After ten years and $34B, Australia's NBN falls short

Australia's decade-old NBN is expected to complete its rollout by the middle of the year, prompting speculation about the future of the mostly copper and HFC network.

The A$50 billion ($34.4 billion) project does not want for critics, who point out that, despite the lavish state funding, the country remains below average in global broadband rankings.

The latest Ookla ratings place Australia 68th with average download speed of 41.8 Mbit/s, well behind the global average of 73.6 Mbit/s.

For retail ISPs the biggest problem has been the high wholesale prices and the limited amount of bandwidth NBN was selling them.

Retailers, analysts and the opposition party have called for a A$20 billion writedown that would enable the NBN to cut its costs.

An Australian Broadcasting Corp financial commentator observes: "There is almost no debate now about how to fix the problem. Everyone from ratings agency S&P to the telcos themselves are demanding the government write down the value of the NBN by around $20 billion."

For political reasons, that writedown isn't going to happen.

But competition regulator ACCC recently concluded that the retail telcos were right about the limited capacity, finding that it seemed impossible for consumers to access the full NBN speeds promised. Even the fastest NBN services reached no more than 95% of the advertised speed, it said.

NBN Co responded with price cuts and a revamp of its provisioning to ensure it would "over-dimension" capacity -- that is, make available enough capacity to allow ISPs to deliver the level of service promised.

Telecom analyst Paul Budde points out that NBN's complex wholesale structure, with a sliding pricing scale per connection, squeezes consumers and retail providers and discourages them from buying higher-speed packages.

In other words, the brand new NBN is already rationing out its bandwidth.

NBN Co says data consumption over the network increased 25% last year. Given its limited capacity and high costs, how will it keep up as its business transitions from rollout to upgrades?

For more fixed broadband market coverage and insights, check out our dedicated broadband content channel here on Light Reading.

In the absence of a writedown and any more cash, most likely it will muddle along.

Rod Tucker, professor emeritus of Melbourne University, said in an email to Light Reading: "There are no plans (and indeed, no funding) for an upgrade to FTTP [fiber-to-the-premises] in Australia and the country's rankings in the global index are destined to get even worse in the future. We are not just behind the world's best broadband speeds, we are behind the world's average broadband speed."

One consequence is that, unlike the gigabit fiber networks rolled out in other markets, the NBN, which is mostly offering speeds of up to 25 Mbit/s, can expect some competition from 5G-based fixed wireless access. One consequence of the slow fixed-line network is that Australia has some of the world's fastest mobile networks.

Tucker adds: "For years, the government has been saying that once the NBN rollout gathers speed, Australia's position in the rankings will improve. But this has not happened -- the reason being that while Australia rolls out FTTN [fiber-to-the-node], other countries are rolling out FTTP. The rest of the world is not standing still."

— Robert Clark, contributing editor, special to Light Reading

COMMENTS Add Comment
jimmychowhk 1/23/2020 | 9:56:02 AM
unbelieveable For 10 years & $34B expense, Australia built a "narrow-band network", too amazing in anyway!  

FTTP, even FTTH in the main cities and town in the whole country, with good planning, no need to spend so huge money on it.  This project need to do audit for the capital expenditure. 
markseery 1/21/2020 | 11:11:53 AM
Political context Context: 
  • NBN has been subjected to political forces.
  • NBN was originally envisioned as a FTTP rollout (Labor party / "Left-Wing" party)
  • NBN pivoted away from FTTP with change of government (Liberal party / "Right-wing" party)

The above may be seen as an argument for or against government involvement, depending on political propensities / perspective.

Whether the above would have had any impact on the dynamics mentioned in this article for retail ISPs, I don't know.

Probably average downloads would have been higher in a FTTP deployment, depending upon, of course, other network investments and policies in access, aggregation etc.

