Opinion, Telecommunications - Written by Renai LeMay on Tuesday, January 8, 2013 12:03 - 177 Comments
Debating 2012 NBN take-up rates
opinion Reality check: The National Broadband Network is a project which will continue to serve Australia’s telecommunications needs for at least the next fifty years. Debating take-up rates in the first year of its existence is nothing short of incredibly short-sighted and trivial.
Over the Christmas break period, your writer took several weeks off to enjoy the beautiful Australian summer, spend time swimming in our crystal clear waters and catch up on his science fiction/fantasy reading, usually with a tequila sunrise in his right hand. But unfortunately, Australia’s addled politicians apparently failed to do the same.
When I returned from this idyllic vacation, I found that our two politicians primarily responsible for shaping policy relating to the nation’s telecommunications sector, Communications Minister Stephen Conroy, and his opposite, Shadow Communications Minister Malcolm Turnbull, had spent at least some of the break engaging in a somewhat shabby and facile war of words over what the take-up rates of the initial handful of people to be connected to the Government’s National Broadband Network meant.
Conroy’s contribution to the conversation appeared to be an attempt to answer Turnbull’s ongoing criticism of the Government for not paying more attention to what’s going on in overseas telecommunications market.
Claiming to be outlining “the facts” about Australia’s take-up of the NBN so far, Conroy pointed out that in areas where the NBN’s fibre service had been available for over 12 months, more than 25 percent of premises in total had volunteered to connect to the NBN.
The good Senator then proceeded to highlight the fact that this figure represented a world-beating statistic, judging by the fact that similar rollouts of fibre services in the US (Verizon, 24.2% after three years, 37% after seven years), Europe (total average take-up of 21% after three years), Singapore (20% after three and a half years) and New Zealand (less than 2%) had performed worse than the NBN’s fibre in terms of take-up.
Conroy further went on to highlight the fact that the speed at which the NBN was being taken up was “far superior” to that of other internet technologies, including dial-up, ADSL and HFC cable.
“By any reasonable comparison the take-up of the NBN’s fibre services has been rapid,” Conroy proclaimed. “This is further evidence that Australians want the Gillard Government’s NBN.”
Now, we have no doubt that much of what Conroy is saying here is broadly correct. There is ample evidence that most Australians approve of the NBN project and that early take-up rates show strong demand for the NBN’s fibre. Indeed, we think Conroy should probably have mentioned the fact that demand for the NBN’s highest 100Mbps speeds is particularly high.
However, of course Conroy neglected to mention one of the key reasons why initial take-up of the NBN’s fibre has been so high: Many users are aware that eventually they will have no choice but to switch to the NBN, as the project has already commenced plans to switch off the existing copper and HFC cable networks in some areas.
Sure, in the case of Singapore and New Zealand, the fibre networks being rolled out also constitute monopolies, but one suspects that the take-up rate on the fibre owned by Verizon and some of the European telcos would be higher if infrastructure-based telecommunications competition was being shut down in those countries, the way it is being shut down in Australia through the NBN. Then too, there is also the fact that many early adopters on the NBN network have been receiving free or significantly discounted services as they function as test subjects for telcos trialling NBN products. Free is always the greatest incentive to sign on to anything.
And of course these and other relatively points were exactly the arguments which Malcolm Turnbull laid out in his inevitable reaction blog attempting to correct what he labelled as Conroy’s “bizarre contribution” to Australia’s broadband debate.
Turnbull’s argument is broadly that Conroy’s numbers mean little, given that “FTTP take-up has been weak everywhere”, adding: “Senator Conroy argues the NBN fibre rollout is a raging success because demand so far is not quite as weak as elsewhere (over a tiny sample size of households in the NBN’s hand-picked initial markets).” The really significant figure, the Liberal MP argued, was not the 25 percent of premises which had signed up for the NBN, but the 75 percent which hadn’t. And even that 25 percent who did sign up, Turnbull claimed, were strongly influenced by the NBN’s “huge marketing budget”, “free trial periods”, “anti-competitive” shutdown of rival fixed broadband networks and more devilish government inventions.
And of course, Turnbull also circled back to his overall point … the point he has been making continuously over the past several years since he was appointed to the glorious role of chief Coalition telecommunications pontificator.
“The fact that people use the NBN is hardly surprising,” Turnbull wrote. “Nobody is suggesting that there is no demand for broadband at all. The argument against his approach to building the NBN is that it is costing far too much and taking far too long than a more rational strategy would take.” The reader is encouraged to believe that Turnbull’s alternative fibre to the node vision, where fibre would still rolled out nationally but only to neighbourhood cabinets, would solve all of the government’s aims — if it would only listen to reason, goddamnit!
