Why Aren't More Customers Flocking To The NBN?

The NBN has become an election issue in Australia with claims being made that the Australian public doesn’t want to pay for the higher speed options. Just 15% of consumers have so far opted for speeds of 100 Mbps (Mega bits per second), with the bulk (47%) using the 25 Mbps service and the remaining 33% on the slowest speed of 12 Mbps. In short, customers aren’t buying fast broadband — because that isn't what they are being sold.

The above purchase profile is being used as an argument against the need to change the Fiber To The Node approach of the current government, to the Fiber to the Premises or Fiber to the Distribution Point favoured by the opposition parties. If people don’t want faster speeds, why provide better technology that guarantees even greater speeds than what is currently on offer?

The Australian experience is clearly at odds with what is happening in New Zealand where uptake of fibre broadband with speeds above 25 Mbps seeing a growing adoption rate.

Image: NZ Government Statistics Office.

The US market is also showing that services up to 1 Gbps (1,000 Mbps) have become increasingly popular. AT&T has announced that it will expand its ultra-fast fibre-to-the-home (FTTH) broadband to a range of new cities in the US. At the same time. Verizon’s fiber broadband starts at 50 Mbps and is available up to 500 Mbps.

In the US and New Zealand, when advertising broadband plans, the emphasis is on the different speeds available. AT&T and Verizon do not even mention download limits as these are “unlimited”.

In contrast, in Australia, Telstra does exactly the opposite, selling plans on the basis of download limits. To actually find out what the speed of the broadband connection is, a customer needs to open a document to get a link to a page that talks about speeds of all of their different types of internet plans.

It turns out that Telstra’s standard NBN plan is 25 Mbps. To get 50 Mbps you have to get a “Very Fast Speed Boost” and to get 100 Mbps, you need to opt for a “Super Fast Speed Boost”. Of course, you need to look at the original document to find how much extra, the speed boosts will cost (AUD $20 and $30 extra a month).

Telstra Pty Ltd

Another of Australia’s major internet service providers, iiNet, does a better job of allowing the selection of either 25 Mbps or 100 Mbps plans. iiNet still emphasises the download limits, even though anything over 200 GB a month for the average family would be rarely used. The 25 Mbps plan is selected by default and the advice given on the site is that this would be more than sufficient for the average family.

Contrasting iiNet’s recommendations is Verizon, which suggests that 100 Mbps is the minimum necessary for households with 3 to 7 devices.

It is not surprising that in Australia, the majority of customers are opting for speeds of 25 Mbps because this is what the ISPs are pushing. The likely reason for this is that those plans are at a comparable price to what was available on one of the better non-NBN (ADSL2+) broadband plans. The economics of what the ISPs charge for the NBN is in part determined by nbn.co who sets wholesale prices for these connections based on speed.

Telstra’s commercial NBN plans are no different. The default is a 25 Mbps speed and again, if there are options for faster speeds, these are well hidden.

Apart from the way in which the Australian ISPs sell broadband products to emphasise the 25 Mbps connection, Australian is also in a chicken-and-egg situation. At the moment, people don’t see the need to get faster broadband because there are not the apps and services that really require it. Those apps and services are less likely to appear because people don’t have the speed and capacity on their broadband connections to be able to support them.

In the US, at least in this instance, there is the view that if you build the infrastructure, others will provide the applications and services to use that infrastructure. Being first in that game is obviously important. This is obviously not driving Australian ISPs, and why they don’t believe that they should offer faster speeds is a mystery.

David Glance, Director of UWA Centre for Software Practice, University of Western Australia

This article was originally published on The Conversation.


Comments

    Currently I'm on cable. I regularly get 30Mb/s. Why would I go over to a 25 Mb/s service that is going to cost me $10/month more?
    That's the reason why we haven't gone over yet. Still in another few months we will be forced over.

    because like so many things in Australia's tech/media world the internet product offerings are stuck in the past and the constant bickering from politicians doesn't help, data caps are ludicrous in this day, especially ones as low as some aussie isps offer, of course no one is going to bother getting the full (pathetic) 100/40 the nbn offers when the 25gb data cap theyll be allowed will be burnt in one netflix sitting at the quality 100/40 would net them (i exaggerate but the point is valid).

    Wth some proper love our fibre network could reach the decent speeds so many other countries have had for years now (1gbps) but whats the point if its all hamstrung by ridiculously low data caps.

    We should have just invested in this properly to begin with, instead of say submarines, made our ISPs buck up and got australia's tech sector to an envied place rather then the laughing stock of modern internet

    I initially signed up to 50Mb/s but quickly found that for much of the time, I was barely getting 20Mb/s due to congestion on backhauls / services in Australia. I promptly dropped my plan back to 25Mb/s, I wasn't going to pay for speeds I didn't actually get.

    A quick search on whirlpool shows that a great many people on NBN do not get anywhere near the plans' speeds, so I'm not the only one in this boat.

