How The Labor And Coalition Broadband Policies Differ: A Hype-Free Explainer

Broadband — in the shape of the National Broadband Network (NBN) — remains a key point of difference between Labor and the Coalition's policies going into the federal election. Our politicians are not paying lip service when it comes to these differences. There are significant variations in cost, in delivery types, in download and upload speeds, in business opportunities, customer experience and the so-called "future-proofing" of the network, depending on which version of the NBN we continue with. So what are they, and what do you need to know?

Cables picture from Shutterstock

At the 2010 election, Opposition leader Tony Abbott threatened to scrap the NBN. But under Malcolm Turnbull's deft handling of the Shadow Communications Minister's portfolio, the Coalition's Broadband Policy, released in April this year, recognises the need for a national, wholesale broadband network and shares many characteristics with the existing NBN model as conceived under Labor.

As with Labor's NBN, an NBN under the Coalition will be a wholesale network, open to any retail service provider that can connect to the network. There are some differences in pricing strategies between the two policies, primarily around whether prices are uniform across the country (as in the Labor policy) or capped (as in the Coalition's policy) but the service model is broadly the same.

Both Labor and the Coalition will use newly-launched satellites to take broadband to remote areas, and fixed wireless to cover rural areas, where wired access such as fibre or copper is either technically unfeasible or economically unviable. But the key difference between the two policies is the network technology to be used in urban areas.

Labor will continue rolling out a Fibre to the Premises (FTTP) network — whereby optic fibre extends all the way to homes and businesses — while the Coalition policy calls for a shift to Fibre to the Node (FTTN) — whereby fibre is delivered to local "cabinets", called nodes, and copper wire runs from these nodes to houses and businesses — in brownfield sites (i.e. established urban areas); and FTTP in greenfield sites (i.e. new housing estates).

Despite some delays in the rollout of Labor's FTTP network, NBNCo — the company tasked with building NBN infrastructure — says the completion date for the project remains fixed at 2021, and that the total cost will be $44.1 billion.

Cost differences

The Coalition's policy calls for completion of the rollout of its FTTN network by 2019, at a total cost of $29.5 billion. The difference in cost between Labor's network and the Coalition's network per premises is about $1000.

To put this in perspective, the recent rollout of smart electricity meters in Victoria cost about $1,200 per premises.

In essence, the Coalition's FTTN network will cost two-thirds as much as Labor's FTTP network, based on the official cost estimates in each policy, but will be only one-twentieth as fast.

Speed differences

The Coalition's FTTN network will provide download speeds of 50 Mbps (allowing you to download an hour-long high-definition television show in a few minutes) to 90% of connected homes, while Labor's FTTP network will initially provide download speeds up to 1 Gbps — 20 times faster than the Coalition's FTTN network.

Labor's FTTP network will provide upload speeds of 400 Mbps — 40 times faster than FTTN. Upload speed is important for activities which require you to send data from your computer, such as video calls.

The speed difference between the two networks comes down to the fact the Coalition's FTTN model relies on the existing copper connections between the node and the premises, while in Labor's FTTP network, the entire connection is by fibre.

The table below summarises some of the key differences between policies:

In recent years, engineers in laboratories around the world have developed technological marvels to extract the maximum capacity out of copper, and these marvels are to be incorporated in the Coalition's network using very-high-bit-rate digital subscriber line (VDSL) technology.

VDSL's higher speeds result from the use of different bands of frequency to voice calls, allowing data for multiple applications (such as internet connection and high-definition television) to be transmitted on the same copper wires. It builds upon — and is faster than — current technology used in asymmetric digital subscriber line (ADSL) networks.

But the download and upload speeds achievable with VDSL are a tiny fraction of the speeds achievable using FTTP.

Additionally, with VDSL in FTTN networks, the further the premises are located from the node, the slower the speed. In addition, the speed can be degraded if water gets into the cables after heavy rain — as some users notice in today's ADSL network.

What the future holds

While few households need 1 Gbps today (the average internet connection speed in Australia is currently 4.2 Mbps) the historical demand for broadband network bandwidth has grown at about 30% — 40% per annum.

