news Shadow Assistant Minister for Communications Michelle Rowland has delivered a speech criticising the Coalition’s version of the National Broadband Network for not being “fair”, highlighting among other factors the fact that premises with inferior technologies such as Fibre to the Node will pay the same access charges as those on full fibre.
The previous Labor Government’s approach to the NBN would have seen most Australians provided with the technically superior Fibre to the Premises option, with a small proportion of the country covered by satellite and wireless alternatives in areas where fibre was too expensive to deploy.
However, the Coalition has drastically changed this approach. Instead, the HFC cable and copper networks owned by Telstra and Optus will be re-used, along with satellite and wireless. Some premises will still receive Fibre to the Premises, and an upgrade option will also be made available, although this option is expected to cost several thousand dollars per premise, at a minimum.
In a wide-ranging speech to the conference of the Australian Communications Consumer Action Network last week, Rowland heavily criticised the Government’s approach.
“ I would argue that the Coalition is making the NBN fundamentally unfair and we see this through the myriad of changes they have made to the project,” Rowland told the audience. The full speech is available online.
“Under the Coalition, the quality of your broadband will be determined by your location. Australians on certain access technologies (copper) will pay the same for monthly internet access as those on world-class broadband (fibre). Australians who live in the copper footprint, including small businesses, will also be slugged up to tens of thousands of dollars if they want to upgrade to reliable, super-fast fibre to the premises.”
Rowland also raised the issue of uniform wholesale pricing. The previous model would have seen retail ISPs — such as Telstra, Optus, TPG and M2 — all charged the same price to access the NBN in whatever location they did so, even though it would cost more to provide broadband services in rural areas.
This style of uniform national pricing is provided through what is termed ‘cross-subsidy’, where users in metropolitan areas are ultimately charged a little more than they naturally would be, to ensure that the cost of providing services in rural areas can be picked up by the NBN company. However, the Coalition has broadly walked away from this approach.
“I feel very strongly that an incoming Labor Government must pick up on this fundamental tenet of equitable wholesale access, because it will continue to be significant determining factor on affordability (or unaffordability) based on geography,” said Rowland.
opinion/analysis
The issue of charging the same price for fundamentally different access technologies under the NBN is one I have raised a few times, and I continue to see it as an issue. As I wrote back in October 2013 with respect to the then-FTTN model (the MTM model had not yet been released):
“Underlying all of this is the concept of “fairness”.
Right now, there are only so many types of broadband that Australians can buy. Usually, most residents buy ADSL because that’s all they have available to them. Some, usually those in metro areas who own their own house, have a choice of HFC cable that they can add to the mix. And for those who can’t get either, there are mobile broadband or even satellite options.
If NBN Co pursues a differentiated FttX strategy, it’s going to create a patchwork of broadband options all over Australia, with Australians unable to determine what type of broadband services they will be able to get access to, at which price points, until they actually move into a premise. Premise by premise will be different and ISP prices will be substantially different from each other. And let’s not forget that the Coalition also wants to keep HFC broadband alive, adding to this complex mix.”
… The whole thing is starting to sound like chaos …
… I also hope this article has done much to forewarn Australians that the broadband future they are likely going to see under the Coalition will be messy. It will be chaotic, inelegant, and it will be seen as being unfair. That’s what happens when you take a position of technological neutrality. You miss out on the chance to pick the best technology — once and for all.”
The cross-subsidy issue raised by Rowland is also an important one. We haven’t really seen how this will play out just yet under the Coalition. But as a fundamental principle, Australians always get angry when they are forced to pay more for things just because they live a little outside the major cities. The Coalition Government will need to handle this one sensitively or risk a substantial backlash from the bush — which, after all, is the portion of Australia which has the worst broadband to start with.
This article focused on the idea of ‘fairness’ as espoused by Rowland, but I really encourage you to read the rest of the MP’s speech — she goes over quite a few other regulatory topics which I suspect many readers will find quite interesting.
Image credit: Parliamentary Broadcasting
I have a question – The horse has bolted, why is it still being beaten?
There is no such thing as “fair”. Either you slug people in the bush and rural communities a higher amount to offset the difference in delivery costs, or you deploy an averaged cost model. You aren’t going to win friends with either option.