    The reality seems to be that the broader infrastructure in australia can't keep up with too many people on 100Mb/s, which is probably another reason ISP's push lower speeds by default so as to not use up too much of their upstream bandwidth.

      This is more likely to be related to your ISP not provisioning enough CVC to your POI. As a result, you are running into issues when lots of customers connect at the same time due to very bad contention ratios. This has nothing to do with the broadband infrastructure in Australia. It is simply the result of NBN co policy on cvc pricing and the unwillingness of ISPs to purchase it at the current prices.

      Last edited 20/05/16 9:55 pm

        Doesn't really matter who is at fault, ultimately if the customer sees 20Mb when they're signed up as 50Mb why would they continue to pay the premium? I know I wouldn't, I'd drop it to a 25Mb plan and save the dollars.

        I suspect part of the problem is also people signing up to a lower speed plan because historically it's been easier to go *up* in plans than it is to drop down. They also don't entirely know what they'll do with "all that speed". So people sign up for a lower plan intending to upgrade later, find it's perfectly fine for what they're doing and forget about it.

        Once more people are embracing streaming and other internet content you'll probably see more takeup.

        And of course, confusion plays a huge part, people don't know *what* type of NBN they'll get anymore. Got a friend who was connected in the last month and he's not sure whether it's FTTP, FTTN or what exactly (nor was it made clear to him). When you've got people unclear about exactly what is being delivered (and some technologies getting badmouthed for poor performance) they're probably gonna go for the cheap option if not skip them altogether.

          Every single point you've made here is absolutely true. My comment was aimed purely at the claim that somehow the Australian infrastructure (which I understood to mean backhaul and international cables) were somehow responsible for the issue.

          Last edited 21/05/16 7:24 pm

            That's probably a fair point too. And it highlights the fact that we need some sort of watchdog ensuring that customers aren't being dudded by providers underprovisioning. And simpler (cheaper) access from the NBN Co at the ISP level.

            99% of consumers have no, or very little technical knowledge so they just expect it to work. It's pretty frustrating that you can have a major service that can provide a quarter of it's rated performance and still be considered ok. Imagine if that happened with power, water or any other utility?

            I certainly don't disagree with you, my knowledge in the area is only scraped from a variety of sources and probably quite thin.
            I am under the impression though that while the backhaul and international links are technically capable of plenty of bandwidth, the pricing of them is the major factor in our high costs and quantity caps on plans? (vs other countries with much better/cheaper internet) Hence the widespread issues of under-provisioning and low speeds during popular times.

            I guess the biggest part of the problem for me is when customers have speed issues, there's no way to actually find out who's at fault.
            Your ISP is really your only direct contact point and they always point the blame at someone else, or just lean on the clause in the contract that says they don't guarantee speed.
            If you take it to the ombudsman it's hard to prove if you've been undersold, the best you can really get is pressure from them to get the ISP to let you out of a contract so you can go elsewhere, assuming you can choose someone else who might treat you better.
            I think that there should be powers for the watchdog to inspect whether ISP's are actually purchasing enough bandwidth to supply the quantity of customers they have the product they're promising.

              NBN Co themselves could act as the watchdog, if they were instructed to. They could prove beyond doubt which part of a connection within Australia is having issues. They could easily have a website that shows whether a node is experiencing congestion, whether problems exist at a backhaul level or whether an ISP is skimping on CVC. But there is no political will to make this a reality.

    I just got the NBN and when looking through ISP I found that out of the major players only Optus and Iinet were direct and forthcoming about the speeds. To get it from Telstra I had to ring and ask, after repeatedly saying I was only interested in knowing which tier each one was.
    It is this deception that pushed me to go iinet or Optus (I ended up with iinet) because they were upfront and honest about it.

    A great deal of the real value in fibre is the speed of the uplink, and ALL of the NBN plans have a significantly lower uplink than downlink speed. Many "cloud" services are effectively useless without a reasonably fast uplink.

    Let's say you have a 1Mb uplink and, oh, 20GB of important stuff to be backed up the the cloud. The time required is 20000/*0/3600 or 55 hours.

    Now, I have a lot more than 20GB of stuff I want to keep, but even that 20GB takes over two full days (constantly online, and not doing anything else) to sync up at ADSL2 speeds. Those cloud-based services tend to be impractical for those speeds.

    For most people they know the Internet as that thing they use for social media (generally requiring low bandwidth), email (generally ditto) and video for which ADSL2 speeds are functional for a single stream. The enormous number of other applications that are evolving are not being pushed, because (1) most people don't know about them and (2) bandwidth costs money, and most ISPs are perfectly happy with people using their Internet links as little as possible.

    I suspect the latter is the real reason why the higher plans are not being marketed. Why would an ISP sell a plan with twice the bandwidth, and so twice the financial exposure, for a 20-30% cost premium? Better to convince people that the slow speed is all that they will ever need.

