Why Are NBN Plans Capped At 100Mbps?

Why are NBN plans capped at 100Mbps? Well, I guess the simple answer is that they actually aren’t.

It is possible today in some places in Australia to buy plans that are 150, 250 and even higher. But there are a couple of reasons why most ISPs don’t offer plans higher than 100Mbps, and why most customers aren’t buying them when they do.

Number one reason is technology. Just as long-distance copper ADSL lines are limited in the speeds they can deliver, some of the current technologies that deliver internet to customers just will not physically cope with speeds higher than 100Mbps (or often even lower speeds).

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Technologies that use beams rather than wires to your house – such as fixed wireless and satellite – are significantly speed restricted and can even be affected by weather.

Fibre to the node, which uses older copper lines for the final leg of the journey, is generally not capable of anything higher than 100Mbps and often sits at lower speeds than that, depending on your distance from the node (sometimes described as “node lotto”). There are some new technologies coming soon that may change this, but for the time being it’s a restriction.

Fibre to the Curb is generally less restrictive on the speeds you can get, as the only copper link is between the curb and your house. This technology has the capability to go above 100 Mbps but currently NBN does not offer this.

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Optic fibre straight to the house (fibre to the premises or FTTP) is certainly capable of speeds higher than 100Mbps; however, only about 20% of Australians are or will be connected through FTTP.

At Aussie Broadband, we offer plans of 150 and 250Mbps to customers on FTTP where our network capacity will cope, but only about 300 customers around Australia have taken up these plans. Corporate enterprises with their own dark fibre networks often have much higher speeds.

Number two is NBN charges. Every internet provider, like Aussie Broadband, has to pay NBN for two things: AVC and CVC. AVC is essentially the cost of being able to link a customer to the NBN – think of it like a freeway.

As a guide, NBN charges $30 more for an AVC at 250 Mbps than it does for a 100 Mbps AVC. This doesn’t seem like a lot more, but you need to add extra CVC into the equation too.

If AVC is the freeway, CVC is how many lanes your internet provider is buying on that freeway for their customers to use. During the day it usually doesn’t matter because traffic is low. At peak hour, though, when everyone wants to use their internet, the number of lanes certainly makes a difference. Not enough lanes equals congestion.

NBN offers some good wholesale incentives for internet service providers to buy decent numbers of freeway lanes for particular plan speeds, especially those on 50Mpbs. There’s a new pricing now for 100Mpbs plans but it relies on customers staying on that plan for a certain period of time before providers can get the good price, which can be risky - and there’s no guarantee that NBN will keep this lower pricing into the future as it’s a short-term rebate.

It’s important to understand also that prices for CVC in Australia are amongst the highest in the world, and there are no discounts for speed tiers higher than 100Mbps. For Aussie Broadband, that means that we just can’t afford the CVC to be able to offer unlimited plans for those higher speed tier users, which is a restriction. Typically, customers buying higher speed plans use considerably more data than customers on lower speed plans.

To have enough CVC (freeway lanes) sitting around spare for customers to purchase 500 or 1000 Mbps plans doesn’t make sense either, as 1000 Mbps of spare CVC would cost $8000 per month. So to sum it up, NBN plans aren’t actually capped at 100Mbps – but it’s highly unlikely we will see higher speed plans become more common until technologies improve and economics change.

Fast NBN 100 plans

Here's the pricing for Australia's fastest unlimited NBN 100 plans:

Phillip Britt is managing director at Aussie Broadband.


This story has been updated since its original publication.

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Comments

    No mention of HFC here. I'm an Aussie Broadband HFC customer and you told me your >100Mbps plans are not available for me. With DOCSIS 3.1 isn't it capable of speeds exceeding 100Mbps? In the press it appears they used DOCSIS 3.1 to overcome drop out issues and avoid HFC node splitting but its not clear whether the NBN have universally implement DOCSIS 3.1 or not.

