Good opportunities for the NBN

Ever since we started talking about the national broadband network there has been a constant flow of confusing information about the need for fixed broadband, especially in comparison with all the fascinating mobile broadband developments that are taking place.

Often that confusion is fuelled from the top. Not so very long ago Malcolm Turnbull, when in opposition, argued that there was no need for fixed broadband, as wireless would be able to deliver such services. Admittedly, he has never used that argument again since that time. But the Federal Communication Commission in the USA (FCC) – again fuelled by politics – has made similar arguments several times, but only last month stated that wireless is no alternative to fixed broadband.

Over the last decade I have had numerous radio, TV and newspaper interviews during which this issue of why we need the NBN came up time and again, both from the media and from listeners and readers. So it is safe to say that confusion abounds.

However, the law of nature is providing the answer. As the names implies, wireless uses the ether/spectrum/radio signals. There are natural science limitations here – lower frequencies can reach large distances but can’t carry high-speed broadband; higher frequencies can only be used over short distances but can deliver high-speed broadband.

Finding the balance between the relevant technologies that can be used in these wireless environments are, of course, also highly influenced by cost., for example shorter distances means more and more towers/antennas. This is very important as, all around the world, there are clear limits about what customers are prepared to pay for their monthly high-speed broadband connection – the median price would be between $60 and $90.

It doesn’t really matter how much it will cost the operator to build these networks; whatever the costs are the end-user price is more or less a given. Operators will have to be able to build networks that are able to deliver services that are within the budgets of what users want to spend. In the case of the NBN further confusion is added because of political interference, and because of that we now have a second-rate fixed broadband network that costs too much to deliver a  good quality broadband at an acceptable end-user price.

So in order to make ends meet the NBN company throttled the service in an effort to force customers to pay more for better quality services, but it has become clear that customers were not biting. A very good first step is that most customers will now be lifted to a 50Mb/s service without an increase to their monthly subscription.

At the same time most people are now also in one way or another using broadband on their mobile phones and for what they are using they are, in general, happy with both the service and the price they pay. So, no wonder many of them are still wondering why on earth they need the NBN.

However, if they were to use their mobile phone to download Netflix movies every night, for example, they would start running up large mobile phone bills. So most people do understand the rationale that lies beneath the confusion; wireless does have price/performance limitations.

This should be a massive opportunity for the NBN, but for all kinds of reasons they are not really involved in these discussions. First of all, they have to please their political overlords; secondly, they are a wholesale company and not a retail organisation; and on top of that there are all the technical problems that are sprouting from this hopscotch of different technologies that they have to get working.

Over the years we have been arguing that as much as 30% of people are in a position to effectively use mobile or wireless broadband – based on current usage patterns – especially those with a relatively low use of broadband services such as voice, emails, messaging. For the last decade or so that percentage has been sitting around 15% (and this is on par with many of the western economies).

If the NBN was serious about capturing as many customers as possible they should deliver a truly high-speed broadband service (let’s say at 100Mb/s) for a price that fits what customers are prepared to pay. This would stimulate not only the use of high-speed services, but also it would stimulate content and service providers to develop applications that are well-suited for such a high quality infrastructure. Customers would be attracted by such services, as they were when Netflix arrived, and that would guarantee the success of the NBN. When customers realise that affordable, good quality high-speed broadband will be delivered by the NBN, first of all there will not be an increase of the 15% of people that are currently mobile-only users, but they would also be able to entice some of those customers back into the fold of the NBN, as they will see the value of those new high-speed broadband services that would be too costly to use over a mobile connection.

It will be particularly interesting to follow these developments once 5G starts to kick in, sometime between 2020 and 2025. NBN will most certainly have a big competition fight on their hands if they haven’t addressed this issue before that time. If the NBN gets it wrong a true financial disaster will be looming as the 30% scenario becomes a very viable one.

However, if they get it right the future will be on their side. Ubiquitous, affordable high-quality broadband will most certainly see the development of e-health, e-education and other high-quality government, community and business services.

If the NBN begins to deliver ubiquitous, affordable, good quality broadband at levels needed for such services they will find plenty of opportunities to turn the NBN into one big success story.

Paul Budde





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