How expensive are Australian NBN services?

One of the things people like to toss into the broadband debate is to grab a price that’s cheaper than what Australia’s National Broadband Network seems to offer, and complain about it. Usually, that involves grabbing a price in a currency other than our own, grabbing today’s exchange rate, and converting the foreign price. …

[Anonymous Coward]

Major Omission

There is a major omission here - most of the countries listed give either unlimited downloads or a data cap of hundreds of gigabytes, but the Australian plan listed has downloads capped at 30 gigabytes. That's a huge difference in what you get and not including this information makes the whole comparison next to worthless.

[Richard Chirgwin]

Re: Major Omission

I agree that this is omitted. There's no good way to compare "20 GB per month" with "unlimited".

However: Australian Bureau of Statistics' published data suggests that most Australian users consume somewhat less than their allowances.

I should have noted the allowance question in the article, so thanks for identifying this.

Richard Chirgwin

[Jaii]

The difference can be measured as "up to 700 times more"

Sure there is. Its about sixty minutes access vs forty three thousand two hundred, if you were downloading near capacity through a clean pipe - assuming a thirty day month. Internet companies are quiet fond of the "up to xx times faster than 56k" line in selling their broadband to the masses - in this vernacular, unlimited could quite fairly be described as "up to 700 times more than a 20gb cap".

Most Australians may consume less than their allowances, but I would wager a weeks pay against a cold glass of beer that most Australians would also not be able to identify the difference between a computer connected on ADSL2/copper cable and a computer connected to the NBN, unless you gamed it (e.g. had them download a large file).

[scottf007]

This makes me mad

What you did not take into account is that in Australia it is run by the government and has not chance of price reducing. The price can only increase because of fixed wholesale costs across everyone in the market.

We have signed ourselves into high prices whether our country is doing well or not performing. There is very little chance that wholesale prices will ever get cheaper, it is a monopoly.

[Anonymous Coward]

you forgot something ..

You've ignored the AUD27B of taxpayer dollars that the govt is handing the NBN co. in order to subsidise the cost. It works out to roughly AUD3600 per household (about 7.5 million households), meaning that amortised over 3 years and ignoring the lost opportunity cost of the money, we are all paying AUD$100 more per month than whatever rate is publically quoted ... That makes your comparison pointless.

[DavidRa]

3 years!?

You can't be serious. Fiber in conduit, in the ground has a lifetime significantly exceeding 3 years - indeed, barring rats chewing on it, excess input power burning out the remote end (which is easily serviceable), thermal shock and the like, it's like that broken beer bottle on your lawn - it'll last almost unchanged forever, until you step on it.

Try 50 years as a useful life (lots of the copper is older than that) - remembering that trans-oceanic fibers are 20+ years old and not stuffed by 20 years of salt water immersion!

~3666 per household, amortised over 50 years is $6.11 per month (ignoring inflation/cost of money). Given that's what Telstra charge to display a damned phone number when you ring (caller ID is $6 a month, IIRC, for having a software option switched on instead of off - what a RORT), and we're building a national fiber network - I think that's a damned good price. If you prefer - make your sandwich for lunch instead of buying it twice a month and you're in front.

But wait ... this money is coming from taxes. Investment in infrastructure, by the government, during a recession (ooh that'll bring out the haters). I'm generally anti-Labor, but it's the right thing for the country. Oh and the children (that'll win the argument). Something about thinking of the children.

[DavidRa]

Oh, I forgot something ...

How much of the cost of a copper phone line is the maintenance of the existing copper network? Given Telstra wanted (I think) $20 per month per line including margin ... that suggests $14 per month is a reasonable average cost for maintenance of the copper. Compare that to $6 per month for original amortisation, or ~$14 per month if you include interest, to install the fiber.

[Anonymous Coward]

That is the difference between fiber and other tech

Investment into fiber depreciates over more than 10 years.

I am surprised not to see the other Eastern European companies here. I was in one of them at last month and there was an ad on half of the buses for Fiber Broadband at around 3$ per month. That is still less than 10$ per month even if we adjust it for purchasing power.

The only thing which allows the incumbent telco to offer this is the fact that the depreciation of the fiber can be set to 10+ years.

By the way, they do not have the choice but to offer at such prices because their investment into FTTC which they rolled out more than 3 years ago failed to recoup. They had their shorts eaten by LAN extenders which offered 30Mbit+ to every urban (and not just urban) household based on Fiber to the building + Cat5/Ethernet inside the buildings.

[shumbadrinker]

one sided view

Totally agree with the first 3 posters. You have taken a very naive view of the govt stimulus package that is the NBN. If people really want 100Mbps+ speeds then let them pay for it and let the market decide the cost, not the nanny state government. Throw in the internet filter, and we are onto a real winner - Oz continues to be the laughing stock of the digital world.

