October 28, 2011 | Graham

Is the NBN the Internet P76?

If the NBN is going to make money then it needs a lot of customers taking the high speed packages, but how likely is that to happen?

I was canvassed earlier this week by TPG who offering me a 10 mbs broadband upload and download package for $199 per month. I said “No”.

If it had cost no more than my current package I might have said “Yes”, but then, who wouldn’t? The real question is how much extra I might pay for it. I suspect the answer to that is  “Nothing”, although in the absence of a real offer I can’t be completely sure.

While Internet Thinking, our webdesign business, is obviously a technology business and therefore in the segment of the economy supposed to benefit from much higher broadband speeds, there is no reason we need any speeds better than what we have at the moment, unless we decide to run a server from our own office, but why would we do that?

With budgets tight and tightening there is zero appeal in increasing an existing overhead by even a small fraction.

But something I might do is take-up Telstra’s offer of 4G when my Optus mobile contract runs out. It might not be as technically good as ADSL, but I can see myself using it and getting a benefit. And once I’ve blown the non-existent budget on that I’ll be even less likely to want higher landline speeds.

It seems to me that Telstra has done a very good deal with the government with the sale of their copper network. They’ve sold a major risk of technological obsolescence to taxpayers in return for $11 bn of net present value over 30 years and they get to take the money and plough it into growth areas like mobile, while still being able to retail using the legacy technology.

At one stage I was describing the NBN as a plan to put a Ferrari in everyone’s garage to drive the information superhighway, when all most needed was a scooter. Now I am beginning to think it is like giving everyone a Leyland P76.



Posted by Graham at 5:23 pm | Comments (13) |
Filed under: Uncategorized


  1. Do other countries charge different rates for different plans or is that only happening in Australia ?

    Comment by P. Oliver — October 28, 2011 @ 6:42 pm

  2. The NBN doesn’t actually need very many people to take up the high speed packages to get their projected return. The business case expects that initially, about 50% of customers will be on the cheapest (12/1 Mbps) plan. To me, that seems remarkably pessimistic, given the pricing released by iiNet, where a 25Mbps speed is only $5 more per month than 12 (and 50Mbps another $10, and 100Mbps another $5).

    The pricing released so far by iiNet, Internode, Exetel and iPrimus compares very favourably with current ADSL pricing, and for similar speeds is generally cheaper in metro areas. Outside metro areas (where there’s no ADSL competition), the NBN is massively cheaper than current ADSL+phone packages.

    As as for a comparison to Telstra 4G…. Their biggest plan (not bundled with a home phone) is a whopping $100 per month, for just 15GB of data. Prices like that make the biggest NBN plans look like chicken feed. For that same $100 per month, iiNet will give you a Terabyte of data (1000GB) at a speed of 100Mbps down and 40Mbps up. Overseas experience has shown LTE (ie Telstra 4G) in reality delivers download speeds of about 10Mbps and upload of about 5Mbps. That means iiNet’s $100 NBN plan gives a user about 10x the speed and 60x the data allowance for the same monthly price.

    The latest ABS stats quite clearly show that fixed-network data volume is booming, and is now almost 50GB per user per month. More than 3 times the volume available on Telstra’s biggest 4G wireless plan. And it’s been growing at more than 50% every year for a decade. Meanwhile, wireless data volume continues to be almost flat.

    While wireless user numbers continue to boom, and will undoubtedly do so until the market saturates, all the statistics point to the fixed network as being the boom area for data consumption. Video is the real driver, and the Smart TV segment is the one that is causing volume growth faster than any other device, including tablets. But plug that Smart TV into a 4G modem and see how long your monthly data lasts.

    I wouldn’t be at all surprised if the takeup of >12Mbps plans on the NBN is at least 50% higher than predicted in their corporate plan. And that will be good for all of us.

    Comment by NBN Myths — October 28, 2011 @ 9:02 pm

  3. The internet is fast enough right now.There is a way to escape these charges.They are going to spread the cost via line rental to anyone who has a telstra line to their house.I have an existing unused OPTUS one to mine.So disconnect Telstra entirely and use wireless + mobile services or use the OPTUS cable if it is available.

