout, this ‘nbn effect’ is predicted to have multiplied to $10.4 billion a year,” Morrow will say. “This represents an extra 0.07 percentage points to GDP growth, or 2.7% of the estimated GDP growth rate in 2021. By the end of the rollout, the ‘nbn effect’ is forecast to have helped create 31,000 additional jobs,” Morrow will say.

The ConversationThe network is now more than halfway built. About one in three homes and businesses are connected. The rollout is due to be completed by the end of 2020. Morrow has been CEO since 2014.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

NBN faces irrelevance in cities as competitors build faster, cheaper alternatives


Allan Asher, Australian National University

Malcolm Turnbull is now connected to the National Broadband Network (NBN) at his Point Piper home on a 100 megabits per second (Mbps) plan, it was revealed in Senate Estimates yesterday. But only because his department intervened to avoid delays affecting other customers.

And while the Prime Minister might be happy with his NBN connection, that’s not the case for the 2.5 million customers waiting on a connection through their pay TV or cable service who have been left in limbo.

Lauded in the 2009 Commonwealth Budget as the single largest nation building infrastructure project in Australian history, the NBN is at risk of becoming an expensive white elephant in our cities. Years of political interference, poor technology decisions and a monopoly business attitude have damaged the brand.

Rather than meeting its objective of connecting 90% of homes and workplaces with broadband speeds of up to 100 Mbps, the NBN is looking more like a giant sponge. It soaks up public infrastructure dollars and returns high prices, long delays, unacceptably slow data speeds and service standards that are now the subject of an ACCC investigation.

As a result, a growing number of competitors are bypassing the NBN by undercutting prices and beating performance standards.




Read more:
The ACCC investigation into the NBN will be useful. But it’s too little, too late


Adelaide bypasses the NBN

The latest challenge to the NBN came after South Australian Premier Jay Weatherill denounced the “very poor NBN outcome” and last week announced A$35 million in funding for an Adelaide fibre network alternative if he is reelected in March 2018.

The plan was warmly welcomed by Mighty Kingdom, an app and games developer who told the ABC, “I don’t have what I need to get me to the rest of the world.”

This follows news announced last year that Adelaide City Council is working with TPG to deliver an NBN-alternative broadband service to local businesses. The service promises fibre internet up to 100 times faster than the NBN, at lower prices, and with no installation costs for city businesses or organisations.

Lord Mayor Martin Haese said:

This technology will be a game changer for the city of Adelaide. It will be a boom for local businesses and other organisations, but will also attract business from interstate and across the globe.




Read more:
The NBN: how a national infrastructure dream fell short


NBN alternatives for Melbourne homes and businesses

Meanwhile two aggressive startups in the Melbourne market are hoping to take a serious bite from NBN’s lunch.

Lightening Broadband is connecting homes and businesses using microwave links capable of delivering both 100 Mbps download and upload speeds. That’s better than the comparable NBN Tier 100, which offers 90 Mbps download and 30 Mbps upload speeds.

The company is constructing microwave transmitters on tall buildings, connected to the telco’s core network using microwave links. Customers within a two-kilometre radius share a microwave transmitter, requiring a dish on their roof.

Another telco start-up, DGtek is offering its customers a full fibre alternative service.

Upon its launch in 2016, DGtek’s founder David Klizhov said:

“Ideally the NBN would have worked if it was fibre to the home, but it’s taken quite a lot of time and we thought that we could have a go at the Australian market using technology that’s been implemented already overseas.”

DGtek uses Gigabit Passive Optical Networks (GPON) and runs it directly into tightly packed homes with the dense population of inner Melbourne. As a sweetener, DGtek offers free internet service to government organisations – such as schools and hospitals – in areas they service.

The threat from 5G and other new technologies

New entrant competition is not the only threat to NBN Co. Optus and Telstra are both launching 5G services in 2019. This represents a quantum leap in wireless technology that could win away millions of current and potential NBN customers.

While Vodafone CEO Inaki Berroeta has said that 5G is unlikely to replace the NBN in Australian homes, Optus Managing Director of Networks Dennis Wong recently told BIT Magazine:

Everyone has heard of concepts like self-driving cars, smart homes, AI and virtual reality, however their full potential will require a fast and reliable network to deliver. Seeing 5G data speeds through our trial that are up to 15 times faster than current technologies allows us to show the potential of this transformative technology to support a new eco-system of connected devices in the home, the office, the paddock and in the wider community.