[Grumpy Old Fart]

Aussies are bargain-hunters though

The price question goes to the heart of the debate. Aussies are price-sensitive. If it's expensive it's not considered 'good quality', it's a rip-off, a rort. Unless you can prove that it's some of the best value for money in the world, we'll grump and moan about what a rip-off it is.

I don't care. I want my NBN. Having compared the broadband service here and in the UK, this sucks. Capped quotas, dodgy connections, poor speeds, it's just dreadful. I'm happy to pay more if that's what it takes, but I want a decent service.

And while I'm more than happy for Abbot to get in and end Gillard's Green Madness, if he starts waffling on about wireless again I'm going to drive to Canberra and personally clobber him with the cluestick.

The PPP I've always used is beer. A pint of beer at the moment in Perth is $10, about 6 quid or, well, $10 US too. That's an average pint too, you can go more expensive. Not sure how that compares to UK beer these days though.

[Head]

Hmmm

Two extremely important words were not said in the article, that give rise to the (relatively) expensive (but in reality average) cost:

Pits and Conduit.

Both had to be purchased BACK from Telstra. If the NBN already had pits and Conduits to use, the price would probably be about half.

Whats next for the NBN? IMO they should make all data within Australia free. Not count it at all. Doing that would attract alot of business here, especially those companies looking to stream live/stored media. Awesome article!

[Anonymous Coward]

How long?

How long have the other countries had 100Mbps broadband? Given the propensity for prices to come down, would an cpi adjusted comparison of introductory costs be better?

[Mark 65]

Misleading

"Our wages are also higher, our country bigger, our houses bigger, and we don’t have a nervous, paranoid, starving, unstable, dangerous neighbour within artillery distance of our border."

1. Average wages are meaningless, a bit like GDP growth and GDP per capita as comparison metrics (GDP growth good but how's every sector ex-mining going?). Please don't judge the man on the street's disposable income level as affected by also taking into account that of Clive Palmer and Twiggy Forrester. How do the median salaries look? What do disposable incomes look like?

2. Bigger houses - also less well built, poorly insulated, more costly to run, and probably worth less given high population densities put a genuine supply constraint on properties rather than just that which the real estate agents use to try to justify price spruiking. Who cares anyhow - it just sounds like a playground pissing contest?

3. Greater distance to cover for meaningful population coverage is a valid point, but that's not to say that the Government have necessarily made the best choices in how to cover that distance.

4. Artillery sporting unstable neighbours - neither do Sweden, Japan, etc.

5. I bet they also don't pay through the nose for food (despite the fact we grow our own), utilities, and virtually anything else they buy.

I'm sorry but your final paragraph just reads like most of the blinkered bullshit found in the Australian media that try to portray this place as the "lucky country" at every opportunity - I hope you were taking the piss. The fact is that the good bits are what mother nature provided and every thing else is a mess. Just a mess with oodles of mining cash bailing it out. Chinese owned, Chinese made.

[-tim]

Country size is an issue?

The size of the country not a major issue since most of the Australia is completely empty. To get a better grasp on how people are spread around, look at road km and you will find that Australia has about 815,000 km of roads compared to Japans 1,200,000 km. When you consider many of the roads downunder are fire access tracks, the places you have to run lines are spread out about the same as Sweden's.

You should also note that the prices being proposed are simply early guesses by the ISPs since they don't know their real costs yet. The Exetel price is pilot project price only as just one example.

There is also the issue of technology being used. The PON that the NBN will be rolling out is shared and there are real hard limits of how fast the technology will go in the future, while many of the other example countries are using non-shared fiber. The shared PON won't ever allow 40 to 100 gigabits up and down unlike what was being installed in some Scandinavian areas years ago.

[Mark 65]

@tim

I have to take issue with country size not being an issue in your opinion. It is when there is a minimum service level (% of population) to meet that is set suitably (or unsuitably depending on your standpoint) high. Whilst most poeple live in around 10-20 large urbanised regions (see wikipedia) this won't get you over the line. The problem is that these fruit are truly low hanging but you'll need to bring out the climbing gear to get the next level. It's only when you fly in over the country and see these townships in the middle of nowhere and think "Why the fuck..." that you realise how much of a barrier those extra few % if the population are. Just imagine if you could NBN 80-85% of the population at a cost of $10bn but the extra 15-20% would cost you $30bn more. I'm not sure how it breaks down but I'd imagine the returns are suitably diminishing.

FYI: The target for this scheme (from their website)...

Under the NBN, every home, school and workplace will receive high-speed broadband.

"The NBN will connect 93 per cent of premises with fibre to the premises technology providing speeds of up to 100 megabits per second (Mbps). Theto a high-speed fibre network, capable of providing speeds of up to 1 gigabit per second with the remaining premises will be connected via next-generation fixed- wireless and satellite services that will deliver peak speeds of at least 12 Megabits bper second (Mbps)."

So that's 100% coverage at 12Mbps with 93% FTTP (not FTTC). It'll be an interesting ride that's for sure.

