Why Projected NBN Broadband Demand Numbers Are Flawed

In their cost-benefit analysis of the national broadband network, the Vertigan panel predicts that in 2023, an average Australian household will require a broadband download speed of 15 megabits per second (Mbps). Bill Morrow, the CEO of NBN Co said he is "curious" about this prediction. I would go further and say it is simply wrong, and calls into question the validity of the conclusions of the Vertigan cost-benefit analysis.

Picture: Steven Depolo

Let's look at the data. The chart below shows average broadband download and upload speeds in Australia from January 2008 to January 2024. The curves in the shaded region in the lower left of the chart are actual measured Australian average upload and download speeds, as reported by Ookla, and reproduced from page 103 of the Vertigan Panel's report.

The dotted straight lines in the chart are the projected average download and upload speeds from 2013 to 2023, extracted from graphs on Pages 55 and 57 of the Communications Chambers report as supplied to the Vertigan Panel. Communications Chambers obtained their data by statistically analysing the usage patterns of a variety of known applications in a variety of household types. The data point indicated with an asterisk is the Communications Chambers 15 Mbps prediction for 2023 that found its way into the Vertigan report.

Amazingly, this 15 Mbps prediction for 2023 is less than Ookla's reported actual average download speed in Australia, today, in September 2014 (16 Mbps).

In other words, Communication Chambers is saying the rapid growth in internet access speed that we have seen in recent years is about to suddenly come to an abrupt end and there is no need for any increase in download speeds in Australia for the next nine years. This defies logic, and it's a mystery why the Vertigan panel didn't ask Communications Chambers to check the calculations and fix the data.

And then there's upload speeds…

Incidentally, the chart also shows data in the Vertigan report for upload speeds is also clearly wrong, with a projected 2.5 Mbps upload speed in 2023, compared with today's average upload speed of 3 Mbps.

The picture painted by the data in the Vertigan Report is completely at odds with international trends. By comparison with the Australian data, Ookla reports September 2014 average download speeds in the USA of 30 Mbps and in Spain 26 Mbps. In Sweden it is 47 Mbps and in South Korea it is 56 Mbps. The average download speed in Kazakhstan today is 17 Mbps. Kazakhstan currently enjoys higher average download speeds than Communications Chambers thinks Australia will need in 2023.

But it gets worse. The solid straight lines in the chart are projections of actual download and upload speeds that I obtained by extrapolating the real data from Ookla out to 2023. These straight-line extrapolations are conservative because the data rate in broadband networks typically grows exponentially rather than linearly.

Using my conservative linear extrapolations, I estimate that, on current trends, Australians will expect average download and upload speeds in 2023 of around 34 Mbps and 8.5 Mbps, respectively. This is about the same as in the USA today.

What about heavy users?

Communications Chambers and the Vertigan panel rightly recognise there is more to the overall picture than just average upload and download speeds. There are detailed graphs of the percentage of households requiring different download speeds in 2013, 2018, and 2023 on pages 55 and 57 of the Communications Chambers report.

The average speeds plotted in the chart above represent just one point on each of these graphs. Critically, the detailed Communications Chambers graphs show some households will require considerably more than the average download and upload speeds.

For example, the Vertigan report claims that in 2023 the average household will require 15 Mbps, but the 0.01% most internet-active households will require 48 Mbps. In other words, the most active of households require about three times the average of 15 Mbps. This enables Vertigan to come to the conclusion that by 2023, everyone will be well served by the Coalition's multi-technology mix (MTM) using fibre to the node (FTTN), delivering 50 Mbps. How very convenient.

Serious flaws in the Vertigan report

But what happens if we use my projections of real bandwidth growth rather than the highly questionable Communication Chambers data? If we multiply my projected average download speed of 34 Mbps by the three-times ratio used by Vertigan between high-end users and average users, we find that high-end users will require download speeds of 102 Mbps. If I replace my conservative linear projection by an exponential projection, the required download speed for high-end users will be more than 200 Mbps. A FTTN network cannot provide these speeds; a FTTP network can.