      @endorphiniser: That is a question you will need to present to NBN Co. They are the ones limiting HFC speeds to 100/40. The current reasons seem to be a combination of underlying technology issues to support greater speeds on the HFC network and NBN's belief that few people will upgrade to the higher speeds if they invest more money in implementing full duplex DOCSIS 3.1.

    As someone who is still waiting to be connected and will be for at least another year it is hard to say for sure how much speed I actually need. I know I will be getting at least the 100/40 option as I do a decent amount of uploading which will often take 12 hours to upload jobs to work. Uploads I can see is the more important use of the NBN than download speed especially in the future and probably should have more said about it.
    I do wonder why we are in this position with plans of X speeds anyway? There should only be in my opinion 2 options. A basic plan that offers ADSL 2+ like speeds that is "good enough" for most. Then offer a second option of as fast possible up to 1gbps. That would have made things simpler and hopefully encouraged the network to have been built capable of sustaining this. I think in NZ everyone now can get 1gbps connection speeds as everyone has FTTP and the network was built for it. Our politicians were too focused on building it cheaply and not building it right.
    As this article was written by an RSP representative it does give some insight to some things and was not too much of an advertisement.

    Tried the NBN FTTN here in Ningi Qld for a year and when out of contract I got myself a Optus 24m S4tab with 200gb and SD streaming for about the same money of $60 and I can use it anywhere! Toss in a Optus SIM with $10CR for $25 and an extra 30gb and I can use wificalling for home roaming and a cheap unlimited talk text mobile. Telstra's SIM only with 1.5mb data unlimited is also an option from $39! Pick your posion but Im not paying NBN prices for data I cant use when its wet as FTTN was slower than dialup for weeks at a time!

    I'd appreciate if the "Phillip Britt is managing director at Aussie Broadband." line was at the top of the article, not the bottom. Partway through, the reader gets hit with the statement "At Aussie Broadband, we offer plans" which is confusing because unless told otherwise, we expect the article to be from LifeHacker.

    The saddest part is that all new connections were getting 100mbps under the original labor version.of the NBN. Then the libs came in, reduced the quality of the tech and now your lucky to even get 25mbps and if you do you'll be paying extra for it.

    This is not what the NBN was intended to be, but greed got in the way.

    I have worked at a dozen ISPs and Carriers over the past twenty years. Predominately in roles where I am privy to wholesale pricing and costs.

    The liberals, beholden to the major telcos (just look at how many former executives of Telstra, Optus and co are liberal party members and/or have taken up roles either as MPs or in other capacities in liberal governments - just to name the a few people will recognise ones, Malcom Turnbull and Paul Broad).

    When the ALP was forced to introduce the CVC it was meant to reduce the repayment period for the NBN from 100 years to something like 30 years.

    When the liberals took over, and found that the project was cemented in with far too many contracts (and early termination fees) they realised the only real way to protect Telstra and co was to increase the total cost (CAPEX outlay) of the project. This in turn would put massive pressure on the NBN to increase the one and only mechanism available to recoup these additional costs, the CVC.

    What you have to realise about CVC is that it is the defacto floor for wholesale transit in Australia. Wholesale Transit is the real charge, per mbps that wholesale telcos charge the ISP for moving data around the country, from exchanges to the mega data centres (megapops) which in turn use undersea cables like ASC to SCC that connect Australia to the US and Asia. Every telco product in the country is based on this layer. If the CVC pricing construct fell to cents on the dollar, in turn the wholesale transit costs would be forced to come down as well (forced down by regulatory agencies). Consequently the big telcos would be facing significant decreases on everything.

    Indeed everywhere else in the world wholesale transit costs are measured cents on the dollar. In Australia, even in heavily populated metro areas they have been massive. In 2006 it was over $1800 per mbps. In 2012 it was $32 per mbps (for gbps scale order i.e. 30gbps).

    The CVC is still give or take around $17 per mbps.