    The NBN will be another costly white elephant like desalination plants.Observe who benefits.I think it is corruption on a massive scale.

    Comment by Ross — October 29, 2011 @ 8:56 am

  4. Hi NBN Myths, can you tell us something about yourself? I’ve been to your blog and there is nothing on it about you, although you’ve obviously lavished a lot of time and effort on it. As well as commenting on any posts on the Internet that point out the waste of the NBN.

    Comment by Graham Young — October 29, 2011 @ 9:42 am

  5. @Graham Young

    Correct, there’s nothing on it about me, because it doesn’t matter who I am (we, actually). Suffice to say we don’t work for NBN Co, their suppliers or anyone else with a financial stake in the network and we have no ties to the ALP whatsoever.

    Personally, I’m just a guy who cannot stand demonstrably false NBN stories who believes in the Governments investing in infrastructure for ourselves and our children. For too long, Governments of all persuasions (The Federal Coalition and the NSW ALP spring to mind) have not thought beyond the next term, and failed to invest in services that will last well into the future.

    Comment by NBN Myths — October 29, 2011 @ 3:15 pm

  6. @Ross.

    The problem is that for many people, the internet is not fast enough right now. And without either installing full fibre (FTTP ie the NBN) or at least Fibre to the Node (FTTN) it cannot get any faster for those people, because it’s the length of copper between their house and exchange that is the bottleneck.

    To say “the internet is fast enough right now” is incredibly short sighted. 10 years ago, we wondered at the arrival of ADSL and thought the “internet was fast enough” at a speed of 128kbps. Now we have typical speeds of 8000kbps, and for many that’s adequate. But what about in another 10 years?

    The rest of the World is rapidly moving to 100Mbps and beyond. Many Asian countries are currently installing the same tech as the NBN to deliver up to 1000Mbps. The USA has set a target of 100Mbps for 70% of their population by 2020. Much of Europe are rolling out 50-1000Mbps networks as I write this.

    What you’ve written about “spreading the cost via Telstra line rental” is rubbish. The NBN doesn’t have any Telstra line rental. If you don’t want to connect, you don’t have to and you won’t pay any line rental. However, the old copper will be switched off and if you want a fixed line, then it will be the NBN or nothing. Optus cable will also be switched off, and the customers migrated by Optus to an NBN-based service.

    That said, for the vast majority of people, the NBN will be both faster AND cheaper than what they pay now for a phone+ADSL2 service over copper or phone/internet via cable. For example, the cheapest phone+ADSL now is about $50 per month. But the NBN starts at $34.50 per month for a phone+broadband service. That’s 30% cheaper than the cheapest service available today.

    As I’ve written above, wireless is much, much more expensive and much slower than an NBN service. There is a reason why not a SINGLE country or telco in the World is trying to replace a fixed network with a wireless one in urban areas. Wireless cannot handle that sort of load. Hence, it is priced to discourage such adoption. If it were as cheap as fixed lines and large numbers of people switched, the wireless networks would collapse under the strain.

    Comment by NBN Myths — October 29, 2011 @ 3:32 pm

  7. I thought you were an astro-turf operation, and this basically proves it. Of course who you are matters, and who is paying your bill matters as well.

    Looking at your blog it was reasonably obvious you had a sock puppet operation going in the comments section there as well.

    It underscores the problems with the NBN when its proponents have to stoop to tricks like this.

    Comment by Graham Young — October 29, 2011 @ 3:32 pm

  8. @Graham. I’ll email you. I trust after that, you’ll retract your last comment.

    Comment by NBN Myths — October 29, 2011 @ 4:57 pm

  9. NBN myths.There is a far greater urgency of infrastructure and that is transport and housing.Many people spend hours per day commuting to and from work wasting time,fuel and being exhausted before they even begin work.The is not only destroying our productivity but wastes time and fuel.

