NBN plans trapped in an ADSL framework


opinion One of the most remarkable and ongoing trends within the global technology industry is the astonishing degree to which humans tend to interpret and judge the development and implementation of any new technology by examining it through the prism of the technology it’s replacing.

When Apple released the iPad, there were many who complained about features the device lacked which were commonly found on netbooks. When Skype launched its Internet telephony service, there were many who were outraged that it could not immediately dial emergency services. And when Nintendo released its Wii console, there were many who bitched about the impreciseness of its motion-sensing controls compared with a traditional controller. Actually, EA is still bitching.

In all three of these examples, what critics failed to recognise was that the new technologies brought with them a paradigm shift in the way we think about their product categories. Sure, all three examples saw older technology make way for the new. But in all three cases, it wasn’t a case of a direct one for one replacement. A change in the way we think was required before we could adopt the new hotness. And when people started to understand that paradigm shift, all three technologies saw rapid adoption.

Right now, nowhere is this lesson more applicable than in the analysis of the first tranche of pricing plans released for commercial services over Australia’s National Broadband Network, which is due to kick off commercial operations in October.

So far, analysis of the pricing plans released by iiNet, Internode and Exetel have focused on one question: How do the plans stack up when compared to existing ADSL broadband options?

When Internode released its plans in late July, commentary focused on the fact that its highest value plans were dramatically more expensive than current broadband pricing is today. Pricing released by Exetel several days later was consequently praised — as the ISP priced its NBN offerings at a similar level to existing broadband options. And as I write this, on the forums of broadband site Whirlpool, iiNet is engaged in a constant dialogue with its customers about how close its NBN plans released this week are to existing ADSL options.

However, if we step back a little and look at the NBN pricing plans released so far, it’s possible to see that when they were being created, all three ISPs limited their thinking extraordinarily by refusing to step outside of the existing broadband pricing model, which is steadfastly predicted on the limited of ADSL technology.

The first and most obvious problem relates to the download quota limits which the ISPs have imposed on users.

The NBN will offer speeds dramatically higher than ADSL2+ currently offers. Initially, customers will have the option of speeds ranging up to 100Mbps — at least four times what is possible today — but in the longer term, 1Gbps speeds are also on the table. And the launch of terabyte and ‘unlimited’ quota plans by almost all of the Australia’s major ISPs over the past year is testament to the fact that strong demand for high quotas exists already on our much more limited ADSL connections.

However, iiNet, Internode and Exetel have not modified download quotas at all in their NBN plans.

A 100Mbps connection theoretically offers users the ability to download roughly 600 megabytes (not bits) of data per minute — that’s 36 gigabytes per hour, or some 864 gigabytes per day. A day. Almost a terabyte per day, if you maximise your top-end NBN fibre connection over 24 hours.

Now I’m not claming that this is a reasonable scenario, but in a family household with several teenagers often on BitTorrent, HD YouTube and Xbox Live, plus one parent working from home, it doesn’t seem unreasonable, perhaps in a few year’s time, that 10 percent of that household’s full utilisation could take place per day — for a sum total of two and a half terabytes per month. Particularly as many ISPs count both uploads and downloads in data quota.

And yet, the top-end NBN plans offered by Australia’s ISPs at the moment offer no more than 200GB (Exetel), 500GB on- and off-peak (iiNet), and a terabyte (Internode). Worse, if you’re with Exetel or iiNet, there is currently no way to get additional quota if you top out that plan each month — your connection simply gets shaped. Intenode does allow customers to top up their quota with ‘Data Blocks’, but its top option is a measley 50GB for $50 — not precisely economical in a fibre world.

And when those 100Mbps fibre connections do get shaped, they get shaped drastically.

Exetel shapes NBN customers to 512kbps once they exhaust their monthly quota, while iiNet customers will be slowed down even further — to 256kbps. But it’s Internode’s shaping that really takes the cake — limiting those who beat its fibre limit in a month to a tiny 128kbps — barely faster than a 56k dial-up modem.