Read more:
5G will be a convenient but expensive alternative to the NBN


5G is not the only technological game changer facing the NBN. iiNet in Canberra has launched its Very-high-bit-rate Digital Subscriber Line (VDSL2) as its own superfast network.

According to iiNet, it is made up of fibre and copper and provides a faster connection than ADSL and most NBN plans. The network is independent from Telstra and differs to NBN in that iiNet’s VDSL2 network uses its own copper lines.

Levelling the field for smaller players

The huge capital requirements of rolling out telecoms infrastructure has always acted to deter more competition in the Australian market. But following a regulatory decision of the ACCC in 2017, smaller entrants can now enjoy cost-based access to some of the largest networks – including Telstra, TPG and Opticom – allowing them to better compete both with the big telcos, and with the NBN.

By providing access to superfast broadband access service (SBAS) and the local bitstream access service (LBAS), new entrants will be able to sell NBN-like fixed line superfast broadband wholesale.

So where to for the NBN?

Yesterday the government released a working paper forecasting that demand for bandwidth will double for households with high internet usage over the next decade. The report also suggests that the NBN is equipped to meet those needs.

The ConversationHowever, cost, technology and customer service problems continue to threaten the commercial success of the NBN. Without a radical rethink, it is doomed to fail its initial mission.

Allan Asher, Visitor, Regulatory Institutions Network (RegNet) & Chair of Foundation for Effective Markets and Governance, Australian National University

This article was originally published on The Conversation. Read the original article.

5G will be a convenient but expensive alternative to the NBN


Rod Tucker, University of Melbourne

Will Australia’s National Broadband Network (NBN) face damaging competition from the upcoming 5G network? NBN Co CEO Bill Morrow thinks so.

This week, he even floated the idea of a levy on mobile broadband services, although Prime Minister Malcolm Turnbull quickly rejected the idea.

NBN Co is clearly going to have to compete with mobile broadband on an equal footing.


Read More: Like it or not, you’re getting the NBN, so what are your rights when buying internet services?


This latest episode in the NBN saga raises the question of exactly what 5G will offer broadband customers, and how it will sit alongside the fixed NBN network.

To understand how 5G could compare with the NBN, let’s examine the key differences and similarities between mobile networks and fixed-line broadband.

What is 5G?

5G stands for “5th generation mobile”. It builds upon today’s 4G mobile network technology, but promises to offer higher peak connection speeds and lower latency, or time delays.

5G’s higher connection speeds will be possible thanks to improved radio technologies, increased allocations of radio spectrum, and by using many more antenna sites or base stations than today’s networks. Each antenna will serve a smaller area, or cell.

The technical details of 5G are currently under negotiation in international standards bodies. 5G networks should be available in Australia by 2020, although regulatory changes are still needed.

Connections on 5G

In a mobile network, the user’s device (typically a smart phone) communicates with a nearby wireless base station via a radio link. All users connected to that base station share its available data capacity.

Australia’s mobile network typically provides download speeds of around 20 Mb/s. But the actual speed of connection for an individual decreases as the number of users increases. This effect is known as contention.

Anyone who has tried to upload a photo to Facebook from the Melbourne Cricket Ground will have experienced this.

Mobile base stations.
kongsky/Shutterstock

The maximum download speed of 5G networks could be more than 1 Gb/s. But in practice, it will likely provide download speeds around 100 Mb/s or higher.

Because of contention and the high cost of the infrastructure, mobile network operators also impose significant data download limits for 4G. It is not yet clear what level of data caps will apply in 5G networks.

Connections on the NBN

In a fixed-line network like the NBN, the user typically connects to the local telephone exchange via optical fibre. Directly, in the case of fibre-to-the-premises (FTTP), or by copper wiring and then fibre, in fibre-to-the-node (FTTN).

An important difference between the NBN and a mobile network is that on the NBN, there is virtually no contention on the data path between the user and the telephone exchange. In other words, the user’s experience is almost independent of how many other users are online.

But, as highlighted in the recent public debate around the NBN, some users have complained that NBN speeds decrease at peak usage times.

Importantly, this is not a fundamental issue of the NBN technology. Rather, it is caused by artificial throttling thanks to the NBN Co’s Connectivity Virtual Circuit (CVC) charges, and/or by contention in the retail service provider’s network.

Retail service providers like TPG pay CVC charges to NBN Co to gain bandwidth into the NBN. These charges are currently quite high, and this has allegedly encouraged some service providers to skimp on bandwidth, leading to contention.