Today's ADSL2+ network provides around 10-20 Mbps and many households find this to be barely sufficient, especially when two or three family members simultaneously access high-bandwidth applications, such as video on demand, gaming, or various kinds of home office applications.

Using historical growth figures, and allowing for future generations of ultra-high definition television, multi-view services, together with multiple TV displays in a single household, in-home video conferencing and so on, it's likely that domestic broadband domestic customers will be seeking bandwidths of more than 100 Mbps by 2020 and about 1 Gbps by 2035.

Many business customers will require these bandwidths much sooner, as they begin to take full advantage of new broadband applications and services, and to develop innovative new online products. Historically, the development of applications tends to follow the provision of infrastructure. Applications that use increased speed tend to be developed only when those speeds are in existence or imminent.

Based on these numbers, the Coalition's FTTN network will be obsolete by 2020, and will require major expensive upgrades after this. While it's possible telecommunications engineers may find ways to squeeze a little bit more speed out of copper, the only way to move beyond the speed limitations of FTTN is to move the nodes closer to the home.

In practice, this ultimately means an upgrade from FTTN to FTTP.

Fibre on demand

For those who need more than 50 Mbps from the FTTN network, the Coalition's policy provides for a "fibre-on-demand" upgrade path, in which a customer pays for a fibre to be installed from the node in the street to the premises.

The cost of this to the individual could be in the region of $1,000-$5,000, depending on the distance of the node from the premises. Future upgrades of Labor's FTTP to 10 Gbps and beyond will require simple exchange of the user terminal in the home, at a cost typically in the region of $100-$200.

The Coalition's "fibre-on-demand" strategy raises the spectre of a digital divide between households, businesses and regions that can afford to pay for the upgrade and those that cannot.

To illustrate this, a graphic design business that uploads and downloads data to its customers, and happens to be located close to a node, will be in a much better business position that a competitor 500 metres down the road. This will arguably impede the economic benefits of the network as a whole, limiting the application of health, education and productivity-boosting applications.

This will mean the saving of $1000 per premise offered by the Coalition could easily be wiped out by the loss of long-term economic benefits of a high-capacity FTTP network.

Going mobile

Some commentators have argued the increasing popularity of mobile devices such as smartphones and tablets decreases the need for the NBN.

But a FTTP broadband network will facilitate this rapid growth in mobile broadband. Telephone companies around the world are now enhancing their mobile networks with an ever-increasing number of small wireless base stations located on street corners, in shopping centres, offices, and even in customers' homes, using fibre connections from the small base stations to their network.

While NBNCo is not yet offering backhaul services (transporting data to a point that would allow it to be be distributed over a network) to mobile operators, Labor's FTTP network is ideally suited for this. Because the Coalition's FTTN network relies on existing copper cable to the home, it is generally unsuitable for wireless backhaul.

Energy implications

Energy consumption is often overlooked in communications network planning, but is becoming increasingly important. The power consumption of the Labor's FTTN network will be about 70 Megawatts and the Coalition's FTTN network will consume twice that — about 140 Megawatts.

The cost of this extra power is relatively small compared with the installation cost of the network, and this comparison does not include end-user devices such as computers and TV displays. But the increased electrical power consumption of the Coalition's FTTN network will have a greenhouse impact approaching that of a city the size of Launceston in Tasmania.

What we know, in short …

The Coalition's broadband policy offers a lower-cost network that will provide customers with modest improvements in broadband services in the shorter term; whereas the Coalition's network will create a new digital divide and require major upgrades soon after it is completed.

The cost difference between these two alternatives is about $1000 per premises.

Labor promises a more future-proof solution that will cost more at the outset, but will stimulate broadband developments in government, business, and entertainment, and has potential to serve Australia beyond 2050.

Rod Tucker is Director of the Institute for a Broadband-Enabled Society (IBES) at University of Melbourne. His research is financially supported by the Australian Research Council, Alcatel-Lucent, and the Victorian Government. The Institute for a Broadband-Enabled Society has received cash and in kind support from a range of companies including Optus, NBNCo, Ericsson, Microsoft, Cisco and Google, through its industry partner program and research collaborations. A version of this article was published on the University of Melbourne's Election Watch 2013 website The ConversationThis article was originally published at The Conversation. Read the original article.


