Backhaul 101: Why It Matters

Backhaul 101: Why It Matters

backhaul The first part of the National Broadband Network spending will be backhaul connections, with six regions initially targeted. Backhaul doesn’t directly bring faster Internet right to your door, so why is it important?

Since the announcement of the National Broadband Network as a private-public partnership back in April, there’s been lots of speculation and lots of backroom negotiation, but very few concrete developments. Today’s announcement of $250 million being spent on improving backhaul in six key regional areas represents the first real physical activity on building the NBN.

In an Internet context, backhaul refers to moving large aggregate volumes of data between locations. It doesn’t refer to the connection between your house and the Internet, but between major data aggregation points like exchanges and overseas cables. But it can still impact heavily on the price you pay.

A typical Australian broadband connection will generally utilise ADSL, and the speeds you get offered will be determined by your distance from the nearest exchange and the type of equipment your ISP has installed in that exchange. Telstra generally controls access to exchanges, but is supposed to allow other ISPs to install their own equipment on reasonable terms, though in practice those terms have often been defined through lengthy regulatory battles. Many ISPs also purchase ADSL wholesale from Telstra or Optus.

Even assuming that you have a choice of ISPs, however, you won’t necessarily have a wide choice of prices. ISPs also have to pay to transport data from exchanges back into the core of the network, and this is the process generally referred to as backhaul. This can be done using a variety of technologies (including microwave, DSL, carrier Ethernet, fibre and ATM). The technology itself isn’t what matters, though — it’s the price which carriers have to pay to send that aggregate data.

In much of Australia, the only available backhaul connection is owned and controlled by Telstra, meaning that it can effectively set the pricing. If those costs are essentially fixed for anyone offering an Internet connection in that area, then the chances of competition based on price are reduced. ISPs often complain that Telstra doesn’t offer equitable or reasonable pricing; NBN pricing for backhaul will be fixed, so any provider in the area should (in theory) pay the same cost. At the same time (the theory goes) existing backhaul providers will adjust their pricing to remain in the game.

The six locations which have initially been singled out — Darwin in NT, South West Gippsland in Victoria , Emerald and Longreach in Queensland, Geraldton in WA, Broken Hill in NSW and Victor Harbor in SA — are all relatively large regional centres (and it’s surely no coincidence that they’re evenly spread between the states, save for Tasmania which has already been singled out for other investment plans). Yet despite that, competition for broadband services in those areas is relatively low, and the lack of backhaul is one possible reason. If ISPs have no choice about how they’ll get data from a local exchange to the wider Internet, price competition becomes more difficult.

Or, as Minister for Broadband Senator Stephen Conroy put it: “Access to competitive backbone infrastructure on an open access, equivalent basis will allow retail broadband providers to expand further into regional areas.” (The government has also heavily emphasised that there’ll be further backhaul announcements, less other regional voters get grumpy.)

Will infrastructure competition make a practical difference to consumers? We won’t know until construction is finished and the actual prices are set, but the early indicators are positive. iiNet estimates that it already has 3,500 customers in the six target regions who could receive cheaper prices if competition results in better backhaul fees.

Lifehacker 101 is a weekly feature covering fundamental technologies that Lifehacker constantly refers to, explaining them step-by-step. Hey, we were all newbies once, right?


  • And what happened to Mt Isa, the minister had previously mentioned Mt Isa by name as a targetted location, by now it’s not on the list Why not?

    • Random Dude, I’d hardly consider this announcement a copy of a major point of OPEL. They are both proposed solutions to a problem.

      OPEL was canned for a reason and in my opinion, rightly so. If you recall there were some issues with probity and covereage for OPEL. OPEL also wasn’t providing real backhaul competition – just a 30% discount to the current price in regions which isn’t necessarily enough to spark competitive offerings. At least our government appears to be doing things correctly and openly this time which may end up bringing about a beneficial outcome for regional areas being addressed initially with backhaul capacity.

  • We have major backhaul issues in Port Lincoln SA as all of our Backhaul is via Microwave Link to Port Augusta. If they put decent backhaul from Port Augusta to Port Lincoln they will get three Major Regional Cities, also allowing alot of small towns along the way to be connected to the NBN with out huge cost.

  • oh, I don’t know, Random Dude. Look at it this way: the Liberals couldn’t get it done when they were in power (because of Labour?) but Labour is able to get it done (in spite of the Liberals?). What matters is it’s getting done and perhaps Telstra will no longer screw over Australia’s Internet services.

    Now all we have to do is get rid of Fielding and his crap…

  • So Geraldton is getting cheap Backhaul! Now lets see how many ISP’s will provide services to all those towns along the 400km route to Geraldton! My guess is NONE!

  • Don’t bother asking ‘how about ‘, first ask yourself whether you, your council or community actually bothered to put in a proposal for eligibility. I know that myself along with a large amount of other residents as well as our council all put in proposals for our town (Broken Hill, NSW) to be considered as we only have Telstra for backhaul, that is it, no one else just Telstra. All well and good to whinge about being left out, but unless you and your community actually put in a proposal for eligibility then you have no leg to stand on.

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