The Vertigan report includes a sensitivity analysis that shows an FTTP network can provide a better net cost-benefit outcome than a FTTN network if the growth in bandwidth demand is higher than used in their analysis. If they had used realistic data for growth in demand, their cost-benefit analysis may well have shown that a FTTP network will provide Australia with the best long-term value for money.The Conversation

Rod Tucker is Laureate Emeritus Professor at University of Melbourne. He receives funding from the ARC and has received funding and in-kind support from a number of telecommunications companies. He served on the Rudd Governent's Panel of Experts that assisted with the development of the NBN.

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


Comments

    Very nicely written... and yet sadly completely unsurprising. I mean did any tech-literate person truly believe that the NBN cost benefit wasn't a sham written to match the new plan?

    "Malcolm, the report shows that FTTP is better, what do we do?"

    "Fudge the assumptions a bit."

    Baseless, but if the only thing wrong with the report is the assumptions...

    If the Vertigan report was submitted to a peer reviewed journal it would have been torn to shreds in the first 10 seconds and the contributors stripped of any awards/qualifications for producing such a farcical document.

    But in Politics it's all about seeing how far you can bend (read: break) the truth before people decide they've had enough.

    We've only got a few years left of this joke and then we can vote in whichever government commits to fixing it.

    Just another example of the incompetence of this Government when it come to that almost heretical subject.., Science and Technology..!

      ah so that's why they disbanded those government areas, its considered heresy. lol

      Last edited 08/09/14 10:50 am

    Wait... you're comparing the speed "an average Australian household will require" with the speed the average household (who benchmarks their connection) gets?

    You may not agree with their reasoning about what's 'required' but it seems like a silly argument.

      While I disagree with the projections of the original study, I think you've hit the nail on the head here.

      The Ookla numbers show what people are actually getting, now (supply). The projections show what the study authors think will be required in future (demand). Another way to read the numbers is that current technology is already meeting projected future demand requirements.

      Now I happen to think that the projected future demand requirements are wrong - in particular, upload will become much more important over time as "cloud" services become more common, and this is something the Coalition's plans have always ignored. But to complain that the study is inadequate because the bandwidth currently supplied, on average, is more than sufficient to meet projected future requirements is an exercise in twisted logic.

      Far better to concentrate on actual traffic volumes, which can then be used to approximate the demand for bandwidth.

    I am currently on Cable 100Mbps, so the government wants to lay fttn and take away my cable, they want me to accept going from 100Mbps down to 15Mbps...... I just cannot take this seriously and I just cannot believe we don't have a say in this. why are we going backwards? why is the government trying to limits speeds? whats next limit the download limits to business and not personal? is this another attempt to satisfy the gross income of the movie studios and limit Australians from pirating? and since when did the average Australian household only has 2 people in it? why are these people just openly and plainly LYING TO US and not even hiding it?

    Last edited 08/09/14 10:46 am

      Firstly if you were aware of the policy you'd be aware they are including HFC in their Multi-tech mix so the whole thing about them forcing you to go on FTTN... nope not true.

      Second with the contention on HFC sitting at around 800+ per split you're going to be praying your ass off to get FTTN when your 100Mbps slows down to a crawl because everyone else is forced on to HFC.

    Every Australian should have access to the above analysis.

    Why limit the discussion on speeds required in 2023? How about 2034, 2044 and 2054? If 15 Mbps is not enough who will think that it will be good enough in 2023. The Ookla data doesn't show how much we use, we tend to use speed test which is powered by Ookla to see how fast we can get and not how much.

    Last edited 08/09/14 12:05 pm

    Annnnnd we already knew this... but this is what the idiots of this country voted for, all the tech savvy people should just move to the area's getting FTTP and let the rest of Aus rot in broadband hell in my opinion, it's what they voted for right?

    3 Mbps upload is rubbish. I am currently on 50/20 Mbps plan and would say that the 25/12 is the minimum for cloud storage, but 100/40 with local datacentres is ideal. What good is being able to download your iCloud/One Drive/Google Drive photos at 15 Mbps when you can only download them at 3 Mbps. Once Microsoft opens local Azure datacentres and others follow in the same trend, fast upload will be mandatory (the faster ping times can take advantage of).

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