Why these limited quotas, with pathetic bonus packs? Because these are the download patterns which the three ISPs are currently witnessing on their ADSL networks. Why these pathetic shaping speeds? Because these are tiered speeds which Telstra division used to provide through its wholesale ADSL service, resold by the three ISPs. In both of these cases, the arbitrary limits chosen by ISPs bear no relevance in a fibre world and are sourced from their ADSL history.

Now, these are only the most obvious examples where NBN pricing is trapped within the previous ADSL paradigm. However, there are many others. Let’s go through one of the more radical ideas out there at the moment.

If you examine the investor presentations (TPG PDF) which companies like iiNet and TPG make periodically to the Australia Stock Exchange, you’ll find that both have a strong focus on increasing the number of ‘on-Net’ customers which they have.

What this refers to is that there are several different types of ADSL customers. ISPs can make a higher profit margin from customers who are directly connected to their own ADSL broadband infrastructure in telephone exchanges (DSLAMs) — on-Net customers — as opposed to reselling Telstra wholesale services.

The reason behind this is that ISPs are much better able to control the various input costs that go into providing broadband — renting a copper line from Telstra, traffic costs to exchanges, international traffic costs to and from Australia and so on — if they use their own ADSL infrastructure. They can better structure their network and commercial deals, rather than buying a more cohesive package from Telstra.

(I’m aware that this is a drastic simplification of this argument, but bear with me here. Perhaps some ISP representatives can post a more detailed cost breakdown in the comments.)

However, much of this cost breakdown is based on data traffic transit from telephone exchanges to the rest of the world — for the simple reason that on Telstra’s copper network, each individual house and business premise is connected by its own individual copper fibre cable to the local telephone exchange. In an NBN world, a lot more complexity comes into the situation.

Take, for example, the case of two neighbours who own separate flats in the same apartment block. They might even both be using the same ISP. They want to transfer a few terabytes of files between each other — say, one wants to lend the other his Blu-ray collection digitised to his media centre. Or perhaps they share an interest in high-definition recordings of StarCraft II matches from Korea.

In an ADSL world (assuming sufficient speeds were possible through ADSL), that traffic would have to go from one apartment, to a telephone exchange, and back to the other apartment. But in an NBN world, because each apartment block will have one NBN fibre connection, shared between users in that block and terminated somewhere like the basement, theoretically there could be no reason why that traffic should be counted as part of a customer’s monthly data quota — especially if the customers are using the same ISP. It’s simply data being broadcast within the wider NBN network and costing, in many cases, nothing — why should users be charged for it?

In many senses, what the Federal Government is creating with the National Broadband Network project is a giant local area network spanning Australia. But in practice, ISPs and NBN Co itself will charge for access to that network as if each customer has an individual telephone line back to a telephone exchange, and as if each piece of Internet traffic needs to go through one centralised hub.
Late at night and after a few beers, I have been privy to quite a few conversations with fellow geeks where we have mused about the potential for NBN Co and ISPs to consider traffic between NBN-connected customers as quota-free.

An Australia-wide quota-free LAN — with customers paying for data straying outside NBN Co’s limits — would be a wondrous thing indeed. I’m not sure to what degree this is technically possible, but I’m sure such an idea might start with more sophisticated routing and traffic tracking rules being set up … you know, the kind that it’s possible to implement when you have one national network, with standardised termination units on every building.

If you examine the NBN plans released by iiNet, Internode and Exetel closely, you can find a host of other features which have clearly been imported from the ADSL days. How about Internode’s hilarious inclusion of an “included dial-up account with ten free hours” to use when you’re away from your home NBN connection? God knows how that will work when Telstra’s copper network — and the dial tone — are disconnected.

Or Exetel’s $100 connection charge — excusable in an ADSL age where ISPs need to wrangle with Telstra to connect up new customers, but ludicrous when churning between NBN providers should be a matter of a 15 minute changeover window, with almost all of the heavy lifting done by NBN Co itself?

But I’m pretty sure I’ve made my point by now.