    To hide the truth the NBN has introduced scarily complex pricing. Hell i've been doing this for 20 years and its confusing to me. The different tiers they offer, the discounts for different types of services order, and a whole lot of different parameters means its easy to obfuscate what is really happening.

    So how has CVC been kept artificially high despite the fact we're living in a time where moore's law is decreasing the cost of processing data by a factor 2 every year?

    The original NBN was design to deliver 95% of services via fibre and the remainder via sat & wireless. This was slated to cost $30b. The bulk of which was the creation/duplicate of another intercapital fibre network and creation of billing, provisioning, network and IT assets to run all of this. The roll out costs was irony very low and ultimately recoverable through the reasonable moderate fees that were going to be billed. NBN had kept their costs low with the knowledge that the pricing was simplistic and thus their billing system basically only had to bill three different products which in turn only had several flavours.

    Thus the liberals grand strategy to ruin the NBN and protect their corporate cronies. Firstly they rengotiated the copper and HFC buy out deals, giving Telstra & Optus huge amounts of money on assets that had been written off/down. Then they introduced the the Multi-technology-Mix (MTM) strategy, partly to justify the ridiclous amounts of money paid to their overlords but also because the massive increase in products would require the expansion of pricing constructs and the rebuilding/replacing of billions of dollars of network, billing, provisioning and IT systems.

    In addition to this the purchase and use of HFC network assets, which in turn required the rebuilding of these networks meant that the NBN cost has now spiralled from $30b to $90b per the extremely good analysis/maths done by Mike Quigley’s damning assessment of the liberal's NBN (who were of course blaming him for the massive increase).

    This $60billion increase along with the liberals desire to pay for the project in an even shorter period, so they can hock NBN off to their buddies at Telstra and Optus, meant that the CVC pricing construct had to be increased significantly.

    This caused massive congestion issues as the contention ratios went widely out of control. Remember the massive complaints of people getting slower NBN services then their old ADSL? Of regional cities and towns getting standstill services.

    Or the huge number of complaints regarding dodgy HFC/FTTN services.

    The NBN was forced to introduce even more complex pricing and discounting to encourage the take up of products that offered the best margin to them. I know this because i was going for a job on a major project to build and implement these ridiculously complex pricing constructs.

    The people in the IT & telco industry in the meantime is loving it. Project work is everywhere. The project managers, architects, admins, programmers and so on are milking it. NBN has raised the floor on everyone's wages so other projects across the IT space (be it for law, banking, industry etc) have also gone up. So you're not going to hear anyone upset about this. Thus the industry has closed ranks, and those who can be bothered to understand the insanity of the NBN know well enough to keep their mouths shut.

    Meanwhile the people in government that aren't aware of the grander strategy (protecting their corporate are naively defending the governments decisions. Whilst ALP infighting has seen the removal of the few labour party members who knew the difference between a bit and a byte.

    The only party that could have said something is the media. Unfortunately they've been utterly hung up on FTTN vs FTTP without realising that the NBN total cost has been inflated, not through poor decisions but on purpose. I think this has been done on purpose because the telcos, their marketing departments and PR flakies spend a great deal of money courting the Australian tech press. There is no appetite in biting the hand that feeds them (at least in the way that would educate the public that the entire project has turned into a massive scam).

    And before anyone wants to argue that a national fibre network costs more then $30 billion please have a look at the Square Kilometre Array project. Millions of telescopes will be built in the deserts of WA and South Africa, connected individually by under ground fibre services, in turn connected to super computers in Perth, Europe and South Africa. This project will produce exabyte quantities of traffic (what the entire internet does in 1 year of usage) every single day.

    The cost of a network that dwarfs the NBN (both in kilometres of fibre, scale, and harshness i.e. the worst deserts in the world) is just $2 billion dollars. Seriously.

    And meanwhile the Liberals keep telling us the cost of using networks that are already in place (copper, HFC etc) is $90 billion!

    WTF!

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