People need to move on and hold both parties accountable for where and when. Not how. The “how” argument is pointless, we’re too far in to the mixed-technology cluster-f*ck to waste more time arguing over how.
Best we can do is drive politicians to deliver on promises and measure their success accordingly. Turnbull has a free pass whilst everyone continues to be preoccupied with some utopic vision, rather than holding his feet to the fire.
Unless you are a hard core small “l” liberal with their usual “individualist” attitudes (read selfish), the averaged cost model is seen to be extremely fair. When you spread the costs over 10 million premises, it becomes an absolute pittance.
If you applied the small “l” liberal dogma to the entire build (instead of selectively city vs country), you would end up with different suburbs paying different prices because the cost to deliver the service varies between soil types, housing densities and so on. It just highlights to me what flawed argument the “they should pay more if it costs more to provide the service to them” argument is!
FTTN is fundamentally unfair by limiting the service you can receive based on your location due to distance degradation in VDSL2, pricing and requirements for FoD being as a result of that. FoD is of course further impacted by the more likely requests coming from those who are further from the node and also the most expensive to actually take on FoD (one estimate to date for 1,000m is $10,000-$20,000)
It also undermines the cross-subsidy by limiting the AVC/CVC revenue with a reduced top tier take up, due to people in locations not able to achieve top tier speeds. NBNCo themselves estimates that there will be 33% less take up on 100/40 on FTTN in comparisons to FTTP, which in itself for FTTP is limited to the coverage of less WTP locations (I’d argue it would have been higher under larger rollout).
Add on to the fact that you have Mr Morrow and his communication team consistently talking down the top tier plans and continue to push the narrative on the 25mbps only, and you have the recipe for financial disaster with NBNCo very unlikely to earn enough revenue to meet the cross-subsidy and debt repayments. No wonder they want to go into write downs already, particularly as future “upgrades” will be very difficult to raise the necessary capital (it not impossible)
Even paying the same rate on FTTN can be unfair, take New Zealand for example –
https://truenet.nz/sites/default/files/spread%20of%20speed.png
You have people on 7mbps who may be paying for an “up to” 50mbps and then you have people on 40mbps.
It’s like trial and error :/ 21st century network here we come.
Should be pay for what speed you can get as there is no min 25Mbps
I agree Jason, if I can’t get the 100/40 on offer (or 100/100 now seen) why should I have to pay that rate, there should be a discount for having to put up with a sub par connection.
Same Shit different Day , thanks TurnBullShit . Currently ADSL 2 + up to 24 mb/s & I get 3 mb/s . Waiting game on FTTN , up to 100 mb/s , but again no minimum supplied speed , guaranteed to hit 25 mb/s at one second of the day , like 2.00 am in the morning when no one else is on their net I get 25 mb/s , & TurnBullShit says thats good enough , even though at peak times , speed may be lower than my crappy ADSL 2+ @ 4KM from Telephone Exchange 3mb/s . TurnBull you really are a piece of work – absolutely useless .
I would like to choose my own speed , and that speed is 100/40 , if it were made available to me …..
Deejkay
If you are on a full node of 400 current design of the nodes gives you an average speed of 5Mbps.
I find the ALP and the Liberals pricing constructs, both wholesale and retail, are really terrible.
Firstly Renai you keep failing to point out to that the country is awash with fibre backhaul. All of the CBDs have at a min 10-100gbps loops, with data centres every 400m. Whilst metropolitian spaces have exchanges within 3km of every user and major fibre loops going down main aterial roads.
The backhaul and network owners at a pinch:
– AAPT
– Vocus
– Amcom
– Nexgen
– Telstra
– Optus
– arrnet
– TPG/iiNet/Internode
not to mention
– the interstate railway, have laid fibre beside the tracks
– utility providers have all laid fibre in their conduits for
– several major media organisations that have constructed microwave, and other types, networks to move their data but who are constrained by cross media
All of these networks were built and constructed spending hundreds of millions – not $40-90b.
The idea that a government couldn’t have simply compulsory acquired the necessary existing assets to cobble together a network that could give almost free and limitless access, at gigabit rates is quite a thought.
Seriously it doesn’t cost the tens of billions the ALP and the liberals are quoting. Its a huge scam. A con on a monumental scale.
With access to telepgraph poles we didn’t need to bury every piece of fibre.