Much of what the ISPs are doing here is excusable. They are trying to reassure an Australian public confused by the NBN that they will receive a similar or better service for a similar or better price. NBN pricing is a highly politicised debate, after all, and the ISPs are doing their best to demystify it for everyone.

However, as the pedal begins to hit the metal on the NBN fibre rollout, it’s also time for some innovative thinking.

If Steve Jobs had framed his vision within the paradigm offered by netbook manufacturers, the iPad — and a whole class of competitors — would never have been born. If the Zennstrom and Friis boys had accepted that PSTN fixed-line telephony was here to stay, I wouldn’t be placing calls to business partners and sources for free over Skype.

And we all know what would have happened if Shigeru Myamoto had thought inside the box at Nintendo. Geeks globally would never have gotten the chance to vanquish Ganon and take back the Triforce of Power with one fell sweep of our nunchuk-clasping hand in real life. And that, my friends, would be a terrible thing.

So in our thinking about the NBN pricing models, let’s not let ourselves be trapped into the ADSL paradigm of the past. Let’s go back to the drawing board and really consider what sort of usage models might be appropriate for an NBN age, and how we can best take advantage of this infrastructure. A country which would like to describe itself as ‘innovative’ can surely do nothing less.


  1. Perhaps it needs a non-traditional RSP to enter the market and bring a new perspective – Voda maybe? Coles/Woolworths? Even more out-there, but Google?

    • Nah, I don’t really see Coles or Woolworths as innovators, and Google definitely won’t get involved in Australia. As for Voda … I anticipate they will focus on the bundling with mobile opportunity.

      The most non-traditional thinking so far on NBN has come, ironically, from John Linton of Exetel, who had initially proposed a pure usage model for NBN pricing but then backtracked to be more level with the other ISPs. I anticipate eventually companies like Internode and perhaps Dodo or TPG will innovate in the area, but only after customer pressure. It will take a while.

      • Maybe you’re right …

        That said, I think the NBN gives us an opportunity to revisit the early days of ADSL here, where Australia was used as a testing ground for hardware makers – small market, but highly reflective of future trends for other western markets – an ideal test bed. The NBN might attract similar players (probably in partnerships) who want to model emerging ubiquitous networks in other places.

        it’s all speculation, but fun to think about.

        • Good points, one and all. I think Renai’s argument addresses issues in a matter quite similar to Paul Budde’s claims (expressed here: ) about broadband becoming a “commodity”, although expressed in different terms.

          The upshot is that things will change – but only in the medium to long term. For now, the plans and prices will hew very closely to existing ADSL offerings, because that’s how you make a change without scaring people off.

          Think of how at the advent of mobile phones, we had per-call pricing and monthly access charges in close imitation of charging for fixed-line phones. Since then, there has been considerable innovation in mobile phone pricing, while many fixed-line pricing plans have barely changed from 20 years ago.

      • The most non-traditional thinking so far on NBN has come, ironically, from John Linton of Exetel, who had initially proposed a pure usage model for NBN pricing

        If you think about it it does make sense. ISPs would just sell data, speeds will no longer be an issue, 1gbps symmetrical for everyone! I can buy 20tb from iiNet and 10tb from Internode each month if i like. 2030.

      • “Nah, I don’t really see Coles or Woolworths as innovators, ”

        I would point out that Tesco’s has (or had) a strong telecommunications role in the UK when I was there. So it’s entirely plausible.

  2. I think you’ve misunderstood the architecture of the NBN. It is effectively a replacement for the current Telstra copper / DSLAM / AGVC platform, where fibre will replace the copper and the rest replaced with new aggregation POPs.

    RSP’s will be aggregating at chosen POPs, or likely retailing via Telstra Wholesale or other aggregators who sign up to every POP.

    Data from and end user flows through these POP’s, through the aggregate back into the RSP’s network, which provides the switching and routing to upstream (ie. the Internet) carriers and peers.