A restructuring of the wholesale model as well as providing adequate bandwidth in NBN Co’s transit network could easily eliminate artificial throttling.

The amount of data allowed by retailers per month is also generally much higher on the NBN than in mobile networks. It is often unlimited.

This will always be a key difference between the NBN and 5G.

Don’t forget, 5G needs backhaul

In wireless networks, the connection between the base stations and internet is known as backhaul.

Today’s 4G networks often use microwave links for backhaul, but in 5G networks where the quantity of data to be transferred will be higher, the backhaul will necessarily be optical fibre.

In the US and elsewhere, a number of broadband service providers are planning to build 5G backhaul networks using passive optical network (PON) technology. This is the type used in the NBN’s FTTP sections.

In fact, this could be a new revenue opportunity for NBN Co. It could encourage the company to move back to FTTP in certain high-population density areas where large numbers of small-cell 5G base stations are required.

So, will 5G Compete with the NBN?

There is a great deal of excitement about the opportunities 5G will provide. But its full capacity will only be achieved through very large investments in infrastructure.

Like today’s 4G network, large data downloads for video streaming and other bandwidth-hungry applications will likely be more expensive using 5G than using the NBN.


Read More: The NBN needs subsidies if we all want to benefit from it


In addition, future upgrades to the FTTP sections of the NBN will accommodate download speeds as high as 10 Gb/s, which will not be achievable with 5G.

Unfortunately, those customers served by FTTN will not enjoy these higher speeds because of the limitations of the copper connections between the node and the premises.

The Conversation5G will provide convenient broadband access for some internet users. But as the demand for ultra-high-definition video streaming and new applications such as virtual reality grow, the NBN will remain the network of choice for most customers, especially those with FTTP services.

Rod Tucker, Laureate Emeritus Professor, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Turnbull’s government must accept responsibility for delivering an equitable NBN for all Australians



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NBN delivery is variable across different states, but also within the same local council areas.
from www.shutterstock.com

Tooran Alizadeh, University of Sydney

On Monday night Four Corners asked Australia to consider “What’s wrong with the NBN?”.

Prior to the episode airing, a lot of the debate focused on the NBN’s business model, and that it may not be profitable.

I, however, am not sure if the financial returns need be our biggest concern when referring to public service and critical infrastructure. My answer to the question “what’s wrong with the NBN?” is quite simple: the NBN is inequitable.


Read more: The NBN: how a national infrastructure dream fell short


A “train wreck”

This week started with a fiery speech delivered by the Prime Minister, Malcolm Turnbull. He said the NBN was a mistake, blamed the former Labor government for the set up, and described the NBN’s business model as a “calamitous train wreck”.

Turnbull’s remarks triggered a number of responses, including one from former Labor Prime Minister, Kevin Rudd. He attached responsibility of NBN’s failure to the current government, as they “changed the model completely” compared to the original design.

More broadly, the Four Corners program itself created mixed reactions on social media. It was criticised for being “weak”, and not “challenging enough”, but also praised as “exceptional”.

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I find it incredibly frustrating to see a national critical infrastructure project diminished to political ping pong. In my opinion, bipartisan commitment is required in order to deliver an equitable NBN for all Australians.

Inequity from the start

Introduced by Labor, the original NBN was announced in April 2009. The plan was to provide terrestrial fibre network coverage for 93% of Australian premises by the end of 2020, with the remaining 7% served by fixed wireless and satellite coverage. In other words, Labor’s NBN was mainly equitable in terms of the advanced technology adopted across the board.


Read more: Three charts on: the NBN and Australia’s digital divide


However, research on the early NBN rollout pointed out the issue of timing. Even under the most optimistic estimations, it was going to take over a decade to build the nation-wide infrastructure. So, there were always questions about who was going to get the infrastructure first, and who had to wait over a decade for a similar service.

The results of the 2013 Federal election changed the fate of the NBN. The elected Coalition government decided the NBN rollout should transition from a primarily fibre-to-premises model to a mixed-technology model.



Various/The Conversation, CC BY-ND

FTTP = fibre to the premises; FTTN/FFTB = fibre to the node/basement;
HFC = Hybrid Fibre-Coaxial


This added to the complexity of the NBN, and created new layers in the inequality concerns around the NBN. In the Coalition’s NBN, many could be waiting quite some years and yet still only receive a lower quality level of access to the service.

Inequity in 2017

Now we’re past the halfway point of NBN delivery, and inequality of the service is clear at two levels.

