NBN: The Silent Train Wreck

Image: Getty Images

You might be surprised to learn that location is starting to take second place to internet connectivity as a search criteria for new office space. And this is causing a massive problem.

Today’s modern workforce is using more Software-as-a-Service solutions and analysing larger and larger quantities of data. In addition, increase in working from home means quality internet connection is essential to running a successful business.

Commercial real estate landlords need to treat internet performance as a priority feature to attract and retain tenants. Forbes Magazine recently predicted that in just two years time 50 percent of the workforce will be freelancing in some aspect.

Many businesses rely on the cloud to support the increase in remote or gig workers. Shifting work to the cloud is near impossible with slow Internet - and businesses need reliable broadband access for more than the cloud.

Commercial real estate owners and investors need to give internet connectivity the same attention they would give other amenities like shared conference rooms, employee cafés or fitness centres.

However, there is a big problem.

Our national broadband network, NBN appears to have lost its way. Telecommunications Society Journal editor and associate professor at RMIT, Mark Gregory recently outlined the major problems with the current NBN at a Tel Soc presentation.

Gregory is not impressed with our current NBN and highlights four key failures:

  • NBN has no plan for the Future
  • NBN has a Business Model that fails based on its capital cost recovery expectations
  • NBN has further entrenched the disparity between city and country areas; and
  • NBN has no plan for additional satellite capacity both to cope with demand and improved functionality, for example voice on NBN satellite services.

Our own Commercial Property Guide monitoring of NBN for business clients shows that rollout expansion has flat-lined in 2018 at about 45% (see graph below).

Image: CPG

One bright spot is that NBN penetration in previously low rollout areas of Sydney CBD and North Sydney has surged to 35% and 38% however Melbourne CBD remains an effective NBN-free zone at only 6%.

Official NBN technology percentage of technologies deployed and planned match our own commercial property statistics. This technology mix is unchanged with its heavy reliance on legacy hybrid fibre cable (HFC) and fibre to the node (FTTN). NBN is far more important than better quality Netflix.

We need a high performance NBN so businesses that occupy our commercial real estate can remain globally competitive. This is especially true for small business who don’t have the resources to access alternative high speed internet.

The current federal government appears to have a limited and simplistic vision for the NBN. It just sees the future as an enhanced version of the past - progressing from a small percentage of consumers requiring on demand video to a high proportion of consumers wanting 4K (super high definition) video in the future.

Cost cutting has replaced the objective of delivering a world standard internet network. The performance of the HFC component of NBN has been further downgraded by using a very low cost design standard. The design assumes very modest neighbourhood peak bandwidth requirements, based on the federal government’s report “Future trends in bandwidth demand”. So where are the critics? The peak industry bodies that should speak out about our failure to compete globally on digital connectivity are silent. No organisation has suggested the unthinkable – the NBN is not fit for purpose.

The early years of NBN were so promising. NBN got off to a great start with one of the world’s fastest builds and rollout of the NBN backbone infrastructure.

Then things started to go off the rails. Universal Fibre to the premise (FTTP) was replaced with a low cost model that had an associated low performance. Driven by budget constraints Fibre to the Node became the main technology to be deployed by NBN.

The NBN CEO Bill Morrow eventually quit after the government insisted that the fault-plagued and unreliable HFC Telstra network be used as one of the main NBN technologies. So NBN is now heavily reliant on two obsolete systems - HFC which is already passed its useful life and FTTN that is incapable of meeting future business and consumer performance expectations.

Associate Professor Mark Gregory explains NBN’s dilemma: “The NBN is now dependent on obsolete HFC and FTTN technologies. The FTTN network is now vulnerable to competitors offering a superior performance solution. No government will be willing to take the step to write-off the $26 Billion sunk into the FTTN network. This is one simple way NBN could be made competitive and attractive for eventual private sale.”

The completion date for NBN has progressively moved from 2018 to now officially 2022. However informed insiders now expect completion to be beyond 2022.

Mark Gregory’s final grade for NBN, “The end result of these economic short cuts is that NBN is not world standard, in fact not even fit for purpose. By contrast New Zealand and the UK have Gigabit solutions for either the same or lower cost per connection as our inferior NBN”.

This leaves us pondering – NBN, the silent train wreck.


Stephen Rose is industry marketing manager at Commercial Property Guide portal


Comments

    Nice piece.
    To add, other providers are already stepping in to offer NBN direct competition.

    As a IT consutlant that works with SMB's the NBN can't come soon enough. The NBN has been rolled out to homes for non productive use while businesses that need fast, relaible access to remain globally competitive have been left in the dark. The icing on the cake is that businesses have the capacity and need for fast, relaible access and current alternatives such as private fibre are simply unecomonical, many businesses are moving to bonded copper services and 4G as a interim way forward. Business NBN access should have been the priority as they have the need and capacity not to mention will pay mutiples more for this access compared to homes.

      Agreed but even if you've got business grade availability there's still deep provisioning inadequacies under the new model. I moved an office from an active NBN suburb to a neighbouring NBN active suburb (12 minutes drive) away. 7 weeks later one of our connections is just now active with RSP1 . Our alternate connection is still pending activation because our RSP2 (rhymes with Hellstra) is blaming NBN that they haven't provisioned it yet. LIES.

    I waited and waited for the NBN to appear where our business is located - we are located in a HFC area. Then my ISP send me an email about Telstra Fiber (business grade), all the options available plus costs.

    Just so I was sure what I would be up for at a future NBN connection I rang the NBN and they gave me options and prices.

    I installed the Telstra Fiber there and then (30x30).
    For the last year and a bit it has not failed ONCE - I really mean this - NOT ONCE.

    I pay $200 p/m less for the business grade Telstra Fiber than I would have to fork out for a HFC based business grade NBN.

    No brainer.

      Well, that was the point LNP's NBN. Imagine if the original NBN fibre was rolled out to your building.

    The train wreck has been far from silent. It has been a thunderous calamity ever since the Coalition took over as the driver and conductor.

    Many organisations have been critical of the approach adopted. Internet Australia under Laurie Patton was calling for the reinstatement of FTTP for years.

    Liberal party destroyed the nbn when they got elected the first time with Abbott. Why anyone would vote for them second time around I don't know. I have worked in it for 20+ years and the nbn discussion stopped once the liberals got a second term. They won because everything they promised was a lie, or as the liberals say it was a non-core promise. The wasted opportunity and spending billions on effectively a pointless rollout. Fttp was the only sensible option to enable our business to compete and people needed to understand that good things take time and money. Lieberals managed to convince Australia it was not needed and the newspapers helped them. Now we need to spend that money again to get the real fttp rollout we should have got. So many years wasted and money wasted. We need to highlight the waste and put blame where it belongs, the lieberals. Their party should be forced to pay back Australia the billions spent doing nothing.

      And those responsible for this wilful sabotage of the NBN should be brought to justice.

        One Word: Turnbull

    I've been mad about the NBN ever since the 2013 election. When the election result came through, I was hoping the Liberals might silently replace their MTM plan with FTTC and claim they suceeded in all their 'Cheaper, Faster and More Affordably' while at least giving us something capable of being upgraded.
    Murdoch wasn't going to allow any of that I guess because even that would have made his Foxtel infrastructure redundant. Now we're stuck with tens of billions of dollars of waste.

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