Six Myths About The NBN You Should Stop Believing Right Now

I live blogged the launch of the 2012-2015 NBN Corporate plan for Gizmodo yesterday (Giz editor Luke was trapped on a secret mission with a camera which may or may not have involved underwear, so I stepped in). The big takeaway from the event? Cogent dismissals of six persistent NBN myths which I suspect most Lifehacker readers already know are utter rubbish, but which keep clouding the actual discourse about our broadband future. Let's review.

If you want the full details of what was announced, check out the whole Gizmodo feature, which covers all the notable comments from comms minister Sentator Stephen Conroy and NBNCo chief Mike Quigley. Predictably, most of the coverage of the corporate plan launch I've seen to date has focused on the increase in NBN costings, though rather less of that reportage has noted with the same prominence that the predicted rate of return as an investment from the NBN has increased.

But I'm not going there, because arguing solely over the costs ignores all the other issues. If you want "Aaargh the NBN is evil and overpriced" coverage, you have most of the mainstream press at your disposal already. And I'm not going into the whole fibre versus wireless debate either, because we've already covered that a number of times.

Myth #1: No-one wants higher speeds

A standard anti-NBN trope is that "the speeds we have now are more than adequate". That approach ignores all the statistical evidence, which clearly shows our appetite for both download speeds and data allowances is ever-increasing even without the NBN. It also ignores the NBN signup patterns, which show the strongest demand is on the 100/40 and 25/5 plans. NBNCo is still conservatively assuming most customers will use the slower 12/1 option, but that prediction is likely to err on the wrong side. A similar pattern is evident with even the slower satellite services, as Quigley noted: "We're seeing takeup of the interim satellite is in fact exceeding what we expected at this point in time because the service is such an improvement over what we've seen beforehand."

Myth #2: Consumers hate the NBN because they may not be able to make emergency phone calls

The question of whether 'battery backup units', which ensure you can make a call on your landline in a blackout, should be compulsory has been much debated in the press. Given the total saturation of mobile phones, it's questionable whether this is a drama. More to the point, when NBNCo has asked current customers if they want a battery backup in their home, few say yes once they realise that their current cordless home phone will be dead in a blackout no matter what the network is doing. As Quigley said: "When people understand, they say 'but I've got a phone over here, is it good for that?' and it's a cordless phone. There's not much point backing up a cordless phone."

Myth #3: Money spent on the NBN should be spent on roads, etc.

Because the NBN is an infrastructure investment which takes place over a decade, its total cost is an easy target. If you don't like the NBN (or you don't like the current government), suggesting that spending the money elsewhere would make more sense is an obvious ploy. But it's not a logical ploy, because the NBN is treated as an investment, not a one-off expenditure. As Conroy pointed out, yet again: "To treat it as an expense would be breaching international accounting standards." You can't just shift the money from 'NBN' to 'roads' or 'hospitals', because the latter require a different accounting treatment.

Myth #4: NBN plans are overpriced compared to ADSL

The really short version? I compile and update Lifehacker's Planhacker listings for the NBN, so I know this is total rubbish. There are NBN plans available at a wide range of price points. And that's before you remember that comparisons of basic prices often ignore the fact ADSL prices require you to pay for a landline, and that the NBN, unlike ADSL, can offer a guaranteed speed.

That doesn't stop the myth being perpetuated. As Conroy pointed out, Tony Abbott's budget reply speech suggested a typical NBN plan would cost three times as much as current offerings. That's not true even if you ignore the speed and performance difference. And when you consider that with recent price rises, basic line rental from Telstra can cost less than an NBN plan, it's a lousy, deceptive and pointless line of argument.

Myth #5: You will be forced to use the NBN

Yes, your copper cable will eventually die (unless you live in a satellite-only area). But if you don't want the NBN connected to your house, you can take your chances with 3G or a rival satellite service. Even when NBNCo is wiring up your street, you can decline the option to have a basic connection enabled for your house for future use. Annoyingly, if you live in a unit block, if enough of your neighbours are misinformed anti-NBN zealots, they can disconnect your block altogether. As Senator Conroy noted: "If the strata says no, we declare it 'frustrated' and we move on. We can't storm the building. We still have property rights in Australia." If my neighbours try this, I will move, and curse my lowered property values.