Comments

    How can the coalition guarantee 25 MB/s without providing new copper runs from new nodes? If they have to run new copper to most houses, how can that cost be much different from running fibre to houses? I am not an expert but it seems to me that the cost would not be that different.

      The nodes are not the same as the current exchanges. Apparently the idea is to install nodes close enough to customers to meet the minimum speed requirement.

      If the copper has degraded badly in an area, presumably they'd have to decide whether to keep the bad cable and install more nodes, or replace the copper (either with new copper or fibre). I wouldn't be surprised if they'd favour the first option though, since if they ended up converting too many people to fibre people might start questioning the wisdom of their plan.

        if they ended up converting too many people to fibre people might start questioning the wisdom of their planIf they replace copper with copper, people might start questioning the wisdom of their plan... :)

        Last edited 18/07/13 9:47 am

          No matter what they do they'll have to replace a lot of copper with SOMETHING. People WILL question the wisdom of their plan, I just hope it's before they get the chance to screw up this infrastructure project! It's gonna be bloody expensive either way, but at least with FTTH we won't then be immediately back to playing (and paying for) catchup.

        The cable is going to require replacing anyway as VDSL requires 0.6mm copper cores and most of the country is using between 0.35 and 0.4mm.

        This will inflate the coalition nbn cost up towards the cost of labours future proofed network if not past it.

    Pay less now, FOR less now, so you can pay more later, to catch up AGAIN.. yeah thats a smart idea.

      Yep. Exactly! I'd prefer to pay a little more now and not have broadband infrastructure a dominant feature in federal budgets for the next 30 years (10 years is enough, thank you).

    A clear concise explanation of the situation!

    Amazing.... /sarcasm

    Thanks for the great article! Hopefully this will help lift the confusion and FUD around a very important issue.

    Mr Turnbull said a few years ago that he liked Labour's NBN FttH or FttP idea and would back it but do it different than Labour. He meant keep an eye on the budget, Libs are good at that sort of thing and Labout never really worry about going over budget.

    Shame Mr Turnbull isn't the leader of the libs anymore. Big Shame

      Fiscal debt is not the demon those in the opposition purport it to be.

      Now is a good time to use borrowed money and government bonds to implement infrastructure that will majorly benefit the economy once it coverage is met.

    *sigh*, if the NBN actually goes the way off FTTN its going to be a major upset. That kind of little imrpovement for nearly the same cost is almost pointless. Australia is in dire need of structural changes for our internet speeds, andthe libs are trying to convince people we just need to save a bit more on it, to get near nothing out of it. I'd especially like to know the kind of effects FTTN would have on areas further out from the cities, as the lowering of speeds over distances is the main issue for people I know right now. Some will get 15mb/s, others, like myself, 5mb/s.

      And others like me get 2.7mbps when I'm lucky, and during the colder months it drops much lower - I had to put up with 1mbps for a few weeks due to all the storms we were having at one time.
      Officially I was told I can't get ADSL here in Frankston South because I'm too far from the exchange and my line quality is crap. iiNet thankfully have their own hardware at this exchange, otherwise I'd be on wireless - no cable, no ADSL, no 4G, hardly any 3G.
      And 2 minutes closer to Frankston, my friends have cable, 4G and fast ADSL.

      I doubt the Coalition's plan will provide much, if any, benefit for me - and that's if they bother replacing the cable here. They might just go with wireless instead so I still get to stay behind the curve!

    Still seems one sided, even if it is unbiased. Merely by the fact that the Labor version is just so much more practical.

    The interesting bit is if you take the assumed figure of 12.7 million premises and the difference in cost between the FTTP and FTTN plans, the Coalition's claim that they would deliver the plan more efficiently adds up to a 4.9% difference. So apparently the difference between massive Labour waste and massive Coalition efficiency is 5%.

