What Australia’s NBN tells us about the future
Australia’s national broadband network is having effects no
one foresaw. These ripple are
undermining the position of Australia’s biggest
phone companies. Australia is a cautionary tale. Every country in the world
is going to have to deal with the same thing.
Mobile Broadband may eliminate the need for fixed broadband networks.
Australia’s government is currently rolling out the NBN - the
Next Generation Broadband Network. Started in 2007, the NBN project was
heralded by the government of the day as Australia’s biggest ever
infrastructure project. Unfortunately, successive administrations have changed
their mind and the policy above the rollout of the NBN so many times that what
is now being delivered is a shadow of what was originally intended.
The results highlight not just how governments can crush
effective technology investments, but also raise an important point about
alternatives to fixed broadband. The lessons don’t just apply to Australia –
they will be seen in every market around the world. In short, 5G mobile data
will offer a viable alternative to even optical fiber fixed broadband speeds,
and could make fixed networks redundant. In Australia, this could mean that the
$60 billion of public money the government has spent is wasted.
The original goal of
the NBN was to provide fiber broadband speeds to every house in Australia
Mobile
broadband services are already available in Australia, even as the fixed
network continues to be rolled out. The NBN was originally forecast to provide
fiber to every house in Australia at a cost of around $40 billion Australian
dollars. Rough numbers, that’s a cost of about $2000 per person, about $6000
per household to deliver optical fiber based broadband to the home. Initiated a
decade ago, under the Australian Labor Party, the NBN rollout plan was
generally received well by the public, on the tacit assumption that fiber would
eventually have to be rolled out everywhere, anyway.
The NBN offered the change that, with the government
delivering the infrastructure, every house in Australia would be connected to
the fiber network. The alternative was unappealing : If left to private
companies to deliver this sort of facility, two tier system may have developed.
That’s something which has been seen with the deployment of mobile networks
Down Under. Even now, rural areas (which are substantial in Australia as you
can imagine) receive slower data speeds and worse coverage than the networks
the phone companies have built in city and suburban areas.
The Liberal party
stopped the rollout of fiber
The current Prime Minister, Malcolm Turnbull had a key part
to play in the current problems with the NBN. In the early days of Labour
trying to roll the NBN out, Turnbull was
shadow communications minister. Turnbull and the rival Australian Liberal
parties campaigned at the last general election on an NBN policy which offered
to cut the cost and rollout time associated the new technology. Their fundamental
adaptation of the plan was to deliver fiber to the node and leave existing
copper cables going in to homes.
Under the Liberals, they said, copper phone wires already in
place would be used to traverse the last mile to each home, providing adequate
bandwidth – up to 100 Mbps and a fraction of the cost. (Remember, Labour wanted
to take Optical Fiber to the home.) When the Liberal party as elected, they
took their success as a mandate for the policy and implemented it.
At the same time, 4G
data got much, much cheaper
In the meantime, 4G data pricing offered by the mobile
networks was getting by the year. The amount of data consumed by people in
their phone plans was increasing at a rate of around 70% per annum. The amount
of data provided at a standard price point increased at about 100% per year.
In the 10 years since the plan to deliver the NBN was
launched, the difference between the growth in allowances and demand added up.
Now, mobile broadband plan with ‘4G plus’ (effectively data speeds of up to 100Mbps
on mobile networks) are available with costs comparable to fixed broadband
alternatives.
At the same time, as with many government projects, the cost
of delivering the NBN has spiraled out of control. They are currently forecast
to spend $60 billion dollars to deliver it.
5G is just around the
corner
In 2020, 5G data will become available. It will offer
download speeds which are 100 times better than those available now with 4G. It
will represent effectively unlimited bandwidth and capacity. 4G pricing will
have fallen four-fold, again, between now and then. The resulting economics
raises real questions about the viability of the fixed broadband Next
Generation network which will be in place.
In addition, incentives which are in place for the mobile phone
companies are likely to drive the take up of the mobile alternatives to the NBN,
too. The NBN is the sole provider of wholesale fixed broadband access. All Telcoshave
to buy it from the NBN and sell it for a small profit - roughly 20% of the
retail price. When they sell their mobile broadband connections, they keep the
full amount -i.e. 100% of the retail price. They will make far more money
selling mobile broadband than fixed NBN alternatives.
5G will be rolled out
globally at the same time
The involvement of the government in Australia’s NBN debacle
has highlighted this issue early in that country. The economics of mobile vs
fixed will be a subject that each nation has toconfront at some point. The
effectively infinite capacity of 5G networks could lay waste to the money which
has been spent burying wires and fiber in every country around the world.
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Broadband