Myth #6: Mainstream NBN coverage is objective and balanced

If I ever doubted that much of the local media coverage of the NBN was predisposed to negative bias, five minutes in the room ahead of the announcement were enough to dispel that notion. One journalist from the alleged national paper might has well have been wearing an 'NBN Sucks' T-shirt. As soon as the press release was handed out, she complained: "This can't be the plan, can it? Three pages?" (We got handed the full printed plan as well.) Another financial press journalist was phoning in the increase in the overall costs from the press release, ignoring the statements in the same document about how pricing had largely changed due to delays in the deal with Telstra and the addition of Optus cable customers.

It's not that the cost isn't important, but it's boring and simplistic to say "This costs too much and therefore it sucks" without looking at the context. As Senator Conroy pointed out and we've already noted, the incessant mantra that money spent on the NBN could be easily redeployed to roads or health or education or your cause du jour ignores the realities of how different expenditures are accounted for, let alone ignoring the fact that not changing Telstra's monopoly control on the existing copper network would leave large swathes of the population permanently screwed. Ultimately, we don't have a fully-priced alternative to the NBN from the Opposition, and it was the Opposition in power that 'privatised' Telstra while giving it near-monopoly control over the copper network. Under those circumstances, giving random statements from Malcolm Turnbull or Tony Abbott equal weight with a fully-costed plan is not balanced journalism.


Comments

    The NBN is a fantastic idea, especially given the current state of the internet services in Australia. Coming from the UK where cable is the norm (and installed to most streets during the early 1990s), the net services here are dated: speeds are slower and capped plans are the norm. And by no means is the UK at or near the top of the download speeds medals table. For Australia and Australian businesses to carry on growing the NBN is not just desirable it is essential. It will also provide an excellent return on investment for the country.

    National infrastructure projects like this cannot and should not be left to the private sector. This is text book example of when the Federal Government should take the lead and plan for the future to create a nationwide solution. Of course, these projects cost a lot, of course they run over budget.. but it's the same in the private sector. Just because there's waste it doesn't mean the project should be canned. The benefits far outweigh the costs.

    Fingers crossed the project doesn't get scrapped due to short-term thinking. If it does Australia will get be left in the dust as the internet age matures and you can't keep digging stuff out of the ground forever.

    I have idea for myths #7, The NBN will be obsolete by the time of completion.

    #8 Wireless internet will be superior to wired internet in a few years.

    This seems to be a popular arguments with anti-NBN people, which with these and the other myths proves people don't know what they're against.

    Let's get one thing clear, we WANT NBN to be a monopoly. It is actually cheaper and more efficient to deliver broadband with a wholesale monopoly.

    Its a first year economics problem, but by the sounds of things not many people on this forum have any idea about basic economics. Try searching for Natural Monopoly (http://en.wikipedia.org/wiki/Natural_monopoly).

    So in industries with high fixed costs (utilities like power and water) you only want ONE set of the infrastructure. Eg You only want one set of water pipes to someone's house, it is not efficient to have 5 different water pipes because water pipes are very expensive. Then you regulate for retail water providers to rent space in the pipes. Same goes for electricity distribution and, you guessed it, broadband. In this case, you encourage competition in the retail space where firms compete on price and service, NOT on who has the best pipes.

    The system we previously had was Telstra and optus laying fibre to the SAME areas (most metro). This is not efficient.

      Your way off with Natural Monopoly. From your link: Natural monopolies arise where the largest supplier in an industry, often the first supplier in a market, has an overwhelming cost advantage over other actual or potential competitors". The "overwhelming cost advantage" provides a natural monopoly. Getting the government to buy up and pull out competing technologies (ie payment to telstra and pulling out copper) is not a natural monopoly, it is a very artifical government monopoly. Having Optus compete with telstra actually reduced costs to the consumer, not increased them. It did increase the total cost of the infrastructure though.
      Lets get one thing clear, we have seen a telco monopoly here and it was bad. This project is another one, and competition has already dried up, with the largest being bought out of the game (telstra and optus) and the smaller being absorbed by bigger fish. Read what a competitor said after quitting the game: http://delimiter.com.au/2011/12/22/nbn-policy-spurred-internode-buyout-says-hackett/

    Please remember this. The Liberals oppose the NBN because they have mates who run businesses that could make big profits if the government weren't going out and building this. Every single financial and technical argument against it is a constructed fancy derived from this driving intention. You can argue technical facts, accounting systems until the cows come home, but you will never convince these people that a government has any role in building infrastructure that a private company could do instead. Forget the fact that a private company would do it on a smaller scale, targetted only at those parts of the country where easy profits could be made with the least expenditure, upgraded as slowly as possible to ensure the maximum profit made from any actual investment.

