The NBN: Why It's Slow, Expensive And Obsolete

After coming to power in the 2013 Federal Election, the Coalition government promised to deliver a national broadband network that would be faster, cheaper and more quickly deployed than Labor's scuttled fibre-to-the-premises plan. Two years on, what have we got? Regardless of where your politics lie, the answer isn't pretty.

Snail picture from Shutterstock

The Abbott Coalition government came to power two years ago this week with a promise to change Labor's fibre to the premises (FTTP) National Broadband Network (NBN) to one using less-expensive fibre-to-the-node (FTTN) technologies, spruiking its network with the three-word slogan: "Fast. Affordable. Sooner."

But with the release in August of the 2016 NBN corporate plan and in the light of overseas developments, it is clear that the Coalition's broadband network will not provide adequate bandwidth, will be no more affordable than Labor's FTTP network and will take almost as long to roll out.

With the benefits of two years' hindsight since 2013, let's look at the Coalition's performance against each of the three assertions in their 2013 slogan.

Affordable

The graph (below) shows funding estimates for the NBN from December 2010 to August 2015. Labor's funding estimates for its FTTP NBN rose from A$40.9 billion in December 2010 to A$44.9 billion in September 2013, an increase of 10%. By comparison, the Coalition's funding estimates, both for FTTP and the so-called multi-technology mix (MTM), have fluctuated wildly.

Labor and Coalition peak funding estimates from December 2010 to August 2015. *December 2013 data adjusted to account for different contingency. (Graph: Rod Tucker)

The estimated funding required for the Coalition's NBN has almost doubled from A$28.5 billion before the 2013 election to between A$46 billion and A$56 billion in August. Before the 2013 election, the Coalition claimed that its proposed multi-technology-mix network would cost less than one-third (30%) of Labor's FTTP-based NBN.

But in new estimates released in the 2016 corporate plan, the cost of the multi-technology mix favoured by the Coalition blew out and rose to two-thirds (66%) of the cost of a FTTP-based network.

Also, the cost of repairing and maintaining Telstra's ageing copper network was likely underestimated, as was the cost of retraining and maintaining a workforce with the wider range of skills needed to install and maintain the multi-technology-mix network – costs that are unique to the MTM.

In the space of two years, the lower-cost deal the Coalition spruiked to Australian voters has turned out to be not so affordable after all.

Sooner

The Coalition probably underestimated the predictably lengthy delays in re-negotiating the agreement with Telstra as well as delays in re-designing the network the new IT systems needed to manage a more complicated network with multiple technologies.

The graph (below) shows the actual and planned number of premises passed (or in today's parlance – ready for service) for the original FTTP network and the Coalition's network.

Premises ready for service, plans and actual, as published by Labor and the Coalition. (Graph: Rod Tucker)

The Coalition's original target was to bring at least 25 Mbps to all 13 million Australian premises by 2016. That target has now been quietly dropped and replaced with a target of more than 50 Mbps to 90% of premises by 2020.

At the end of July 2015, almost two years after the 2013 election, only 67 premises had been served by multi-technology-mix technologies. In the meantime, as shown (in the graph above), the roll-out of FTTP has continued, albeit at a lower rate than Labor originally intended.

This lower roll-out rate has led to fewer connected customers and lower revenue. It will be interesting to see if the newly released targets for premises ready for service will be achieved (blue broken line in the graph above).

Labor certainly had its problems when it was in charge. For example, slow negotiations with Telstra and asbestos in Telstra's infrastructure caused delays of around one year. The funding requirements for Labor's FTTP network crept up by about 10% from 2010 to 2013.

But the delays and cost blowouts have been very much worse under the Coalition than under Labor.

Fast

Australia's broadband capabilities are falling behind its international peers. According to internet companies Ookla and Akami, Australia's broadband speed lags well behind other advanced and even emerging economies.

In 2009, Ookla ranked Australia's average broadband download speed as 39th in the world. Since then, our international ranking has steadily declined and slipped to 59th place earlier this year.

What's worse, my studies of trends in internet speed in Australia and in a range of developed and developing countries show that FTTN technology – a key part of the Coalition's MTM – will not be enough to meet the needs of Australian broadband customers.

In short, FTTN technology will cement Australia's place as an internet backwater. Our world ranking could fall as low as 100th by 2020.

In many forward-looking nations, fibre-to-the-node technology has never been entertained as an option. In some countries where it has been installed, network operators are planning to move away from FTTN in favour of more advanced broadband technologies like FTTP. In doing the opposite, Australia is moving backwards.

If FTTN magically appeared on our doorsteps by 2016, as originally promised by the Coalition, there would certainly be a short-term advantage. But the 2016 target has been missed and the FTTN component of the network will be obsolete by the time the roll-out is completed.

Of course, there is no point in speed just for speed's sake. Studies in Europe and the United States have shown a strong correlation between GDP growth and internet speed.

In the US and elsewhere, increasing numbers of homes and businesses are receiving services at 1 Gbps and higher. A recent study presents evidence that communities served by 1 Gbps and more are faring better economically than communities with slow-speed broadband.