More to the point if we used all of the dark fibre in Australia we wouldn’t need to make artifical limits for people using contention ratios.
Everyone could get a 1:1 1gbps – and there in lies the rub and why this massive scam is happening. The entire Government and enterprise telecommunication market depends on these organisation paying massive prices for ethernet over fibre connections.
Imagine a point to point ethernet intercapital network being sold to your organisation, at $30k a monthly recurring charge along with usage for connectivity to the internet and other fees and charges associated with co-location services, interconnects, VPNs and so on. These customers are being fleeced.
The NBN had to dance delicately with the CVC construct. It was sold to us as a means to recoup the massive cost of the supposedly network build but in reality its design to artificially contend the network so as not to undermine the entire wholesale and corporate/government telecommunication sectors.
You realise we’re not an authoritarian dictatorship (yet), right? The current government is actually a lot less friendly to your idea than….well….any of the alternatives.
That’s not to say your idea doesn’t have merit. I’m just sayin` you need the government to shift a few decimal points to the left before that particular idea could have any hope of any consideration…
“You realise we’re not an authoritarian dictatorship (yet), right?”
The idea of compulsorily acquiring property seems to be fine with these parties when it comes to highways we don’t need and yet its an anthem when it comes to the countries biggest ever infrastructure project.
In a way acquiring the HFC assets was a latent form of compulsory acquisition, just the government over paid on the assets to avoid having to go to the trouble of using legislation to force a fair price.
I think it was ignorance that allowed the NBN and government to forget about AAPT’s exclusive licence to lay fibre via EA and Citipower conduits. If they had acquired that the licence would have given the NBN a massive boast enabling it to lay fibre to any building with underground power cables – which is almost every building in the country.
This is why the the project has been one massive scam. I have seen fibre networks being built and it doesn’t cost $40-90b to lay a cable into the ground. I saw one team lay a cable between Adelaide and Perth by driving a backhoe, caravan and truck with the cable across the country. Yet if the NBN did something like that they’d quote $5b.
There would be what 10 different contractors subbing the work out. There would be airconditioned vans, bulldozers flown in and stoppages every 2 days.
This utterly unnecessary sub-contracting crap not to mention insisting every asset be buried is just ridiculous. Laying the cables on the poles wouldn’t have been a big deal.
You are very wrong. That is exactly what vast aspects of life in Australia is like. Particularly regional Aus.
Own some land in a CSG area and see what private property rights you have.
1984 is spot on.
There’s fibre (multiple) 3.85km from my home (including new NBN runs) and I am on NBN LTE (grateful) though why there has been no discussion of splicing in DSLAMs to these existing runs for regional folks, or, running fibre on poles, is truly wrong.
In most regional areas there are existing poles there waiting to be used.
You don’t need to trench everything.
I’d even happily borrow $ from the taxpayer at the govt bond rate (hey! New investment for super funds! Aust NBN Kanga Bonds!) to fund the install.
Location: Northern Rivers.
@1984
Gross exaggeration aside, a key part of the original NBN Co/Telstra deal was to lease Telstra’s unused dark fibre.
“gross exaggeration” eh.
Well considering i’ve done the prequalifications for orders at various telcos I am far more aware of what’s in the ground in areas then you would be.
Your exaggeration was regarding data centres every 400m.
I’m well aware of the fibre in CBD’s too as I used to manage the delivery of fibre, microwave and data centre services to customers.
It might not be 400m, but let’s not get caught up in semantics, his broader point is right.
[Ex Tier 2 telco eng/capacity engineer]
His broader point ignored the Telstra Deal v1.0 which gave NBN Co access to any Telstra dark fibre they needed.
I’m waiting for the FTTP – FTTN difference to show up in real estate prices. How will that play for the government?
Roughly 20% according to http://www.realestate.com.au/blog/how-does-internet-connectivity-affect-home-prices/
I call bollocks on 20% price difference. (That articles US land prices …. and I don’t think you can run a direct correlation to here by any means).
I mean realistically if the upgrade price is anywhere near $5k who would pay anymore of premium for another property already with fibre? So that’s closer to a 1-2% margin and that could just end up in noise variable (negotiating skills et al).
I agree that 20% seems to high for Australia, but $5,000 for FoD seems too low, too.