    Your model offering data sharing amongst those on the same exchange ignores that the traffic is routed further up the chain, and ignores the upstream and peering costs that RSP’s will have. International IP transit to Australia is still a major cost, as is interstate bandwidth. Peering can reduce these costs somewhat, but your model uses overly simplistic, and incorrect, assumptions.

  3. Interesting rant – but just enchant the magic word CVC – and backhaul – to realise we aren’t building a “giant LAN”. Each ISP network is still hierarchy of stars and they interconnect in two or three places – not every NBN node. What we know as “quotas” translate into “how long you spend using the speed” as a proxy for the CVC and backhaul cost.

      • A majority of ISPs already take steps to lower costs by peering (e.g. PIPE, WAIX, etc.).

        International transit is still an issue, and even at a peering level, x amount of bandwidth still costs $y. Quotas ensure that the available capacity is available proportionately to customers based on how much they’re willing to pay.

        Completely unlimited 100Mbps at the service level means enormous capacity requirements on the upstream side of things – ie, more $$$, and likely way above what a consumer is willing to pay.

      • It will be interesting if an ISP releases an unlimited NBN plan. Can you imagine having to supply bandwidth to every leecher in Australia for the 26 or so TB they could download in a month? Before there is any suggestion that they wouldn’t download much more than they do now. The true leecher downloads for the sake of it and never even looks at most of what they download. I know several with 20 or more large hard drives just packed with stuff they never look at.

        • That’s a tiny percentage of people. On an all-fiber network they won’t really make a difference. Keep in mind GPON supplies 2.4 gbps to 32 people. If backhaul is an issue then NBNCO should use some of its profits to build more where needed. Backhaul is an order of magnitude cheaper to build than fiber all the way to the home.

          • I also wonder if the cost of leechers will increase on NBN. The average user only uses like 20-30GB per month. At the moment I think they were say the small percentage of uses (3% or so) who download massive amounts of data account for about 60% of the ISPs costs. At the moment, due to download speed limitations (whatever they can get with ADSL2+, lets be generous and say 10Mbit) they can usually download a couple of TB a month, about 100 times what the average user would download. I don’t think you could say they will still just download the same amount on the NBN, their goal is to download as much as possible and constantly. They could now download 1000 times the average or more! Those 3% could be responsible for way more than 60% of an ISPs costs, maybe in the 90s. Why would you undercut other ISPs and offer unlimited plans to get them on your network? I saw an article in with Michael Malone said that it was sound business sense to encourage these user to leave and go to your competitors.

      • Maybe you should ask Internode if they have any intention, or given consideration to reinstating their Flatrate plans?

        I think Simon may have been 10 years too early, Flat rate would be even more attractive and full NBN speeds.

  4. Some interesting ideas. Unfortunately I don’t think we’ll see much in the way of innovation until the NBN is far more established, say 5 years down the track. That’s assuming it isn’t derailed before then.

    I especially like the idea of quota-free transfers within the NBN, but I suspect that could only happen within an area served by a POI. Backhaul still costs money.

    • Backhaul is relatively cheap though. The main issue is the CVC charge, which is just way too high at $20/mbit. Other countries charge $1-2/mbit in highly urbanized areas.

  5. From my experience with residential internet connections, typically there is no complex switching done until even before the exchange, generally back at a point-of-presence for the ISP where they can do their switching (sending traffic to/from users, to/from their network and even to/from peering networks and links).

    This doesn’t change much with the NBN either. The terminating units in each building and local connection point won’t really handle switching. They simply act as points to bind the connections into the fibre cables heading back to the ISPs network.

    To give an example, if you have a neighbour on a different ISP’s network, ping them. You’ll notice that the traffic doesn’t just extend to the exchange, it makes a few hops through the ISPs network, peers at a particular point then makes the journey back to your neighbours connection. In fact, if an ISP makes some horrible peering decisions, you can see the traffic bounce to opposite sides of the country before it reaches your neighbour. Unfortunately due to how ISPs, peering centres and backbone networks operate, this will still remain.

    • “From my experience with residential internet connections”

      That’s a paradigm-trapped sentence if I ever saw one.