If in 2013 the Coalition had simply allowed NBN Co to get on with the job of rolling out its fibre-to-the-premises NBN, rather than changing it to an inferior multi-technology mix, it may well have ended up spending less money and delivered Australia a much better network.

The Coalition sold the Australian public a product that was supposed to be fast, one-third the cost and arrive sooner than what Labor was offering us. Instead the Coalition's NBN will be so slow that it is obsolete by the time it's in place, it will cost about the same as Labor's fibre-to-the-premises NBN, and it won't arrive on our doorsteps much sooner.

By my reckoning, we didn't get a good deal.

Rod Tucker, Laureate Emeritus Professor, University of Melbourne

This article was originally published on The Conversation.


Comments

    I would have thought an Emeritus Professor would know that correlation doesn't equal causation, but obviously not, instead he's pushing his polital barrow.

      What is interesting is the words say... Studies in Europe and the United States have shown a strong correlation between GDP growth and internet speed.

      What's interesting is that having a skim over the study linked there he's actually toned down the language. The study references multiple sources that claim increased penetration of ultra fast internet (by way of FTTH) have caused increases in household income and increased household satisfaction (which GDP has trouble measuring, but is often used a generic yard stick).

      Read and understand before pushing your own barrow filled with others ideas.

      Bingo. The prof actually was on the 2009 panel that convinced Conroy to go from the Fttn to FTTH. He has a barrow indeed.

      Not saying what we are getting now is great. Just that it's always good to get the full picture of someone's opinion so you can make up yours.

      Oh Steve, clearly you're pushing your own myopic "polital" barrow.

        I'm pointing out facts as @christian did. The guy is biased and uses poor scientific methodology, pushing correlation as causation, when it isn't. Comparing Labor's 'back of the napkin' uncosted, unfunded, unplanned, unresourced joke with reality is in fact itself a joke.

      Since when is documented fact bias? Oh wait, it's not towing the LNP line so naturally its biased.....

        Documented fact? You can't compare a timeline of what IS happening now (Coalition) with what MIGHT have happened (Labor) and call it fact. Very misleading.

          Actually i can

          https://nbnmyths.wordpress.com/why-not-fttn/

            Are you really Doctor Who? Come on, give it up... let me know what happened in the future so I can put my mind at rest.
            Either that or... no you can't because you can't predict how long something that is not going to happen is going to take.
            Just to be clear I am not debating the merits of FTTP vs FTTN. I was specifically criticising the good Professor's "statement of fact" on timing.

    If we could convince the government that fast internet would stop the boats and foil any plots by Jihadis then we'd be set.

      Maybe if we told him the internet was christian, he'd let it into the country.

        I wish the internet was me, too

          I don't think you'd want to be the internet. For starters, all those cables would ruin your body forever.

          "I'm not a robot like you, I don't like having discs crammed into me... unless they're Oreos... and then only in the mouth." - Fry, "Insane in the Mainframe", Futurama

    I remembering hearing the initial FTTP announcement. I had to listen to it again to make sure I understood what they said. Surely they didn't say FTTP. That would be the right thing to do; it would be future proof; it would be high speed now, and higher speed later. It would replace ageing copper. Wo'hoo!

    I spoke too soon.

    wow, a brother to MYKI...............
    the smart country overwhelms with stupidity !

    it was pretty clear it was going to be a turd of a plan as soon as it left Mr Broadband's mouth

    in other news the sky is blue, and water is wet

      sir, do you have proof for this assertion ?

    That first graph says it all. 'Labor' versus 'Coal'.

      You could read that chart? I think it's an excellent example of how not to display a chart.

    It's alright guys, by the time this finishes google would have taken over the world and we'll have 70Gb/Sec wireless shooting straight out of google's headquarters all over the world...

      Actually, Google is getting out of the internet business as of the last month or so.

    Why is it Slow, Expensive And Obsolete? Because it is being built by the government.

      Nope. Because there are two governments; second comer trying to show a change could be beneficial. A longer election term (6-12 years) would have been more indicative of the government capabilities, especially in complex infrastructure projects that take many more years than the current election term. The Chinese saying goes that "a boat that has two owners is always leaking". Finally, it is not slower or more obsolete than pre-existing networks. But FTTP was the future; MTM is a bummer, a compromise towards incumbent Telco's interests.

    Just to stir the pot,

    my cable based internet ( also runs my cable TV and phones) costs USD 167 per month
    and in the middle of the night gives me close to 300MBps late at night (which just happens to be the rated max speed I paid for) and about 130-150MBps during peak hours (8-11pm) with 23.6 upload pretty much all the time (Ooklah says 134MBps right now, Sunday 7:38 ET)

    My USD167 has no download limits ( I mean who in the world has limits therse days .... oh yeh ) unlimited US, Canada and Mex phone, free hotspot use all over the USA, 2c a minute international to pretty much everywhere ( even AUS) , 600 channels, 2 channel DVR, a ton of movies and tv shows free on demand, and Starz movie channels.

    In AUS, TPG ran fibre up Darly road from Manly Corso , up to the hostpital, Marist Brothers school and Bear Cottage , took them 2 days total. The fibre runs to within 35 feet of our Sydney house, but I have to wait until 2019 to get cable.

    Australia , 12 hours ahead ,10 years behind.

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