It’s an Aussie article referencing US and UK prices, your call on if you believe it or not (it is a real estate site after all :)).
I do know solar adds around 5-6k per installed Kilowatt to a house resale price though, so it wouldn’t surprise me to see other modern amenities also increase property value by a definable amount.
I will challenge that solar figure.
We added 3kW and I will be shocked if that has added 15k. We have a valuation in the next month so we’ll see. Attribution will be difficult. Especially in metro areas (property bubble) probably less so in regional areas (land/aspect/amenity/potential more valuable than depreciated housing build)
Challenge all you like Tim, there is plenty of evidence for the case out there:
https://www.google.com.au/search?q=property+value+increase+of+solar&oq=property+value+increase+of+solar&aqs=chrome..69i57j0l2.8696j0j8&sourceid=chrome&es_sm=93&ie=UTF-8
Good article Renai…Michelle Rowland’s speech raises some excellent points too.
Please remember how “fair” it is for so much of Australia to only have wireless or *satellite*. I’d much rather have FTTN! What’s more, if you’re going to argue over the “last mile” speeds, you seriously need to revisit your understanding of “backhaul” and “contention”.
Outstanding logic sword, so instead of 200,000 nodes we’ll have 2 million?
The same could be said for HFC. It’s a lucky dip. Some can get 100mbps some can only get 30mbps.
You dont hear the Government speaking about the cost of the FTTN Nodes , the amount of FTTN Nodes required to service an area & also the upkeep / running costs of these Nodes , including the power to run the Node & also the Battery Backup cost . Sure the power to run these may be minimal , but multiply it by the amount across Australia & by the years of use & this will be alot more than the cost of just going FTTP . Hey Mal just admit it , your FTTN idea sucks & you are wasting Australian Tax Payers money ! Before your FTTN Rollout starts / finishes it is already a 3rd world country setup that UK have binned & classed as a waste of money – in need of upgrade before you even start . Show the Australian Public you have a Spine & some sort of Morals , & quit this SHIT idea of FFTN – Scrap it & gogo with FTTP . I really am guessing you are Piss Weak & cant admit you have got it wrong . Can you Mal ?
“You dont hear the Government speaking about the cost of the FTTN Nodes , the amount of FTTN Nodes required to service an area & also the upkeep / running costs of these Nodes”
You don’t hear, because no-one cares any more. It doesn’t help sell their plan, so why would they speak of it?
Not only that, people are so pre-occupied with arguing about how the network should be built, Turnbull continues to have a free pass.
The how & why doesn’t matter any more. It just doesn’t. It’s a very small percentage of the constituency that might actually give a crap. Most are too busy being terrified (daily) by reports of ISIS and those boat people. So much so that most are happy to sign away freedoms.
It takes imagery of a small drowned boy to knock people to their senses, for Cthulhu’s sake. Expecting the same group to have a coherent thought, or the people that have been elected on their behalf, is all but impossible.
What matters is ensuring Turnbull delivers on his plan.
I do remember Morrow saying to power the nodes would cost $200M a year.
Cross-subsidy is a positive thing for cities in respect of the national communications grid.
When the ACCC foolishly added 107 points of interconnection to the original, robust 2-POI-per-capital-city model, that was unfair. It meant that consumers on less lucrative urban and regional POIs will have fewer retail choices. I meant that retail providers would be cost constrained on how many POIs they could provide to. This was a decision to appease four telcos with fibre assets, against public amenity and robust network administration.
But a uniform pricing model to enable city suppliers including government to reach all customers, urban and remote, is commonsense. Anyway, Australia’s population is 95% urban, so the incremental amount on at-cost urban services is spread over just 5% of hard-to-reach premises. And in doing so, it reduces the cost of doing business for city suppliers, government agencies (especially health and education providers) and extended families.
Cross-subsidy should raise a red flag if there was not mutual benefit in uniformly pricing retail access, but there is great benefit. It is the most economically rational approach, and happens to deliver the greatest social benefit as well.
Urban Australians are facing hardship due to house price rises. One of the reasons people are slow to relocate to cheaper regional centres is worse communications options. It is in the interst of our cities to build communications and transport infrastructure to attract decentralisation of population back to regional centres, including easing capital city housing demand.
Much more could be said on this, but the positive outcomes of cross-subsidy prove that it is the best way forward for cities and regions.
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