      And yes, I know that IP switching is handled later in the network; I’m not a n00b. However it does seem as if there is an opportunity being wasted here somewhere.

      • The network you propose (ie. bring switching/routing as close to the end-user as possible, like within a LAN) would not work with the current wholesale/retail model. That kind of paradigm shift would require a single integrated telco, which would be a political disaster.

        However, with such an integrated network, you would be able to transfer unlimited amounts between your neighbours, and the data would never leave your street. That would be something.

  6. Renai, have you heard of CVC?

    You know, that charge that makes it more expensive for ISP’s the more their customers download using the internet?

    I think thats the answer why the plans have quota’s. Its like going back to pre 2006 when every ISP was forced to go through AGVC, having a similar pricing model to NBN’s CVC (charging per mbit)

    ISP’s have already stated numerous times that unlimited plans (that actually offer a decent service) on higher speeds won’t be sustainable on the NBN with the CVC model

    • Whilst you are right the pricing ‘model’ is similar, the amount charged is totally different – $65 per megabit vs $20 per megabit.

      • Uh, ULL is $16 + $2 for LSS, there is no charge, whatsoever, on bandwidth or contention

        As Hacket said, the per mbit costs for congestion is 10-20x higher on the NBN then on our current ADSL2 networks

        • Huh? You started talking about AGVC, which is only available if you take up Telstra Wholesale DSL, now your talking about ULL and LSS ??

          • I was saying that pre 2006, every ISP was forced to wholesale through a monopoly (Telstra) as they will be under NBN (what might happen), and back then, quotas where extremely substandard compared to what the network could deliver

            Also directly comparing AGVC to CVC is misleading. CVC costs add up consecutively for each POI, there is only one AGVC cost (to the nearest capital city)

            Of course, right now with ULL/LLS, there is no CVC/AGVC or whatever you want to call it

    • Oh also, about ISP’s stating unlimited plans won’t be available – I have seen nowhere that this has actually been mentioned, regardless, I’ll pull up a source of a ISP saying they will offer it

      “He said the company would also continue to offer plans with an unlimited quota over the network, though they would be more expensive than $39.90 per month it currently charged for ADSL2+ services.”

      Remembering that $39.90 does not include phone! So that $39.90 is really $60-$70

  7. 2 things.

    1/ Why the assumption that peoples use of the internet will drastically change due to their ability to obtain information faster?

    Youtube videos won’t play faster, people won’t read faster, etc, I can appeciate that you’ll be able to get the info faster but that doesn’t mean we’ll be able to consume it any quicker.

    2/ Take, for example, the case of two neighbours who own separate flats in the same apartment block. They might even both be using the same ISP. They want to transfer a few terabytes of files between each other — say, one wants to lend the other his Blu-ray collection digitised to his media centre

    My neighbour accesses my media server via their PS3 now, I’ve just got an access point near my window they jump onto. No external network required.

    • for your first point i think what will happen is people are buffer a number of video/youtube while they are watching the first one. or download 5 or more book while they are reading the first one. with more speed people will download/do more at once.

      • That still doesn’t change that unless they are watching more than one video simultaniously it will still take the same amount of time to watch them then as today

        Unless people buffer videos that they never get back to watching, but then that’s being silly

        And of course there is the issue that with the NBN streaming videos (ie. the buffering problem we run into now) shouldn’t be an issue

  8. ————————————————————————————–
    In an ADSL world (assuming sufficient speeds were possible through ADSL), that traffic would have to go from one apartment, to a telephone exchange, and back to the other apartment. But in an NBN world, because each apartment block will have one NBN fibre connection, shared between users in that block and terminated somewhere like the basement, theoretically there could be no reason why that traffic should be counted as part of a customer’s monthly data quota — especially if the customers are using the same ISP. It’s simply data being broadcast within the wider NBN network and costing, in many cases, nothing — why should users be charged for it?