      I'm really confused by your post. You say that the value of the fibre is the uplink speeds but then say that NBN offers poor uplink speeds?

      Almost all (Barring the bizarre 25/5Mbps connection) offer dl/ul ratios of 2.5/1 as a standard, which is far and away better than anything offered on any other residential plans in Australia. ADSL2+ offers a standard 24/1 ratio (assuming great sync speeds) and the best Telstra HFC connection is 50/1. In the scenario you have posed 48 hours on ADSL2+ is about an hour on a 100/40 NBN connection. And somehow that's too low?

      The alternative is to spend tens of thousands of dollars (and a thousand plus per month) to get a commercial connection from telstra or someone else to provide you with a dedicated symmetrical connection.

        Skymesh offer 100/100 starting at $99.

          It's a new plan, and uploads are included in the data cap; there is no uncapped plan.

          The higher plans have a generous offpeak cap (of 16TB) from midnight to 7am. The "any time" cap is rather less generous and for the cheaper plans makes the symmetry pretty pointless.

          Still, the fact that somebody is offering it is hopeful.

        The actual technology gives parity bandwidth (uplink is the same speed as downlink); the limiting of uplink speeds is entirely an artefact of the NBN pricing structure.

        The only reason it's NOT parity is that the ISPs want to sell you a parity connection at "business" (i.e. much higher) rates. It isn't the tech that's limiting those speeds, it's marketing.

        The 40Mb uplink is significantly better, but if you're swapping data with somebody else it effectively limits their download speed as well as your upload speed.

        Additionally, most people are used to this situation and if they use any technology that DOES require a fast uplink they will experience it as unduly slow and suboptimal. It will reinforce the current usage patterns that heavily favour downloading over uploading and force users into a role of consumers rather than producers.

        The fact that it's much better than ADSL2 doesn't mean it's actually GOOD.

    Most people are lazy and don't see the benefit, you'll see higher turnover when the old lines are turned off. I mean it took me months after our connection date to connect, because the fkn lazy bastards at NBN didn't bother telling anyone it was connected for three months! Even then, I worked it out before they told us and was the second person in an apartment building to get connected.

    We just got FTTN in my area and I signed up with iiNet. Their operator told me I was unlikely to get better than 25Mbps on FTTN, so there was no point paying for 100Mbps.

    Spite is the reason for me.
    Strong armed into a new ADSL2 contract then a week later telstra is telling me I HAVE to move to NBN so they sent out a modem. I told them to get stuffed and now im expected to pay to send back their modem.
    IInet, TPG and optus have also sent NBN modems to me saying I HAVE to sign up to NBN with them and now im responsible for all these modems and sending them back because of their forced marketing tactic
    my ADSL speeds are peaking around 19-20mbs which is more than enough for me right now considering NBN still isnt available in my area

      If they are literally sending you unsolicited modems, you should review whether you are legally obliged to send them back (vs them having to come and pick them up).

        spot on, exactly what I tried to speak to them on the phone about.
        They told me to drive several hours to the dispatch warehouse to drop them back off or organize a courier to do it for me. I told them to get stuffed and they can pick it up whenever they want because its sitting out by my mail box (or was lol).
        Im not taking time off work or using my money to help them out when I didnt want to take part in this scheme they put together.

    The rollout of the nbn™ network has not started in this area.

    I'd gladly get a 100/40 plan except that it has taken 6 years to rollout in our suburb with expected completion by 2018. That and I'm now being told we will only get FTTN

    It's not due here for at least another two years, although given the amateurish and criminally incompetent way it has been rolled out elsewhere, it'll probably be nearer five before we see an NBN van in this street. That said, my friend lives on a new estate on the other side of town and therefore has fibre and an NBN package. He gets about 11Mb down and 300k up on a nominal 25Mb package. I'm on Internode's EasyReach ADSL (not even ADSL2) and I get 15Mb down and just under 1Mb up. So even when they do deploy their useless FTTN here I'd have to see greatly improved speeds to justify moving. Turnbull royally fucked up the whole thing.

    I'm on the 50/20 plan. I seem to be in the minority, which is surprising. To me, that's the plan that gives you the most speed for your buck.

    I don't see any point to signing up to the 12/1 plan if you're getting fibre because that's basically ADSL2+ speed (ADSL2+ on a good day, granted). 33% of people have signed up for that? Crazy.

    It's terrible value, that's why. Fairly simple reason.

    We're on fttP, using iiNet @ 25/5. Why can't I have a symmetric connection? Why do I have to choose 1TB/month d/l? I only wanted 250GB/month which is what I had on ADSL2+. I'm getting about 22 dl most times. Why can't I have symmetric? It's an option if I ask for 1000! And the pricing is ridiculous. I'm paying $10/month higher than with ADSL2+, or I would have gone with 100/40--iiNet don't offer 50/anything. Why can't I have symmetric?

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