    The fact is that building our new network this way maximises the value to the Australian nation and the Australian people as a whole, and forgoes any capacity for private interests to extract all the possible profit margins. That's why the Liberals hate it. That's why The Australian (or more precisely, their advertisers) hate it. That's why it's pointless trying to convince those who think governments shouldn't build infrastructure.

    As taxpayers and individual citizens, and as small and medium and other non-telecommunications businesses, we will all derive massive benefits from this project. The powerful, noisy but tiny telecommunications businesses will miss a chance at easy profits.

      Decent internet comes from great competition. We are in trouble right now because we haven't had this competition, and we have already experienced what happens when the government owns it (Telstra). The privatization of Telstra only sucks because they were originally government owned and have never had to consider what would happen if they didn't make competitive products.

        Competition is best to happen at the retail level, not at the infrastructure level, as has already been mentioned a few times, otherwise, you get multiple pipes at the same destinations, which is wasteful. This is how it is done with electricity, gas and water and you don't see anyone wanting that changed. For basic utilities such as power, heating and water, it is wiser to have it owned by the government as it has to answer to the people, instead of a company which is more interested in profits (e.g. Telstra). Internet broadband is now increasingly a basic necessity so the same arguments apply. The privatisation of Telstra was a mistake because it gave Telstra a monopoly in the infrastructure and it retained its retail arm which means it gave its retail arm advantages and its competitors disadvantages when it can get away with it thus restricting competition. It was also a mistake because it's making generous profits year after year, when all that money could be going back to the government and us, the taxpayers. Yes, a big chunk of the surplus that Howard is praised for is probably from the sale of one of the most profitable public assets of Australia.

        Myth 10: using private companies to build things will ensure less waste, which will translate into cheaper cost to the consumer.

        Companies that are experts at something will be more efficient at doing things. That's why the NBN company was created. Marketing 101 says, you price your product at what the market will bear. If the market will bear a higher cost, no matter how much it saved, a private company will use the higher cost (think current house prices where a new coat of paint increases the house price by $40k). At least the NBN will have the government as its master, and not a select few shareholders. I dread the day that the NBN will be privatised because that is when it will become another Telstra, not before.

    The battery issue is a real one. In an emergency situation the shear number of mobile calls being made could make it unfeasible to use, this cost cutting exercise will cost lives.

      All you do is piggy back a connetion from your cordless phone to a typical hand set of old, problem solved and the NBN backup battery does the rest. In the case of the Satelite a 24hr UPS battery (Should be Standard part of the kit) or connect to your 40volt sola system done!!!

    I disagree with point #4.

    I currently have Cable internet with optus ( i don't rent the cable from optus) i have the high speed package with theoretical speed of 100 Mbps, i get 80 Mbps out of it and 60 Mbps over wifi, at a cost of $69 month.

    For the the same package on the NBN according to Planhacker it will cost me $129.99. Mmmm that appears to be almost double what i pay now for the same thing.

    Myth #7: the Coalition has anything useful to say on the subject.

    Myth #7: Conroy is competent

      I agree. Oh, and btw, they still want to censor the internet, despite it falling off the front page of the popular media. It frightens me what will happen when they will OWN the internet within the country

    You all may have seen this video before, but it is indeed a VERY interesting one!

    http://www.youtube.com/watch?v=6a2ne1WKxek

    Myth #7 You will actually get the advertised 100mbps download speeds

    Myth #1 is the most accurate after a slight tweak. Hardly anyone will pay for the faster speeds. vast majority will get 12 or 25mbits to save $$. people DO want faster interent, they just don't want to pay for it.

    Myth #6. Last I checked, Gawker was a fairly "mainstream" media outlet and is INCREDIBLY slanted towards pro-NBN. (wikipedia: "Gawker Media....considered to be one of the most visible and successful blog-oriented media companies.").

    Oh, I guess that supports your point that media is not "objective and balanced", just be sure to lump Gizmodo and Lifehacker into that group, please.

    Quite a heated discussion here eh. Good to see that so many people are passionate about the internet. My only problem with the NBN is simply this...

