Stating the obvious. Except to those associated with our government.
<https://www.gizmodo.com.au/2017/02/why-nbn-co-is-wrong-about-gigabit-broadband/>
Spandas Lui
Feb 17, 2017, 9:00am
Last week, NBN Co CEO Bill Morrow took a beating for claiming Australians won't
use a gigabit broadband service, even if it was offered for free. He hit back
at his detractors with a lengthy opinion piece, explaining his position. We
take a look at some of the arguments he made and breakdown why they are flawed.
It's not the first time Morrow has said that there's currently very little
demand for gigabit services. Here's what he said last year at NBN Co's full
year results presentation:
"The thing I want to point out is that we did some research of companies overseas —
Google, Comcast, AT&T and so on — to ask about their Gigabit per second services and
asked whether there was a lot of uptake. The answer was no, but they offer them as a market
competitive element."
He echoed this sentiment again at this year's NBN Co Half-Year Results event…
and put his foot in it when he uttered this statement:
"Even if we offered it for free, we see the evidence around the world that they
wouldn’t use it anyway ... we know there are things on the horizon that are going to
increase the need for further demand.
Naturally, people got angry, hence Morrow's opinion piece response. Here is a
list of his key arguments and why they fall short.
Argument #1: People Don't NEED a 1Gbps Connection
Now, you can't dismiss some of his claims, especially the one about how 83% of
people on the NBN are opting on broadband services based on the lower wholesale
speed tiers. That's just a fact. He also pointed to meetings with global
operators offering 1Gbps services that said end-users aren't really taking full
advantage of them.
"Even in a heavy usage household right now it’s likely you’d struggle to generate the need for
anything close to a 1Gbps - if you had five 4K TVs streaming 4K movies simultaneously then that’s
only around 100Mbps being consumed - leaving 900Mbps idle," Morrow said. "Given that the
vast majority of current online video viewing is in SD or HD - requiring only 2Mbps-5Mbps then a
1Gbps pipe would be enough to stream 200 HD streams simultaneously - way, way beyond the
requirements of a normal household."
Again, he is right. But there's no denying there is definitely a future need
for 1Gbps connections. As IT analyst firm Deloitte notes in a 2016 report:
"A Gbit/s Internet connection might appear frivolous, but a decade ago some
commentators may have questioned the need for a touchscreen-based device capable of
transmitting data at 150Mbit/s, with storage for tens of thousands of HD photos,
video quality sufficient for broadcast…, secure fingerprint reader, and billions of
transistors within a 64-bit eigh core processor. Yet modern smartphones with this
specifications are likely to sell in the hundreds of millions of units this year.
While a Gbit/s connection for a single device or a single application may be
overkill, consumers are likely to continue accumulating connected devices in the
long term."
Morrow had said NBN Co will look to accommodate for applications that demand
higher speeds than what is currently being offered on the NBN. But the NBN in
its current form has long been criticised for being challenging to upgrade in
the future. NBN Co's adoption of FTTdp in some rollout areas is encouraging,
but the company is still predominantly working with inferior FTTN technology.
Also, even if 1Gbps is a bit of an overkill for the average consumer, a readily
accessible superfast broadband connection like that would be a boon for small
and medium businesses. It would enable them to launch digital services and
compete at a global scale more easily.
Argument #2 A 1Gbps Service Would Cost Too Much
Morrow said that while city states like Singapore and Hong Kong can afford to
offer 1Gbps connections for as low as $49 per month, such prices are impossible
in Australia since the capital cost of building the NBN is much higher.
"The NBN network is costing around $49 billion to build - and we need to recoup
that cost - given that our business model is split between driving revenues from
access and consumption charges, we simply cannot match the kind of 1Gbps pricing on
offer in markets like Singapore and Hong Kong.
Morrow also noted that NBN Co already offers a wholesale 1Gbps product to
internet service providers (ISPs) that can be made available to more than 1.5
million homes. So far no ISP offers 1Gbps product to the public.
"This is, in our opinion, because there is still minimal consumer demand for these
ultra-fast speeds – especially at the prices retailers would have to charge for
them," he said.
What Morrow failed to address is that the way NBN Co charges ISPs for NBN
services is based on consumption through what is called a connectivity Virtual
Circuit (CVC) charge. This makes it cost prohibitive for ISPs to offer faster
broadband speeds.
As for Morrow's statements about how the high capital costs of building the NBN
and needing to recoup the money, the fact is the company is building a network
with short-term goals. It's already splashing out a lot of money on a
predominantly FTTN network that is likely to become obsolete in the near
future. Then more capital costs will be incurred when the network will need to
be upgraded. Why not just do and it once and do it right? Because, politics.
Argument #3 We Can't Compare Ourselves with Other Markets
"For a variety of reasons, our broadband upgrade in Australia started much later, so
we cannot judge ourselves against markets like these; they are much further along on
their journey and you just can’t compare Australia to Singapore or Hong Kong for obvious
reasons including those stated above," according to Morrow.
Well, can we at least try to catch up with those markets more rapidly? We are
currently moving at a snail's pace on the broadband front.
Customers on NBN's FTTP footprint may enjoy up to significantly better download
speeds but those in FTTN areas have been complaining for ages that they're
getting ADSL2+ equivalent performance from their connections.
Even NBN Co's own advertisements shows a futuristic Minority Report-esque
version of Australia, but that's unlikely to become a reality with our mediocre
broadband connection speeds.
--
David Boxall | Any given program,
| when running correctly,
http://david.boxall.id.au | is obsolete.
| --Arthur C. Clarke
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