Also note, some Australians, at least, explicitly pay not only for theoretical top speed, but total amount of bandwidth used per billing cycle.
Laurie Patton | The Lucky General 1/20/2020 | 11:47:38 PM
Australia’s broadband failure. It’s now or never for the NBN By LAURIE PATTON 21 January 2020 Last week submissions closed for a parliamentary inquiry into the National Broadband Network. TelSoc, of which I recently became vice-president, lodged a submission prepared by a working group of highly qualified industry experts. Unless the federal Government takes notice of two key recommendations millions of consumers are destined to continue suffering second rate broadband for years to come. This massive infrastructure project is scheduled to be completed by mid-year, although as I have previously pointed out that’s at best a theoretical deadline given that replacing about a third of the fixed line network will arguably need to begin almost immediately. TelSoc and our working group believe a bipartisan plan is required to ensure the project is rejigged to meet the country’s current and future needs, and we have called for a ten-year plan from NBN Co. Currently what limited information is provided is mostly restricted to a three-year horizon, which is demonstrably inadequate in terms of modern corporate governance expectations. According to TelSoc president Professor Reg Coutts: “As we approach the scheduled completion of the NBN in the middle of the year we need to look at how we can improve the delivery of broadband services to all Australians. It is regrettable that such an important infrastructure project has become so mired in party politics. TelSoc believes that the nationwide provision of fast, economical and reliable broadband must be removed from the political playfield. That’s why we support calls for a bipartisan futures plan”. TelSoc has also called on our governments to ensure we have more robust systems with better backup in case of failure, particularly during major emergencies. We believe that the federal Government’s proposed bushfires royal commission should examine telecommunications failures. As Professor Coutts has noted, communications breakdowns put peoples’ lives at risk. I’d argue that the NBN inquiry should also take a look at this issue. The key points in the TelSoc working group submission are: 1. It is vital in the national interest that the federal Government, the Opposition and all relevant stakeholders come together to agree on a bipartisan strategy to ensure that the NBN is technologically relevant and capable of delivering the services required by consumers. 2. The essential elements in the required plan include a reassessment of the underlying delivery technologies and how they will be used and developed in future to ensure sustainable delivery of services. 3. The Government should arrange for the preparation of a comprehensive ten-year development plan. A draft plan should be provided to a wide range of stakeholders for their input. The plan needs to include a review of NBN Co’s current and future financing requirements and technology upgrade paths. 4. There needs to be greater attention given to how broadband services are provided to small to medium businesses, to ensure that they have affordable access and capacity to engage effectively with their customers and suppliers. TelSoc has identified other issues we believe need attending to urgently. The relationship between NBN Co and its retail service providers has been the source of numerous complaints to the Telecommunications Industry Ombudsman and other regulatory bodies. Some of these can presumably be put down to ‘teething troubles’ in the rollout period, but once NBN Co enters the business-as-usual stage there will still be areas requiring significant improvement. The impact of new technologies, especially 5G mobile services, on NBN Co’s future business viability has so far received little consideration from the federal Government, at least as far as we know. 5G speeds will be well in excess of the best that FTTN (Fibre-to-the-Node) can deliver using old copper wires. If, as is predicted, large numbers of consumers abandon fixed broadband in favour of going mobile this will further cripple NBN Co’s already lacklustre financial performance. Of the ten million premises currently able to be connected to the NBN only six million customers have signed up. Performance concerns are frequently assigned as a major cause of consumer hesitation. Commenting further on the NBN inquiry Professor Coutts said the board “was keen to see positive outcomes that help put the country at the technological forefront as we seek to leverage the benefits of a digitally-enabled global economy”. TelSoc recently launched an initiative called the NBN Futures project to focus attention on key issues as the initial rollout draws to a conclusion. The TelSoc NBN Futures project involves members and invited experts. The group’s future work will include further research into the benefits of universal broadband, both economically and socially. In my view, if we don’t start fixing the NBN now it may never sufficiently recover to become financially viable and the taxpayer will end up footing a very big bill. (Laurie Patton is a former journalist and media executive, former CEO / Executive Director of Internet Australia, and currently Vice President of the Telecommunications Society (TelSoc). Some of the views expressed here are those of the writer and are not necessarily shared by TelSoc or its members.) http://theluckygeneral.biz/2020/01/21/its-now-or-never-for-the-coalitions-nbn/
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