Large scale

Recent research shows there is a clear digital divide between urban versus regional Australia in terms of access to the NBN. Regional Australia is missing out, both in terms of pace and quality of delivery in the mixed-technology model. This pretty much means that WA and NT are the worst off parts of the nation, because of the spread and dominance of regional and remote communities within them.

“Fine grain” scale

As described on Four Corners, mixed-technology NBN within local government areas and neighbourhoods means some people are better off than others.

Some receive fibre-to-premises service while others have fibre-to-node. The quality of the service also depends on how far someone lives and works from a node, which basically suggests even people on the same fibre-to-nodes service could have varied level of (dis)satisfaction with their internet and phone services.

Research published in 2015 captured some of the frustrations on the ground at the local government level. Differing qualities of internet services available were perceived to have direct implications for local economic development, productivity, and sense of community at the local level.

The two layers of NBN inequality mean that while some customers may be happy with their NBN, many experience a frustrating downgrade of service after moving to the NBN. This may help explain the increase in the number of NBN complaints across the nation.


Read more: Lack of internet affordability may worsen Australia’s digital divide


Let’s start moving forwards

Politicising the NBN and blaming one party over another has been part of the national misfortune around the NBN. But, I believe, the inequality of the NBN is part of a bigger trend in infrastructure decision making in Australia that fails to fully account for the socioeconomic implications. Other examples of this trend are seen in major (controversial) transport projects around the nation (e.g. East West Link in Melbourne, WestConnex in Sydney).

Current and future Australian governments must accept responsibility, and find a way forward for the NBN that is built on the notion of equitable service.

We can start with questions such as who needs the service the most, and who can do the most with it. These two questions refer to the social inclusion and productivity implications of the NBN.

The ConversationThe NBN, as a publicly funded national infrastructure project, has to be equitable to be a truly nation building platform. As long as it is failing some, it is failing us all as a nation.

Tooran Alizadeh, Senior Lecturer, Director of Urban Design, University of Sydney

This article was originally published on The Conversation. Read the original article.

Like it or not, you’re getting the NBN, so what are your rights when buying internet services?


Jeannie Marie Paterson, University of Melbourne

Complaints about the national broadband network (NBN), involving connection delays, unusable internet or landlines and slow internet speed are on the rise.


Read more: When it comes to the NBN, we keep having the same conversations over and over


Most Australians will be forced to move onto the NBN within 18 months of it being switched on in their area, and that means navigating what can be confusing new contracts.

So, what are your rights regarding landline and internet connections?

Landlines

Many consumers can and do manage without a landline. But particularly for those without a reliable mobile service, a landline can be essential. It is included in many phone and internet “bundles” offered by internet service providers.

Standard telephone services (primarily landline services) are subject to a Customer Service Guarantee enshrined in law under the Telecommunications Act 1997.

This means that standards apply to common services such as connection of a phone line, repairs of that line and attending appointments on time. The provider will have to pay compensation to the customer if the Customer Service Guarantee standards are not met.

Despite this, some providers suggest a customer waive his or her customer service guarantee rights. There are safeguards for this waiver to be effective, primarily in that the provider must explain the nature of the rights to the customer before asking for the waiver.

The idea behind allowing providers to request a waiver of the Customer Service Guarantee is that it will allow customers to obtain cheaper services than would otherwise be the case. However, we might question the integrity of the consent typically given to such waivers, given consumers generally don’t read contracts and may have little understanding of the value of the Customer Service Guarantee or the likelihood of having to claim under it.

In any event, providers cannot ask for a waiver for Universal Service Obligations, which ensure accessible services for all customers, including those with a disability and those who live in remote areas.

Internet

The Customer Service Guarantee does not apply to internet connections – although the Australian Communications Consumer Action Network has argued that it should.

So there are no statutory obligations for internet providers, or NBN Co, to connect customers within a particular time frame or respond promptly to complaints.

The main safeguard for customers for internet services is in the Australian Consumer Law (ACL).

If an internet service provider promises a particular broadband speed and does not provide that speed, the provider may have engaged in misleading conduct contrary to the ACL. Damages and even penalty payments could be awarded against it. And fine print qualifications to the headline statement about internet speeds will not necessary protect the provider.

In addition, the Consumer Guarantees under the ACL (not to be confused with the Customer Service Guarantee under the Telecommunications Act) ensure that any equipment provided with an internet service must be of acceptable quality, and services be provided with due care and skill.

