After 10 Years and $34B, Australia’s NBN Falls Short | Light Reading

After 10 Years and $34B, Australia’s NBN Falls Short | Light Reading

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

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