    The only reason that we need the NBN is because the government paid for the infrastructure that Telstra currently owns (as it used to be a government owned company), and after privatization, it became the owner of this infrastructure (hence, a monopoly on all infrastructure). Why is our answer to this problem to create new infrastructure, the same way we did before, and hope that this fixes the problem (and perhaps having another monopoly with the new infrastructure in the future). Surely a decent thing would be to subsidize infrastructure to other companies to encourage competition (so that prices will be better).

    The only reason why the rest of the world is doing better is because they have lots of competition. Have a problem with AT&T in the US? Go to Comcast? Don't like, that head to Rogers. So many choices, and they all are trying their hardest to ensure that your money is going to them. Oh, and they all own their own infrastructure.

      Yep, competition is good. The government needs to stick to policy making and stop interfering with competition in the marketplace. I love how nobody bothers to ask why Australia really got to be a "broadband backwater" as Labor loves to call it (beyond than just blaming the other guys: http://www.alp.org.au/getattachment/f2da6cb3-fae2-42d2-a1ba-b9047b33cf95/nbn/ ). Yes, lets fix the problems that our previous monopoly caused by putting in a new monopoly!

      Gotta love the human condition and our utter inability to learn from mistakes.

    The way both Optus and Telstra market high speed broadband right now is diabolical. For example, South Brisbane is ostensibly ready. Naked BB? - no. Need a phone for all high speed plans. $300 odd for a high speed modem? Extra charges etc. Who you kidding Telstra.
    Ombudsman force them to put up a naked 100mb/s say 150gb for $90 p/month.

    There are many supporters of the NBN here on this forum who gloat over the supposed 7% return on the investment in the NBN (after borrowing the money in the first place at 3%). Sounds great if the project comes in on budget. Word is already out about cost blowouts of anything between 1.5 and 6 billion and the project is way off completion. What do they think will happen when the budget blows out to 50Billion ... 70Billion ... 100 Billion? Either the return will have to take a hit, or once the government has seen all the alternate internet service connections dismantled, guess what ... we the lucky ones will just have to pay more to make this wonderful investment look like it was worth it after all!

    Also, Myth #7 which has been bugging me this week.

    NBN will allow stroke rehab at home:

    http://likeyoucarewhatithink.wordpress.com

    Having discussions over a dead set winner for this country is idiodic, lets just leave our wonderful out of date copper and gloat over the saving we will make...

    I'm a fan of the NBN (or at least, what I hope it will become) and live in an area that was in the second group of suburbs announced to get access to it. It still hasn't been completed - although work has begun - so I hope those in the rest of the country are ready for a huge wait.

    I think that, on balance, the NBN is a worthwhile investment and even the Opposition knows we're beyond the point of no return - they are setting things up so that every set back that occurs whilst they're in a future Government can be placed upon their political opponents, whereas whatever benefits occur will be said to have potentially been achieved more cost effectively under their plan. So no one needs to stress about a future Liberal Government stopping contruction of the NBN - just hope that the rollout rate increases exponentially because I can't believe a suburb that was listed as one of the first to get access is still without it in 2012 and with no information on when precisely it will be available (well, it says "within 12 months" of cable being laid, which occured Jan 2012)

    That said, the article seems to "debunk" myths I hadn't heard of up to this point by any serious opponents of the NBN. Their arguement simply seems to be that the cost to benefit ratio of the NBN is inferior to that of other alternatives.

    I'm a big fan of the NBN, can't wait till I have it, but #4 isn't REALLY correct...

    Right now I'm paying $60/month at 12Mbps down, no data cap (i.e. 3.2TB data cap). I won't be able to get a plan anywhere NEAR that good, for a price anywhere near $60.

    So 7% return :: $B37 investment .
    7% = $B2.59 return every year.
    If there are 22,705,075 australians - then every single australian will have to pay $114.07 each year.

    That seems an awful lot more than what I'm paying for ADSL now - for my 'whole' family'

    Has anyone got a 30 mt tower 50 mts from their kitchen window?
    That'swhat is proposed for my place!! Health risks, they say very little. ??????
    They have given me 16 days to comment. I feel so helpless

    @moss, it is a return of 7.1% each year. If the NBN only lasted for a year, then you would have a loss of investment, but 7.1% a year for the life of the NBN is a reasonable return. I wish my back account was paying that at the moment.

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