Now, unfortunately for both Conroy and Turnbull, personally I’ve just had a lovely three week break lying on the beach in a special magical world I like to call “rational land”. This, and I know many people will find it hard to believe such a place exists, is a world where intelligent people can have intelligent and polite conversations without constantly accusing each other of making “bizarre” statements
It’s a world where the media isn’t constantly tearing itself to shreds over the latest micro-scandal, and where issues are considered in context and with insight, rather than through the lens of political spin and obnoxious personal insults.
In this world, I’ve been calmly considering notions such as what my take-up rate of tequila sunrises should be (two per day seems to the optimum number) and how many pages of my Wheel of Time books I should complete before heading to the water for another leisurely swim (the correct figure appears to be between 50 and 70, although it depends on whether I’m reading a Mat Cauthon chapter or not). They’re hardly complex issues, it’s true, but I feel I’ve approached them rationally, availing myself of all the evidence on hand to make decisions, and I feel this measured paradigm could also be applied to the more sophisticated field of the NBN.
With this in mind, I’d like to encourage both Stephen Conroy and Malcolm Turnbull to consider that the issue that they seemed so hell-bent on debating in December is actually one of little consequence, and that neither can see the wood for the trees right now.
Firstly, it is important to realise that only 52,000-odd property owners actually had NBN fibre rolled past their premises as at September 30 (when NBN Co released its most recent set of rollout statistics). Extrapolating demand from the low numbers of those with the NBN at the moment in Australia is just … pointless. The sample size is too small. It’s all very well to talk percentages, but any statistician will tell you that extrapolating the intentions of a few thousand people to the intentions of 23 million-odd is always going to be a bit tough.
Then there’s the fact that we’re not comparing apples with apples. Let’s assume for argument’s sake that in 2012-2013, only 25 percent of 23 million Australians would connect voluntarily to the NBN’s fibre if it passed their premise. Could you say the same thing in 2020, when the NBN project is slated to be completed? I would think not. With bandwith and Internet usage continuing to explode, it seems likely that the proportion of those who want NBN connections will increase markedly over time.
And that’s not even the whole story.
What about in 2030? 2040? 2050? What about in 2100, for heaven’s sake? In these kinds of timeframes, when Generation Y has become grandparents, could you reasonably say that only 25 percent of Australians would want to connect to the NBN? I hardly think so.
Conroy and Turnbull are debating the NBN using completely the wrong framework. The way these politicians talk about the network is as if it’s the latest iPad, or perhaps a new type of laptop. You know, you upgrade it once every few years, just to keep up with current trends and the Jones’.
However, the NBN is not like an iPad. It’s not going to be out of date in 10 years, or 20 years, or even 30. Like Australia’s great highways, railways, ports and airports, like our electricity, water, gas and sewage networks, the NBN is foundational infrastructure which will underpin our entire country’s telecommunications needs for at least fifty years. Personally, I’m betting it will be around in many forms in a century — just like Telstra’s existing copper network, which was built piecemeal over the last hundred years. The point here is that we’re not building the NBN for today; we’re building it for the next fifty years. That’s how basic underlying infrastructure works.
Of course, there’s other smaller reasons to criticise the underlying nature of NBN take-up debate.
There’s the fact that many of those currently on the NBN live in early rollout areas in places such as rural Tasmania … locations which feature demographics hardly comparable to areas where most of Australia lives — Sydney, Melbourne and Brisbane.
There’s the fact that it’s only been a few months since some telcos, notably Australia’s biggest telco Telstra, started offering commercial NBN services.
And of course there’s the fact that the NBN is so new that much of the necessary ecosystem around it has not yet been developed. Paid content services like Foxtel and premium IPTV services have not yet made a full migration onto the NBN, meaning, for many Australians, that the network may not yet have the ‘killer app’ that will drive rapid adoption.
But for me personally, what gets me every time about the issues the politicians are talking about here is how short-sighted they are. If you take a few steps back and examine Conroy and Turnbull’s frenetic Christmas argument from a calm perspective, it seems incredible irrational to try and use take-up rates from the first year of a fifty year foundational infrastructure project to demonstrate whether that project should or should not go ahead.
Almost every major foundational infrastructure project I’ve ever examined the history of — notable examples in Australia including the Sydney Harbour Bridge and the Snowy Mountains Scheme — were debated intensely when they were in their infancy. But fifty years later, almost all of these projects had easily stood the test of time and are regarded as engineering triumphs. I strongly suspect this will also be the case with the NBN.
Image credit: Commonly used Internet meme
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