Fibre to the No(de)

From the archives: Sam Volkering, 8th May 2014

There’s absolutely nothing that could turn the NBN into a worthy project right now. So far they’re over time, under resourced and if you thought they were on budget…well think again.

There’s so little confidence in the NBN that private companies such as TPG have decided to go around the slowest government project of all time to do it themselves.

To understand what the recent budgetary blow out means you need to understand what the NBN is actually supposed to do.

I’m not going to go into the technical nature of FTTP, FTTN, fibre optics and copper cables. You’d just get bored.

What you really need to know is that around 93% of the Australian population was supposed to eventually have access to the wired NBN. That means most of you would get a fibre optic cable coming to your house (premise) from a distribution hub.

This is the design of Fibre to the Premises (FTTP).

However, the current government thought this was silly and went with a Fibre to the Node design.

Anyway, as you know Australia has plenty of regional and rural areas where you simply can’t get fibre.

In fact, my Dad’s place is in regional Australia. He lives on the outskirts of a small town just a few hours from Melbourne.

But where his house is located, Telstra has told him he can’t get cabling. That means he’s one of the 7% of Australia that will need wireless or satellite high speed internet.

But if my Dad or anyone else in non-wired areas are happy to dish out their hard-earned money they can get NBN fibre. Only it’ll cost them thousands of dollars extra. Yes, that’s right, the consumer has to pay the government thousands for something they should be getting anyway.

The wireless and satellite part of the NBN is every bit as important as the wired rollout.

However, someone miscalculated how much they thought the wireless and satellite rollout would cost. They also stuffed up how much they would need.

The original plan was to launch two K band satellites. These would help provide 80 gigabits per second bandwidth. They were also going to build 1,400 new cell towers to send wireless broadband to antennae on people’s houses.

But, it’s not enough.

Just yesterday NBN asked the government for an extra $1.4 billion. Considering the $12.4 billion just pumped into the JSF program, you’d think it’d be hard for the government to say no.

The extra $1.4bn is to connect another 400,000 premises more than they first thought. That’s 1.7% of the population they just completely forgot about.

So it looks like they’ll now need to double the amount of cell towers, and launch another satellite. $1.4 billion well spent, on technology that’s already out of date. 

The NBN shambles continue

That was four years ago. Today, more people may have the NBN, but the project has old and new problems alike. And the latest development has provided yet another setback for any hopes of ‘future-proofing’ our internet network.

The NBN Co has killed all plans for its ‘high speed’ 100Mbps fixed-wireless service. Instead the NBN Co is focussing on meeting its minimum performance obligations. Which means speeds of just 50Mbps.

To put those speeds in context, the global average for fixed-broadband is 45mbps. Pretty close to the ‘minimum’ speeds that NBN Co is targeting.

However, there is a slight discrepancy in our comparison.

Fixed-wireless and fixed-broadband are not the same service. Not even close. Fixed-broadband is basically FTTP. It means the fibre cables run directly from your property to the local exchange and then the wider web. It’s a single channel that gives you the best speeds possible.

Fixed-wireless on the other hand is shared amongst many households. It’s a service designed to cater for a range of customers because it doesn’t have a physical connection. It can reach more homes more easily, but it comes at a cost.

When multiple households are using the same wireless device for their internet, speeds have to be split. You’re sharing your internet speed with all your neighbours. And that means at peak times everyone gets a fraction of the speeds.

As of today, only 46% of these fixed-wireless cells have an average speed at peak times above 25Mbps. Meanwhile everyone else was dealing with subpar internet.

Some unlucky customers had the pleasure of surfing the web like a citizen of Turkey in 2012. Receiving speeds of just 3Mbps. Good enough to load a text webpage and not much else. You certainly won’t be enjoying Netflix with those kinds of speeds…

And so the merry-go-round of NBN Co stuff ups continues. The Liberals and Labor will point fingers at each other, Telstra will continue to haemorrhage money and Australian internet will go nowhere.

It’s beyond a joke at this stage. Our only hope now is for 5G. Just as long as the government keeps their grubby hands off of it. One can hope anyway.

Regards,

Ryan Clarkson-Ledward,
Editor, Tech Insider

Tech Extra


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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