If these standards are not met, the consumer has a right to certain remedies under the ACL and damages for losses that result from the failure. These rights should go some way to protecting telecommunications consumers, although of course they do not directly guarantee that the provider will arrive on time for a scheduled appointment.

The ConversationSo while you may wish to charge your internet service provider for not turning up to an installation appointment, you wouldn’t get far under current Australian law.

Jeannie Marie Paterson, Associate Professor, University of Melbourne

This article was originally published on The Conversation. Read the original article.

When it comes to the NBN, we keep having the same conversations over and over



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Another day, another report. Will it change Australia’s NBN?
CommScope/Flickr, CC BY-NC-SA

David Glance, University of Western Australia

The Joint Standing Committee on the National Broadband Network (NBN) released its first report on Friday, just as most people on the east coast of Australia headed into a long weekend, complete with two sporting grand finals.

The release on a Friday afternoon, sometimes referred to by the media as the “Friday news dump”, is generally what governments do when they want the published report to gather dust.


Read More: The NBN needs subsidies if we all want to benefit from it


In fact, its hundreds of pages actually included two reports from the one committee. The dissenting report, supported by its Liberal Party members, including the committee’s chair Sussan Ley, contradict many of the conclusions of the first, which was backed by the Labor Party members and Australian Greens, among others.

One ironic benefit of the report is that whatever your political view, there will be something that you’re likely agree with. But is that the way to create good internet policy?

What did the report say?

The report is from the latest committee, formed in September 2016, to inquire and report on the rollout of the NBN. It replaced the Senate Select Committee on the NBN that operated between 2013 to early 2016.

The report makes 23 recommendations. These range from recommending that the NBN cost and plan for a switch for all remaining Fibre to the Node (FTTN) connections to use Fibre to the Curb (FTTC), through to recommending that the government measure and report on “digital inclusion”.

Many of these recommendations are dismissed or ignored in the Chair’s dissenting report.

As political and business commentator Alan Kohler summarised in The Australian:

Like so much of Australian public policy over the past 10 years, the NBN has been hopelessly politicised, so that anything that comes out of any politician’s mouth on the subject can be ignored as most likely unreliable twaddle.

The challenges of the process

Given the political nature of the process and the desired outcomes, in my view, there is a bias built into the process from the start.

This is both in how facts are interpreted and presented in the report, and how groups, companies and individuals with specific vested interests use committees as a means of stating their claims.

The report claims for example that FTTC is a “future-proofed technology” whereas FTTN is not, but little evidence is given to back up the claim.

It appears “future-proofing” is simply a term for the fact that FTTC would theoretically cost less to upgrade than FTTN, but complete data is not offered.

In another case, the report discusses complaints made to the Telecommunications Industry Ombudsman about connection delay issues, citing a “slight decrease” in the number of complaints relative to the number of activated premises.

The decrease is not entirely insignificant: for example, complaints made about 0.98% of total new connections in quarter three of 2015-16 dropped to 0.56% in quarter two of 2016-17.

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The rate of fault complaints about NBN services has also dropped slightly over time and is running at 0.15% of premises activated (2,460 complaints made out of 1,652,564 premises activated over time in quarter two of 2016-17).

Another key problem with committees of this sort is that during the time it takes to investigate, write and publish the report, events have overtaken the process.

The report recommends that the NBN cost a plan to substitute FTTC for FTTN. This has already happened after a fashion, with NBN Co presenting costing to the NBN Co board and to the government. The proposal was apparently rejected because it would have been too expensive and not kept NBN Co’s funding within the A$49 billion limit.

History repeating

Much of what is included in the report are issues that have been discussed by previous committees, but also more widely in the public sphere. We have seen the same topics, arguments, paucity of data and overreliance on anecdote time and again.

Given the government’s “Friday news dump”, a more general question to ask is whether making submissions to these committees is worth the time and effort?


Read More: Lack of internet affordability may worsen Australia’s digital divide: new report


I personally attended an expert session in Parliament held by the previous committee in early 2016. The same issues and questions were asked then and by and large the same types of responses were given. Nothing came of that and this report largely rehashes the same conversation.

As Alan Kohler remarked, public policy shaping the NBN has been marked by political motives and to a far lesser extent, economic or social ones. For that reason, data is not being given proper weight, and is often shaped to support a political perspective.

The ConversationGiven the situation, we are perhaps fortunate to have made the progress we have.

David Glance, Director of UWA Centre for Software Practice, University of Western Australia

This article was originally published on The Conversation. Read the original article.