    Man, there needs to be a quote command! Anyways in regards to this I’m pretty sure this isn’t actually how it works, the only ISP I have seen that allows this is Adam Internet via their CommunityNET feature – and it is a right bitch to setup, needing various tunnels to be setup that only some modems will even allow – not something the average joe blow could handle, TPG make you do the same thing to setup IPTV and my modem simply did not want anything to do with it :(

    Anyway, usually your connection terminates on a LNS or BRAS in your ISP’s core network, ie;

    This means there is physically no way your data can go anywhere, except through that device, which is in my city – or to be exact, PerthIX – St Georges Terrace.

    I do agree with the rest of your post and I am disappointed in how ‘innovative’ ISP’s have been so far – but there are also some things that have surprised me, Exetel offering uncounted uploads for example – very surprising.

    • The other problem for what Renai is suggesting is that it bypasses the encryption on the IP layer for the neighbours to be able to read each other’s traffic.

      If he is suggesting that the two neighbours send the traffic directly to each other, bypassing the exchange, then he has forgotten that it is the IP layer he is dealing with, no routing is done there.

    • It absolutely isn’t how it works with one excepion in the ADSL world. Adam Internet’s ‘Community net’ does actually work using the exchange as the switching point.
      Indeed too, users do not pay for this traffic. It is essentially idle capacity within their DSLAM’s.

      In all other cases, data flows back to the ISP’s core routers (wherever they may be) and back out via whatever leased or owned transit links they have.

      The NBN is unlikely to have ‘community net’ functionality – at least in the medium term.
      Therefore a large chunk of Renai’s ‘thinking different to ADSL’ is actually the opposite. His thoughts DO work on ADSL, but they won’t work on the NBN.

  9. Sorry, article appears to just be a bit of a rant over people not providing unlimited quotas. Using pirating your neighbours bluray collection as an example.
    Feel free to delete my comment again as you did last time i wasnt impressed with your article.

  10. The previous paradigm was the result of a set of input costs. One of those many input costs has changed. Are you surprised that the overall paradigm has only shifted slightly? Maybe they need to rename it the National Last Mile Access Network to drive the point home :)

  11. Agree with the article however I think it will simply take some time for the innovation to come. So far we’ve really only seen the incumbent ISP’s taking part, I have a suspicion that a few more players will be looking at this as a wonderful opportunity to enter the market without the current restrictions. In many ways they’d be stupid to play their hands now before there is even a reasonable NBN footprint. Patience.

  12. In my dream fantasy NBN world ISPs would sign you up for a flat rate, then when you get your bill offer incentive discounts for hitting quota targets.
    Example exaggerated for simplicity: Internet 12MB/s $0.50/GB, 50MB/s $0.75/GB, 100MB/s $1/GB.
    First bill: You used 50GB and we are happy to extend to you a 10% discount for being a valued customer. Would you like to lock in a 50GB minimum usage over the next 3 months for a 15% discount. Perhaps a 12 month plan at a 20% discount with a free set of steak knives is more your style.
    Use 100GB? 15% discount ETC ETC.
    From there ISPs could even add value by charging for access to a premium help desk or after hour support. Don’t mind calling India during business hours? FREE. After hours? $0.50 Want to call a local help desk at 0300? $1.00. Call for help often this month? You can get a discount.
    Add to that pensioner and unemployed discounts and I could see the form-work for a business model that is user friendly.
    I think someone needs to move away from milking people who misjudge their usage and lock into expensive plans that they don’t use and move towards providing a service in a user friendly manner.
    /me puts on his flameproof suit.

  13. I would point out there is a differance between:



    ‘KISS for initial plans’.

    That said, your articles are of such quality I’d take that slight exaggeration any day!

    The whole idea of using it as a LAN is currently impossible though – not only does NBNco not allow for this… given it’s a layer 2 network it would be tricky to do (IP’s don’t exist). Factor in security risks… In short it still works like an exchange.

    The one area I am interested in is seeing some ISP’s use the broadcast component for data. Apparently software like STEAM can use a fair bit of bandwidth as games & patches are released. Same for OS updates. No reason this couldn’t be distributed via multicast – though the economics of it might not work out.

