Here's Why NBN Co Is Wrong About Gigabit Broadband

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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.

NBN CEO Says Aussies Wouldn't Use Superfast Internet Even If It Was Free

'.And in today's basket of "are you fucking kidding" news, I present NBN Co CEO Bill Morrow..'

Read more

What do you think about NBN Co CEO Bill Morrow's justification for why we don't have 1Gbps broadband yet?

This story originally appeared on Lifehacker


Comments

    They could also get rid of this stupid Mixed Technology. I'm not that far out of a main town and the best we get is f*cking useless Satellite. Average usage is 300-500GB of data a month, and like hell I'm paying the insane costs for that. Just gonna be stuck on ADSL until ISP decides my complaining about them having to fix the cooper is too much and pays the insane cost to have fibre connected to my house. This NBN rollout has made Australia more of a laughing stock in the world wide IT community

    Morrow is walking the line of justifying to the public why we can't have a decent broadband network and trying to appear as a commercial organisation. But it's just one channel pushing the government's message. The other is the government itself. You can easily poke holes in what he says .... because its not a commercial message but a POLITICAL message.

    If the CEO of NBN Co wasn't such a politicised appointment, we may see a different message coming out of the organisation. But right now, I'll take anything they say regarding direction and demand with a grain of salt.

    Last edited 17/02/17 8:43 am

    I'm still trying to find where I need to sign up for this free 1Gbps internet. Hey, Bill Morrow can you send me a link?

    He's still a fucking tool. Saying people wouldn't use it if it was free is WAY different to saying it's not being taken up because the bandwidth is surplus to requirements and it's way too expensive for most people to consider. They guy shot his mouth off and he's been mocked because of it. End of story.

    Just playing devil's advocate for a second, but this kinda makes me wonder if the whole 'We want gigabit internet now" response is due to current ADSL plans advertising speeds of "up to 24Mbps" when the majority of people experience <8Mbps (or worse during peak times). People see gigabit speeds advertised and have a realistic expectation of maybe 20-40% of that, if they're lucky, and maybe 5-10% of that during peak times. Hell, I've heard a bunch of people on "100Mbps" plans getting max download speeds of 40-60Mbps...

    It could be a natural reaction to getting well below the advertised service for the past decade+, and expecting that to not change with the NBN.

      I was thinking the same thing, you have terrible internet for so long it tends to lend a lot of weight to news of gigabit connections coming to other regions - if everybody was on a reliable 25-50mbps* or above I think we would still want gigabit connections but wouldn't be nearly as frustrated about it.

      *I have used FTTP, FTTN, and FTTB in the last three places I've lived, and have found them all to be reliable (FTTP is the best, and I understand my experience certainly doesn't reflect everyone elses regarding FTTN).

      And that is exactly the reason I opted for "speedboost" with Telstra cable. I figured a 100M connection would result in a usable speed during peak times.

      That sucks for them they should change providers. My 100mbps connection never drops below about 97. I certainly find that's enough without needing gigabit. Would need a lot more users for that to be required.

    I live in Singapore (previously in Australia with an ADSL connection...) and get between 100-500 mbps downloads on my 1 Gbps connection, depending on the server I am connected too. The real peace of mind for me comes with the fact that the wife can be streaming whatever content she wants and I can download a game on steam without it ruining the streaming.

    That is what higher bandwidth brings you, the peace of mind knowing that if you download something on one computer, its not going to screw your internet connection for everyone else...

    The NBN network is costing around $49 billion to build - and we need to recoup that cost

    This is one of the problems right here. They are treating it like a business treats a product. We can leave the private sector for that.

    The whole point of the government stepping in to implement the NBN was that it is a Public Infrastructure project. It isn't a cost which needs to be "recouped", it is an investment in a system for the public to use which will yield returns through increased productivity and investment in business.

    Case in point, the business I work for has expanded to multiple sites and has a real need for high-speed interconnectivity. At most of them we are stuck with plain old ADSL, or can pay extortionate amounts for fibre to be run [seriously, anything over 1km and you are close to prices in the 7 figures].

    Put affordable high speed connectivity in regional hubs outside of the capital cities and encourage high-tech business to move to the area. This not only grows the economy of the areas, it also takes the pressure of the completely overheated property markets in the capitals.

    Last edited 17/02/17 2:06 pm

    One of the main points he fails to address is that this project is not supposed to just address current usage, but usage in 10, 15, 20 years time. 20 years ago, we were still on dial-up. Internet speeds of 56kbps were considered high speed. Even then, it was insufficient to the task asked of it. Downloading a moderate quality song file took about half an hour. Want to download a high quality movie file? That would take days, even at optimum speeds. Now let's fast forward 20 years to today.

    Lets assume that the NBN operates at peak performance for a residence on FTTN that is about 100m away from the node, so about 50Mbps. That's ~900x the speed that was considered fast 20 years ago. Once the laughing at the idea of an internet connection operating at the advertised speed has stopped, lets assume that we are going to download a 4k movie file for a movie about 120mins long. Conservative estimate, lets say 30GB. That's 1h20m of time downloading assuming that the speed is optimal the entire time. Why do I say download? Because unless you are on an unlimited data plan, that's not a file you are going to want to have to redownload via streaming if you decide to rewatch it. Lets say whilst you are downloading it, you also decide to stream some tv show episodes (because honestly, who wants to sit around watching a download bar). The streaming for your 4k resolution episodes takes 20Mbps, so on your 50Mbps connection, that 1h20m download time is now effectively doubled, because you've hit your bandwidth max. Not a disaster. Oh, look, the latest hit game is now out, might download that to play later, too. Can't interrupt the streaming, so that can share data with the movie download... which is now taking 8h. Dammit, the kids are home too, they want to watch the latest episode of their favourite shows. Those 2.5 kids each streaming stuff to their 1080p devices consumes another collective 20Mbps reducing that movie/game download to 10Mbps of bandwidth to share. Throw in the usual couple of updates that various devices invariably want to make at the most inconvenient times, and we can half that for a while. So guess what: Those downloads are just going to have to wait til everyone has gone to bed because the bandwidth is... you guessed it, not up to the task. Now let's fast forward 15 years...

    Oh look. The internet speed is still the same, because they used technology that will cost a fortune to update and they don't want to be the government that gets stuck with the job of paying for it when they are still paying for the last upgrade. Guess what... It's still not up to the task.

    Shit.

    Last edited 18/02/17 7:17 am

    I live on a street that comes off a two-lane (in each direction) suburban lovely tree-lined avenue. The freeway about 1km away is also two-lanes in both directions, you may know it as the Moansh carpark which stretches from Pakenham through to the city.

    Now, when they put in the new part of the freeway, they decided on a two lane freeway, because no doubt they had the same reasons as we're hearing today (no need for a 3-4 lane road, no one will use it, and the 2-lane fwy can handle growth corridor +200,000 homes which all have at a minimum 2 cars each). In addition, all the overpasses were also two-lane, so any future upgrade comes at a huge cost.

    No replace all those FWY terms with NBN terms... It's the same rhetoric, same cost cutting and same stink in order to win small short term political gains.

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