    I think the "cost of future upgrade" comparison is flawed - it assumes that no one will pay to fiber up their copper connection. But if you factor in the additional inefficiency in having to do upgrades in two parts, that would easily eat up the 5% saving and then some. There's no way the Coalition plan would work out cheaper in the end. It would just look cheaper in the short-term, fudging the figures in exactly the same way the Coalition has been complaining about since they lost office in 2007.

    Nice article,

    First up, Im all for FttP and think it is the right solution, but there is a glaringly obvious problem with your Mobile argument - being that the Mobile Wireless connection would presumably not be in people's premises, which case it would be on the Node, which would be connected via Fiber....so....hmmm

    The biggest issue I see is that convincing people that Latency and Upstream are equally important in broadband connections for many applications (Such as telephony) and are fundamental in getting FttP to take off, something that no other solution can provide, and something that Labour seems to struggle convincing people is a good idea.

    The analysis does not seem to take into account the cost of capital. If the average need is currently 4.5MB/s, the FTTN solution meets that need for $15Bn less, and according to this analysis will continue to meet that need up to 2020. The interest on $15Bn is around $1Bn per year. So by deferring upgrading the last few hundred meters until it is needed will save billions of dollars in interest. And while some may need the upgrade sooner, many may not need it for many decades.
    It like those bridges we commonly see where they put in the foundation piers for say 6 lanes, but only install the bridge deck for three lanes until the traffic capacity warrants it.

      Lowest test scores in commerce and business economics eh?

      The ten year bond rate is currently about 3.5%, so interest payments are about half what you suggest.

      The FTTN network becomes obsolete around 2020 and so needs to be replaced with FTTP at that point (after about 7 years, or around $3.5B in interest payments). If we assume that some of the FTTN infrastructure can be re-used and that the FTTP upgrade will only cost two thirds of Labour estimates, total deployment cost will be approximately $30B+$30B = $60B, a net cost of ($15B-$3.5B) = $11.5B compared to the Labor plan.

      And of course you've deferred the network upgrade for seven years, so any productivity upgrades and improvements in the standard of living over that period are foregone.

      Personally I was stunned at the cost estimate for the Coalition plan. Spending two thirds the amount for what is a relatively marginal upgrade seems to me to be boneheadedness of the highest degree. Better to just defer the Labor plan until somebody decides it's affordable.

    author made a mistake

    "The Coalition’s broadband policy offers a lower-cost network that will provide customers with modest improvements in broadband services in the shorter term; whereas the Coalition’s network will create a new digital divide and require major upgrades soon after it is completed."

    Coalition is mentioned twice when it should be coalition and labor

      Re-read it. The coalitions plan will create a digital divide between the haves and the have-nots.

    I am afraid we both might be arguing on the back of an envelope without important underlying information- for example the upgrade cost from FTTN to FTTP, and the appropriate capital deferral period.

    Infrastructure planning has a well established methodology, and I am sure if you gave the problem to two or more competent infrastructure engineers, they would all come up with the same answer. It might be FTTP, FTTN, or most likely- FTTP in some cases, FTTN in others.

    When politicians or the well intentioned general public get involved in telecommunications network design, they come up with disparate solutions- only one of which is the most efficient way of delivering the desired outcome.

    We might be better off if the Government (on behalf of the taxpayers) decided on the goal, and how much money is available, and left the network design to professionals.

    For example, the goal might be that everyone has as much bandwidth as they need by a certain date, and that to be maintained to a future date beyond that. Usually a tender process then delivers the best outcome.

    I do understand that reinstating a telecoms monopoly (the NBN) has overridden this best of approaches.

    Very informative article, but are we missing something? Since when do governments subsidize our personal entertainment? We all know that's what 90 percent of domestic internet usage is-pure entertainment: gaming, porn, shopping, facebook, porn, movies, porn. Did I mention porn?

    Seriously, my taxes paying for the next door neighbour's unspeakable HiDef addictions at 50+ MBs-1? We have strayed from the path of reason somewhere here.

    That said, I am signing up for fixed wireless next week. 5 times the speed and twice the download for less money compared to current pondscum ADSL service. Yes, I only do a little banking and check the news, but hey, Kev (Tony soon) is paying.

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