The National Broadband Network Company has included a lengthy section in its submission to the national competition regulator examining wireless and mobile broadband technology and acknowledging its potential to compete with the predominantly fibre-based NBN rollout.
Since it was formed, NBN Co has consistently argued that fixed and wireless broadband services were complementary, with residences and business primarily to use fixed broadband in future for most of their access needs, but wireless to fill in the gaps when users were away from their base infrastructure. In addition, the company has highlighted the ability of fibre infrastructure to act as backbone links to wireless nodes such as mobile phone towers.
However, in its submission (PDF) to the Australian Competition and Consumer Commission dealing with Telstra’s structural separation undertaking recently published, NBN Co acknowledged the potential impact of wireless for the first time.
While it considered that wireless services were complementary to fibre services and that wireless’ ability to compete was limited by the amount of users per tower and the amount of tower, NBN Co noted that “it is possible for wireless broadband services to deliver speeds of 12Mbps (the initial entry level service to be offered by NBN Co on its fibre network)”.
“It is conceivable that wireless service speeds in particular areas may be comparable to the speed of NBN Co’s entry level services as the NBN rolls out,” the document added.
However, it appears as if NBN Co’s submission has underestimated the potential speed improvements which carriers like Telstra are planning to make over the next few years. In recent field trials of the fledgling LTE standard which it is rolling out on its network, Telstra obtained around 80Mbps speeds.
It is not expected that users will obtain anything like these speeds in real-world conditions, and fibre offers a number of other advantages compared with mobile broadband — for example, substantially improved latency, and better reliability. However, the theoretical speeds do but up against NBN Co’s own planned speed ceiling of 100Mbps on its fibre network.
Another contentious aspect of the NBN policy’s treatment of wireless services is a condition in its contract with Telstra which prohibits Telstra from marketing its mobile broadband services as a substitute for fibre broadband services. In its submission, NBN Co stated that this would have “no effect on competition for wireless broadband services”, and that Telstra didn’t currently promote its wireless services with reference to its fixed network.
“To the contrary, Telstra promotes its wireless network as superior to other wireless networks in terms of speed, coverage, reliability and value for money,” wrote NBN Co. “This is consistent with Telstra’s business model of being a full service telecommunications provider and being able to meet customers’ fixed and wireless telecommunications needs.”
However, NBN Co noted:
“The payment to Telstra for the disconnection of copper and HFC premises, without the restrictions on promotion of wireless services as substitutable for fibre services and the provisions for a deduction in the disconnection payment for wireless substitution, could create significant commercial incentives for Telstra to migrate its customers to the Telstra Next G wireless networks, because Telstra would then avoid the need to pay NBN any ongoing access fees and retain a higher proportion of its revenues, but still collect the payment for disconnections.”
NBN Co further noted: “Appropriate limitations on Telstra’s ability to migrate customers to another Telstra platform are integral to the viability of the NBN Co business case.”
Well, well. Talk about adding fuel to a fire.
What NBN Co’s comments here represent is nothing less than a fairly substantial admission — for the first time — that the company is rather worried about the potential for Telstra customers, when their ADSL broadband connections are eventually disconnected, to avoid signing up for the NBN and instead sign up to get most of their broadband needs from Telstra’s powerful Next G mobile network.
The Coalition and other organisations have long raised this as an issue. However, up until now, the Government and NBN Co itself have staunchly maintained their position that fixed and wireless broadband services are complementary.
NBN Co’s comments today reinforce that view (which is good, because it happens to be true), however, they also finally give validity to the view that not all consumers will see fixed broadband as necessary at all in the future. Those with no latency requirements for their applications, or with fairly modest quota and speed requirements, will likely be able to be serviced through mobile broadband.
Now I don’t particularly find any of this disturbing. However, what I do find disturbing is NBN Co’s admission that it needs to shift Telstra customers onto its own infrastructure (and not Telstra’s mobile network), to maintain the integrity of its own business case.
There we have it — in plain black and white. The natural movement of the telecommunications market would see many customers switch exclusively to mobile broadband, if Telstra were allowed to promote it. But the Government’s NBN plan will work against that natural movement, artificially focusing those customers towards the fixed broadband infrastructure of the NBN.
I understand the reasons for it. But to my mind, whenever anyone — be it a company, a government or a regulator — attempts to force consumers down one path and against their natural inclinations, they will end up with pie all over their face. You cannot force a market — it has a mind of its own. It will be fascinating to see how the Government and NBN Co’s attempt to do so plays out in the years ahead.
Image credit: Telstra