How Fast Should Australian Broadband Be?

Image: iStock

Whilst announcing NBN Co’s 2017 half year results, CEO Bill Morrow stated that there was little market demand for faster broadband speeds than the 100 Mbps being currently offered on the NBN. Morrow made the remarks after being asked when Internet Service Providers (ISPs) would offer internet connection speeds of 1 gigabit per second (1 Gbps).

Morrow replied that there are currently 1.5 million homes that can have 1 Gbps connections and that although a “couple of the retailers have signed up for a trial” of these speeds, nobody as yet has offered the service to consumers. Morrow presumed “it is because there isn’t that big of a demand out there to actually develop a product to sell to those end users”.

More contentiously, Morrow stated about customers’ interest in 1 Gbps speeds: “Even if we offered it for free, we see the evidence around the world that they wouldn’t use it anyway”.

Morrow clearly sees that this situation may change with the advent of augmented reality and 4K and even 8K television but that these technologies are not being adopted in any great numbers yet.

It is worth clarifying that when reporting this story, journalists have used the term “super-fast” to refer to the 1 Gbps speeds Morrow was discussing. However, superfast is a term that the Australian Competition and Consumer Commission (ACCC) defines as any broadband over 25 Mbps. Somewhat more confusingly, NBN uses the term to refer to 100 Mbps, but not the 50 Mbps, connections. Perhaps a better description for 1 Gbps internet broadband would be “ultra-fast”?

Returning to the original statement by the NBN Co CEO, are Morrow’s claims that Australians are not interested in 1 Gbps internet connections in fact true?

So far, the bulk of NBN customers are opting for speeds of 25 Mbps or less. By the end of 2016, 83% of fixed line NBN customers and 96% of fixed wireless customers had internet services of 25 Mbps or less. Only 13% of fixed line customers had opted for the 100 Mbps connections.

The difference in cost between a 25 Mbps plan and 100 Mbps is AU $15 a month from Telstra and AU $30 a month from iiNet. The cost of a 100 Mbps is not excessive compared to the slower plans. Customers at this point simply see that for what they use the internet for, 25 Mbps suits their needs.

For the moment, 25 Mbps is just about enough to stream a 4K Netflix show. However, there aren’t that many movies or TV episodes on Netflix available in 4K and even if there were a bigger factor is the download size of these shows.

Streaming 4K results in a use of about 7 GB per hour. Given that the average Netflix user is watching about 2 hours a day on the platform, this would result in about 420 GB per month.

The starting plan that Telstra provides only allows 100 GB per month and so this would be the determining factor for people streaming at 4K rather than speed. Even the higher cost plans only provide 1 TB of data and this would not be enough for streaming 8K or even newer enhancements to video such as high-dynamic range video(HDR).

It is important to note that it is not the NBN that is determining the ultimate pricing on packages that the ISPs offer. iiNet offers unlimited downloads for example.

Critics of NBN Co like Internet Australia’s CEO Laurie Patton have argued that despite what customers may want today, the network should be being built that will support the needs of future applications and capacity. Clearly if applications do arise that need the Gbps speeds, not having a network that can support those speeds is going to prevent the adoption of those technologies.

The difficulty with this line of argument however is that those applications don’t currently exist, especially those that can’t run on 100 Mbps speed connections. 4K or even 8K TV is not on its own, a sufficient argument to justify that need. Although Morrow mentioned that applications like augmented reality and artificial intelligence may boost demand, it is really not clear what these applications would be and why they would need the higher speeds.

There is nothing stopping people currently on the NBN, or even on Telstra’s existing HFC internet network having 100 Mbps broadband that would give them the capability of streaming 4K easily. Given the relatively low take-up rates of that higher speed, one would have to believe Morrow’s assertion that there isn’t enough market demand to make it worth the ISPs while.

Having little market demand for something is not the same as there being no demand for a product. I personally would opt for 1 Gbps because I currently get relatively fast downloads from a 100 Mbps HFC connection from Telstra. Being able to download movies, software updates and other files in even less time would be something I would be prepared to pay extra for. More importantly, having the extra upload speeds would allow me to make more use of cloud-based backups.

There does seem to be an opportunity to educate the market about the benefits of the higher speeds that would presumably be in the interests of the companies making money from selling these plans, including NBN Co itself. If there is little demand for 1 Gbps internet connections, it is possibly time for NBN Co and its retail service provider customers to do more to create it?

The Conversation

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

This article was originally published on The Conversation.


Comments

    I've currently got 30Mbs HFC cable from Telstra. I have the option to move to 100. I have chosen not to, because the price is exorbitant, for the service delivered, and even the increase in download speed, yields the same upload speed.

