The future of broadband

Plans to upgrade the broadband network need to be carefully considered
 
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  • Updated:29 Apr 2009
 

01 .Broadband

Broadband

The issue

In April 2009 the Federal Government announced it will establish a new company that will invest up to $43 billion over 8 years to build and operate a National Broadband Network (NBN) delivering superfast broadband to Australian homes and workplaces.

The government hopes the NBN will provide a better, faster broadband service and promote competition.

This announcement has received support from a wide range of industry and economic commentators.

The primary virtue of the proposed NBN is that it will sweep away the number one structural problem in the Australian communications industry. At present competition is stymied because the largest retailer of communications services – Telstra – is the monopoly owner of the copper wire network which all land based communications services must use.

This is not a question of whether you like or don’t like Telstra. Telstra is unpopular with many consumers, and Choice has been very critical of its anti competitive pricing. But it does do some things better than its rivals – for example it offers a higher level of consumer protection for customers of Mobile Premium Services.

The NBN has also been welcomed as opening the way for a range of new services direct to the home. The problem is no one has really given a reasonably coherent description of what these services would look like and how they will benefit consumers. And there are certainly no actually existing business plans available to evaluate. Nevertheless there is past evidence of undreamed of services coming to fruition once infrastructure bottlenecks are cleared.

The two main worries about the NBN are whether we really need to spend this much money on fast broadband, and whether the cost of fast broadband services will be reasonable for consumers.

CHOICE has been critical of the rush to build high speed broadband in the past (see 'Is fast broadband just Boosterism?'). We still don’t think that the case for rapid deployment of fast broadband is overwhelmingly made – in particular the initial direct beneficiaries will not be the majority of consumers but particular industries with commercial reasons for a high use of video.

CHOICE surveys show that the majority of current ADSL2+ users are satisfied with broadband speed. It is the consumers in both metropolitan and rural areas that do not have access to ADSL2+ that are currently suffering.

We are pleased therefore that the NBN will first be rolled out in areas where ADSL2+ access is poor or non existent. We are also please that the NBN announcement includes a commitment to making the current telecommunications regime work more effectively during the transition to the National Broadband network.

There is much current debate as to what the NBN will cost consumers. This will likely depend on the extent to which new services are create to take advantage of the network capacity and thus help defray its overall costs. This is very much unknown and unknowable at present.

Our understanding however is that the risk will be borne by the investors and/or government rather than consumers. Consumers will continue to have access to ADSL2+ services and wireless alternatives. That kind of competition across platforms as well as over the NBN appears to us to be a very good outcome.

 
 

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02.Is fast broadband just boosterism?

 

CHOICE is concerned that this rush to see who can build the fastest new high speed broadband network may lead to decisions which are not in the long term interests of consumers.

Competition in telecommunications has delivered significant benefits to consumers over the past decade. We feared that in their haste to appear to have the instant answer on broadband, both government and opposition would sell out consumers’ long term interests by caving into industry pressure to reduce the role of the ACCC in protecting competition. We're pleased that the NBN announcement appears to avoid this pitfall.

The short term demand for faster broadband has been misrepresented by the telecommunications industry, media interests and some commentators. While greater speeds will no doubt be needed in the future, ADSL2/2+ provides adequate speeds for current general consumer uses. Indeed, Choice Computer's ISP Satisfaction Survey  found that ADSL2/2+ users were more likely to be very satisfied with their connection speed. Many metropolitan areas have only recently been upgraded to fast ADSL2/2+ broadband and plenty more suburbs and towns are still waiting. Indeed, most consumers with access to broadband do not elect to pay for the fastest, more expensive plans.

The issue with data speeds is not that we urgently need faster-than-ADSL2/2+ broadband speeds but instead that many households do not have access to competitive ADSL2/2+ services. Urgent demands for broadband would be better served by improved consumer access to competitive plans from multiple providers, using technology (such as ADSL2/2+) that optimises the current network infrastructure.

Furthermore, the first round of broadband upgrades may not actually deliver much benefit. Information currently available about the broadband proposals suggests consumers will not initially get significantly higher speeds than the maximum speeds of ADSL2+ broadband already available to consumers in many metropolitan areas. Under at least one previously proposed broadband plan, consumers will pay more for significantly lower speeds.

Planning our broadband future should not be rushed. With such critical and expensive infrastructure, any bad policy decisions made now could have consequences for Australians two decades from now.

What we want

The National Broadband Network: Regulatory Reform for 21st Century Broadband discussion paper outlines various options that the Government is considering to reform the telecommunications regulatory framework.

In whatever arrangements that are adopted by government to support or enable the National Broadband Network, consumers must be guaranteed:

  • competitive access to fairly priced broadband in the short and long term;
  • they will not pay more for services that do not fit their needs;
  • both technology and regulation that is future-proof;
  • genuine public consultation at all stages in the decision making.

03.CHOICE past action on broadband

 
In June 2007, CHOICE wrote to the then Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, outlining our concerns and requesting that more time and community consultation be built into the broadband competitive bids process and planning. Click here to read our letter.

In August 2007, CHOICE made a submission to the Expert Taskforce set up by the Liberal Government to assess broadband proposals to modify its Guidelines. After submissions from Choice and others, the Expert Taskforce amended their Proposal Form to require applicants to assess the impact on consumers of any requested legislative and other regulatory changes.

As we now know, the Rudd government abandoned the Expert Taskforce process and sought bids for a new government supported fibre to node network. In 2009 it instead announced the National Broadband Network fibre to the home proposal, requiring a much larger investment.