With a faltering NBN in Australia, many people in the media and outside the industry are suggesting that perhaps we don’t need an NBN at all as with new mobile technologies such as 5G the quality problem of broadband access in Australia could be solved in this way.
This argument is not new, the Prime Minister, while in opposition used the same argument, which was at that time widely reported by the media. However, he has not used that since that time again, but mud sticks.
So the issue understandably keeps popping up, especially with the disastrous developments surrounding the NBN.
It was good to see that the American regulator the FCC recently confirmed that mobile broadband is indeed no alternative to fixed broadband.
It is interesting to look at the American telecommunications situation in this respect, which is typical of monopolistic behaviour and with the NBN now also being a monopoly it is critical to keep a watchful eye on any such developments.
The American industry lobby (AT&T, Verizon and Comcast) successfully pushed the regulator to get rid of net neutrality. This basically gives the incumbents the free hands to monopolise content use over the internet. For more information on net neutrality see my last analysis on this topic. But the American incumbents are not stopping there.
They can sense the opportunity under the Trump Administration to further roll back any regulations that stand in the way of maximising their profits. As all three largely enjoy geographic monopolies in their regions of operation there is little competition driving innovation forward, so their aim is to milk the networks that they currently have in place for as long as possible. For example, they lobby to get their mobile networks classified as alternative infrastructure to deliver broadband, this would avoid them from having to upgrade the fixed network to Fibre-to-the-Home.
The ability for them to do so goes back to 1996, when the FCC declared that broadband was not a telecoms service and that telecoms regulations therefore did not apply (eg, providing retail access to independent ISPs). In order to limit their misuse of their dominant positions the FCC, under the Obama Administration, introduced net neutrality; however this has now been scrapped under the Trump Administration.
Next on the lobbyist agenda is the downgrading of the definition of broadband. Currently this stands at 25MB/s download and 4 MB/s upload. The incumbents are lobbying to bring that down to 10MB/s and 1 Mb/s.
Then they could claim that they have fulfilled their broadband obligations, since most of the landlines are already able to deliver those speeds, so they would not need to upgrade these networks any further, they would than use their mobile networks for higher-speed services. This would significantly increase the costs to those users who need daily broadband services for family use, entertainment, etc. (typically 25Mb/s+).
Areas that are unable to get landline-based services at that quality are increasingly being forced off the landline network and offered a mobile service instead. As is the case in most countries, also in the United States broadband is more expensive when used over mobile networks, especially if one has to use the mobile connection as the only option for all their broadband requirements (eg Netflix, etc)
Another change that is being rumoured is the downgrading of the school broadband service (E-Rate). So far this service has successfully connected 90% of the schools in the USA; but constant updates and upgrades of this service are needed and this is where it looks like the FCC will start cutting its funding.
Initially the FCC agreed with the industry suggestions to downgrade the broadband requirements. However, fortunately, there was a push back last week with the FCC – be it reluctantly – stating that mobile broadband is not an alternative to fixed broadband and that they will not downgrade the current regulated broadband speed.
Having said all of this, the number of people with low level broadband requirements will find mobile broadband a great alternative as long as their broadband usage remains low to moderate. This market is estimated to grow between 15-30% of the overall fixed broadband market.
Furthermore for several people with a very poor NBN connection there simply will not be any other option than to go with a more expensive mobile data connection.