The contrast could not be any starker. As warnings emerged that Australia’s telcos are seeing their profits squeezed by the end of NBN Co’s short-lived wholesale price discount (with the likelihood that retail prices will rise), across the ditch came word that New Zealanders are about so see their broadband speeds greatly increase while the price of connecting to the Internet comes down. How could this be?
Back in 2013 communications minister Malcolm Turnbull was ordered by prime minister Tony Abbott to “destroy” the NBN. As Turnbull fatefully decided to abandon a 21st Century fibre-based rollout – on flawed advice from a bunch of so-called mates – over in New Zealand they kept deploying fibre-to-the-premises (FTTP).
NBN Co was forced to effectively spin its wheels for months on end, as it re-worked all its rollout plans in order to use Telstra’s ageing copper wires and run-down 25 year old Pay TV cables. Meanwhile, Chorus New Zealand was busily perfecting ways to reduce the cost of fibre installations. These days it costs Chorus around 50 percent per premises less than it did five years ago.
NBN Co continues to work its budget comparisons on its original FTTP costings, which are ridiculously out of date (if they were ever realistic), in order to argue against numerous experts who have long pointed out that what they’re building us is a dud network that will sooner or later have to be replaced.
Shortly before he left, former NBN Co boss Bill Morrow, finally conceded that fibre-to-the-node (FTTN) is causing serious technical problems. This came as no surprise to those who’ve consistently warned the Government, and noted that even Telstra had long ago concluded that it would need to adopt fibre if it was to keep its network up to date. Based on this reality it made little sense for Telstra to continue with anything more than a cursory ‘make-do’ approach to maintenance of its outdated copper network. Frankly, it would have been financially irresponsible for it to do otherwise.
Even where FTTN is working perfectly well it is incapable of providing fast enough broadband for many of NBN Co’s customers right now, much less keep up with predicted needs for the future.
Which brings us back to the Kiwi connection. As NBN Co battles to deliver even 25 Mbps to some of its hapless customers, Chorus has announced that it will be reducing the price of its ultra-fast broadband services while revealing that half a million customers have so far had taken up the service.
While broadband prices in New Zealand are going down, here in Australia they are predicted to go up now that NBN Co has abandoned its wholesale price discount. Much has been written about the manner in which the pricing of wholesale access to the NBN has resulted in retailers buying the minimum bandwidth they can manage, thus causing congestion on their broadband services. It is expected this will again be the case.
So where to now? When the NBN reaches it nominal completion date in 2020 it will still be a work-in-progress. According to Internet Australia – the peak body representing the interests of Internet users – within five to ten years, or sooner, the FTTN network will need to be preplaced. IA is talking from a technical perspective, but you can be pretty certain that consumer complaints, already high and rising, will force whoever is in power to act.
Meanwhile NBN Co is racking up a debt to the Government which it was recently revealed will now surpass the $19 billion to which it originally agreed – with no sign the company will be in a positon to repay the loan when it falls due. The Department of Communications and the Arts told a Senate committee this is partly due to costs associated with remediation of the Telstra HFC network (those 25-year-old Pay TV cables).
The big question that will need to be tackled by whoever wins the next elections is whether or not to ‘write down’ the value of the business in order to provide NBN Co some vague potential to reach profitability.
When the Snowy Mountains Scheme was launched, ironically by a Labor Government, the then Opposition Leader Sir Robert Menzies opposed it outright. However, on becoming prime minister, Menzies not only supported the project continuing he applauded and supported it for what it was – a vital infrastructure project.
Perhaps it’s time for a bit of Menzies’ bipartisanship in order to ensure that Australia keeps pace with the rest of the emerging digitally-enabled global economy – and hopefully catches up with the ‘All Blacks of Broadband’.
We need #BetterBroadband!