    The NBN is not a high priority compared to transport infrastructure and housing.Money spent on housing stays in the economy and many small businesses and contractors benefit.Who will roll out all this cabling?It will most likely be a foreign based companies that will take the profits off shore.

    We should be decveloping rapid transport systems to regional areas so people from the country can work in our over priced cities.We have to reduce the cost of housing by increasing supply.

    Comment by Ross — October 30, 2011 @ 11:31 am

  10. @Ross

    You ignore the fact that the NBN is forecast to provide a positive return. That is, all the $27bn Government investment (plus interest) is forecast to be repaid. Because of this, the NBN is off-budget and does not affect our ability to do other things, such as improve transport and housing. That said, I agree that Governments should be spending much more on transport systems and on improving housing availability.

    The NBN also has huge potential to reduce demands on transport, roads etc. Imagine if just 10% of the workforce could telecommute one day a week. Imagine the reduction in travel that could be accomplished by the improvement in network speeds that the NBN will bring, through an increase in video conferencing, remote education and health services, and the fast transmission of large files. Currently, it’s often faster to deliver large image and video files in person than it is to send them via the internet. Consider the burden this places not only on the transport networks, but also the loss of productivity associated with it.

    Why encourage more commuting? Why not try to increase the volume of industry that can exist outside the cities and allow people to work closer to where they live. Check out the NBN video from Glen Innes-based Eastmon Digital.

    Finally, most of the NBN construction contracts have been awarded to local companies. The 50/50 Australian/German joint venture Silcar has the contracts for NSW, ACT and QLD. Australian company Transfield has the contract for Victoria, Australian company Syntheo (Lend Lease/Service Stream joint venture) has the contract for WA and Australian company Conneq (Lend Lease subsidiary) has the contract for Tasmania. SA/NT are yet to be signed.

    Just as with housing, many local businesses and subcontractors will benefit from this. Every town in Australia will get a boost from workers buying their lunch, staying in local accommodation and buying fuel from the local servo etc.

    The fibre cable suppliers are foreign-owned, but their factories are in Australia and they have announced they will be increasing their manufacturing workforce by several hundred to meet the demand.

    During peak rollout, the NBN project will be employing about 16,000 Australians directly.

    Comment by NBN Myths — October 30, 2011 @ 2:08 pm

  11. NBN Myths, If you do a cost benefit analysis transport infrastructure will give us far better economic and social returns than a nebulus NBN.You obiviously have a personal financial interest in its deployment.Good luck to you but for the rest of us ,it is a no brainer.

    Comment by Ross — October 31, 2011 @ 6:27 pm

  12. Ross,

    You’re missing the point. Yes, there would undoubtedly be economic and social returns from an improvement in transport infrastructure, but unless they are toll roads you are building, you still need to find the money from somewhere. The NBN doesn’t have that issue. The Govt doesn’t need to find the money in the budget, because the cost of construction is repaid by the revenue from the network itself. It is essentially self-funding.

    If you do indeed want to build toll roads, then the NBN doesn’t have any impact whatsoever on that ability. If the transport projects provide a return then we can do both, because the NBN doesn’t impact our ability to spend on anything else.

    If you “redirected” the money that is being invested in the NBN into another project (eg a road), then that road would either:

    a) Need to be a toll road, so that the cost of building it is recovered from the road users; OR

    b) Need to find the cost of construction in consolidated revenue (eg taxation).

    Comment by NBN Myths — October 31, 2011 @ 8:39 pm

  13. Oh, and no I don’t have a personal financial interest in it’s deployment.

    And if you check any polling ever done on the issue, you’ll find the NBN has very strong public support. In 2010 the Essential media NBN poll gave it 48% support, 31% oppose, While the 2011 the same poll gave it 54% support with 28% opposed. A Swinburne Uni poll gave it >70% support. I’ve never seen a recognised (ie: Essential, News, Galaxy etc) poll that showed greater opposition than support for the NBN, but feel free to try and find one.

    Comment by NBN Myths — October 31, 2011 @ 8:49 pm

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