    There is SO much more I, we, could be doing with a higher bandwidth connection. but it need to be available. Even today there are services out there that are just not practical to use on the highest speeds available to us.

    We need to enable this type of new usage, not just play catch up to what other nations are currently using. Delivering 25Mbs to households was where we should have been in 2005, today, we need to be looking at 1Gbs and beyond. Anything less, and we're just that slow backwards nation.

    One problem is that a lot of ISPs aren't even offering Tier 3 or 4 plans for customers. For example, I'm with TPG and I can get tier 1 (12Mbps), Tier 2 (25/5), or Tier 5 (100Mbps). Tier 3 (25/10) and Tier 4 (50/20) aren't offered, so there's no plans for those who want faster than Tier 2, but don't want to go the whole hog to Tier 5. I'm sure that's skewing the data NBNCo are looking at.

      NBN Co restructured their 'Tiers' recently, so there's actually only 4 now. 12. 25, 50, and 100, but no ISP I've looked at is even bothering with 50 for some reason.

        Yeah, it's bizarre. With TPG at least there's $30 between 25 and 100 Unlimited plans, so they could charge an extra $15 for Tier 4. Personally I'd pay an extra $15 to jump up to 50Mbps but I won't pay $30 to jump to 100.

          Yeah TPG's prices are a crazy compared to their ADSL. I got their flyer in the mail saying I could get NBN, and saw $59/mth for unlimited, and I was like "mm not bad. $10 more than I pay for my ADSL with them". Then I go to the site, and find that's for 12/1! Ummm what now?! You want me to pay $10 more for slower internet?! Git farrrked!
          Getting 100/40 from MyRepublic for the same price on 2nd of March! (If NBN Co don't reschedule my appointment again. And if they do, they better tell me before hand, instead of me having to ring them to find out by ringing them)

      Optus is, I am on their tier 4 speed plan and am getting upwards of 70mbps during off peak and 50 to 60 during peak.

      Because I got a bunch of services with them, I get the tier 4 speed plan for 80 bucks.

    You might want to update the Telstra information. To get 100/40 is $30 a month extra, not $15.

    This seems to be a fairly flat rate across all the telcos. Presumably it's what NBN charge them and this is just passed onto the customer.

    ...little market demand for faster broadband speeds than the 100 Mbps being currently offered From a personal point of view (and I'm not yet connected - that's a few months away) the thing I'm looking for is consistency. If I pay for 25 (or 100) Mbps, I want that as a MINIMUM!. I don't want to find that at 6:30pm, it drops to 5Mbps or slower, because some sales drone has sold too many connections.

      Im with telstra on NBN and i was paying for 100/40 top speed i was getting was 30/5, im now paying for 25/5 and getting 27/4

    I'd settle for 5Mbps if it didn't drop more than once an hour as my FTTN does.
    Months of trying to get iinet/nbnco to accept that is a fault is like banging head against a wall.

    My biggest gripe with both the comments made by the likes of Bill Morrow as well as the people reporting on NBN speeds are the constant referrals to streaming videos and netflix. Sure, a faster connection with less latency will help there but if you really want to move the discussion about minimum internet speeds forward you need to get away from the assumptions that everyone just wants faster netflix / pirating / porn and onto what the initial idea for NBN was. The ability for Australian businesses to compete on the world stage.

    I am sure that NBN Co would be using gigabit for their internal network, someone should replace all their switches with 10Mbps hubs and see how they go...

    Of course no one want speeds beyond 100 MBPS because it doesn't exist. The demand for 1200 MBPS in Singapore is in high demand. Google's similar optic fibre offering in in USA has gone virile.
    High speed internet has litle to do with downloading a movie or two it is businesses that need to compete with these speeds but be faster or find themselves noncompetitive.
    So let Foxtel, Roadshow and all the other media moguls find their own solutions against real competition instead of interfering Governments, especially those that rant about letting the market control itself, get you sticky nose out of protecting a few at the cost of the other 99%.

    If I could get a 50/20 connection or that free 1Gbps, I'll be happy. But, I'll be waiting till 2020, I believe.

    In the meantime, I'll just have to make do with my 12/1 connection.

      And, because I live in Canberra, until NBN gets here (probably late next decade), I'll just put up with 1.5/0.4 (adsl2+) on a long copper wire. And I'm one of the lucky ones, to have a connection. Good for low-res google videos at most.

    According to tech support staff at my ISP (Internode) they are finding that there are "many" customers on NBN who are unable to achieve a sync speed of greater than around 25Mbs. Certainly was my experience and I only reside 200 metres from my node. So don't get too excited about NBN. You might only be able to advice twice your ADSL speed.

Join the discussion!