  14. Strong demand does not exist for 1TB plans – they’re just headline, “keeping up with the jones” plans. NBNco created the “demand” by saying that they thought 2TB plans would be typical on the NBN. Then less than a month later iiNet came out with a 1TB plan, then Primus announced a 1.1 TB plan within hours to grab the next headline, then Internode and a whole lot of other ISPs announced them within the next few months.

    You should ask the ISPs how popular their 1TB plans are.

    • But that’s a silly argument to make. There isn’t “strong demand” for top of the line computer hardware either. What percentage of PC users actually own a Core i5 2500K or i7 2600K? What about Radeon 6950s or GTX 580s?

      Should Intel, AMD, ATI, and Nvidia stop producing top of the line products and striving to constantly shift the goallines? Of course not. The early adopters are the drivers of profits and mainstream consumer purchases.

      In much the same way high consumption users will drive ISPs that are all desperately competing on level playing fields to experiment with pricing options in order to provide larger and larger data caps. If NBNCo decreases CVC to make it more in line with worldwide rates then you’ll see unlimited plans soon enough.

      • So sonicmerlin, are you on a 1TB plan? If you’re not, then you’re part of the “lack of demand” group.

        Simon Hackett from Internode says that 95% of people are happy with 30GB plans – you might disagree with that, but then I doubt he’s guessing, he’s looking at his customer database and what they’re willing to pay for.


        95% of people being satisfied by 30GB does not equal “strong demand”. If people believe that there is “high demand” for 1TB plans, they’re ignoring the data or don’t have any. They’re making the causation verses correlation mistake, and assuming that because something exists, it therefore must be popular.

        Innovators and Early adopters might be on 1TB plans, but they’re typically only 15% of the market. 15% does not equal “strong demand”;


  15. It’s not one big LAN (thank your chosen deity). It’s a faster pipe back to your RSP’s network. The underlying cost of the terabytes, which is the transit cost to the US and other content originating points, will not change because of the NBN.

  16. The true problem is that NBNCo have been given two guidelines by the governement: cannot be more expensive than current pricing for a phoneline / ADSL and must return 7%.

    NBNCo have punched those numbers into a spreadsheet and come up with some costs. Unfortunately the result is that we are building first class infrastructure and then imposing a pricing scheme which makes it fourth class.

    The biggest example of this speed tiers and the fact that 50% will connect at 12/1Mbps (page 118 of NBNCo Corporate Plan). The article Low-income users denied NBN benefits (http://www.theaustralian.com.au/national-affairs/health/low-income-users-denied-health-benefits/story-fn59nokw-1226131713930) quotes Quigley:
    > “With the quality of high definition that you’ve got, being able to come across this sort of a network, you could easily have a quick hook-up and actually work out, ‘OK, do I need to take him to hospital, or could we keep him at home?’,” Mr Smith said.
    > But when The Australian approached Senator Conroy and Mr Quigley to describe the level of service users could expect at lesser network speeds, they said high-definition video conferencing was not possible on the NBN’s most basic package.
    > “You certainly can’t do high-definition video service on a 1 megabits per second upstream — it’s impossible,” Mr Quigley said.”

    The fact is NBNCo have set the tiered pricing structures in place even when a flat rate AVC charge would be only $4 more and would inevitably lead to greater CVC revenue.

  17. “One of the most remarkable and ongoing trends within the global technology industry is the astonishing degree to which humans tend to interpret and judge the development and implementation of any new technology by examining it through the prism of the technology it’s replacing.”

    If only the people commenting in many NBN articles would keep this in mind before posting “NBN = nothing more than faster torrent downloads and gaming therefor it’s a waste of money” :)

  18. Moores law… why would it matter how the gigabytes get to us THIS Year, next year or so they double, the year or later , they double again

    its also the same with ANY industry .. eg if you mine a new form of petrol, thats free.. do you sell it for free ? no you sell it at ats market value in a form the market knows

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