[-tim]

@Mark 65

The NBN will use their own shiny billion dollar satellite to cover 3% of the population and wireless to cover the balance of about 12% (according to older numbers, now revised to 7%). The NBN seems to think they can hook up 100% of the homes they fibre passes yet AT&T and Verizon often find they cannot hook up 15% of the homes they had planned to connect and they can use techniques like using direct buried fibre in a neighbors yard. That won't work with many battle axe blocks and other subdivision where the only common property to the curb is covered in a shared paved driveway with unknown utility paths underneath.

I still don't think the size of the country is an issue since the unpopulated interior won't have fibre.

[Fred Pilcher]

Good job, Richard.

It's a bloody difficult comparison to make and you've taken a good shot at it. Yes, capped vs unlimited are an additional difficulty but given the enormous costs associated with our low population density and geographic size, I think you've probably come as close to anyone at providing a basis for comparison.

@scottf007 - as any fule kno, services provided by private enterprise are always cheaper, better, faster, more efficient and altogether shinier than services provided by government. [Eyeroll]

[foxski]

£6 for a pint of beer?? :-o

Grumpy Old Fart, I can at least sympathize with capped quotas, dodgy connections & poor speeds as we still see this regularly in the UK, particularly outside the big cities. BUT if we had to £6 for a pint of beer, I think last week's riots in London would look like a playground scuffle compared to what would would follow!

[Jaii]

Something doesnt add up

http://www.orange.sk/web/fibernet/aktualna_ponuka.html

For 29.98 euro you get 100 down, 100 up, unlimited downloads. David, that is less than 1/3rd the price you quoted in this article *from the same provider*. Where did you get the 100 euro number from?

For half that you can have 100 down, 1 up. Most people don't upload a whole lot. 15 euro is 20 bucks aus a month. PPP it and you still end up with both the basis and premise of this article undermined and ridiculed.

Now remember, that is $20 aus for unlimited downloads on a 100 pipe. Internode is offering 30gb / mo on a 100 pipe for 5 times that. I would be quick to assume that Orange may be the Dodo of eastern europe and Internode makes a poor comparison, but if you had a clean 100 pipe running at capacity you could crack that 30gb in an hour. ONE hour.

After saying that in our best dramatic, sarcastic voice to the jury, the prosecution rests.

As an aside I am really curious to know why you closed by invoking North Korea. It's almost as if you knew the article had turned into a flawed hagiography and tried to distract with a bait and switch. Could you explain for us what impact the mini cold war has on internet prices?

[Dave Ingram]

Are large distances relevant?

Australians like to go on about the vast distances to be covered. News flash! Other parts of the world have to deal with this too. That's why the NBN will be delivered over fibre in the urban areas, LTE in the regional areas and satellite in BFN (rural) areas.

Norway has big chunks of nothing and so does the US. A cow cocky west of Roma is not going to get 100Mb/s on the NBN.

The PPP factors for Norway are about right -- damn that place is expensive!

[DownUndaRob]

Average Income, where can I get that

From the article: "average wage (about $AU1,300 here, $US800 there)." when can I find a job that is paying this 'average' you speak of, mine is more like the figure you quote for the 'there' site.

That AND I get to live in the most expensive capital city in the country (and no I dont mean Sydney).

[Renegade]

Delusional in Australia

+1 for Tim and Dave on distance.

People here always seem to piss and moan about Australia being large, but when you look at a population density map, the vast majority of people live in a very small area. e.g.:

http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/CEBE696C34C36C6ECA25773700169C5E?opendocument

When having a look at the rollout:

http://en.wikipedia.org/wiki/National_Broadband_Network#Trial_rollout

The rollout is miniscule. Less than 100k "premises" for the first 2 rollouts? But Australia is large? It's a poor excuse.

Have a look at the NBN's planned coverage:

http://www.nbnco.com.au/our-network/index.html

Huh? It's only a very, very small portion of the country. Australia being large is a pathetic excuse.

When it comes to geographic advantages, Australia is pretty flat, making it much easier to lay fiber as you don't need to deal with mountains, as you do in Korea (which has had 100 Mbps since at least 2003, and will have 1 Gbps in 2012).

Korea simply has better governance than Australia. When broadband took off around 2000, the (then) government-owned Korea Telecom decided to roll out broadband for the entire country. They had problems because no single vendor could provide them with enough equipment to do the job, so they hacked all sorts of mismatched hardware together into the system. Needless to say, they had problems.

So early on, Hanaro Telecom had the best Internet service by far (they were bought up by SK Telecom a few years ago, 2007 or 2008 IIRC), with KT delivering the worst. Over time KT corrected that and now offers stellar service. Back in the early days of broadband in Korea, everyone that was remotely tech-savvy that had access to Hanaro, had a Hanaro connection. Now, it's not really relevant whether you have Gangnam Cable, SK Telecom, KT or whoever for your ISP.

From the tables, Australia looks to be 3~4x the price of Korea. But then, again, let's raise the spectre of limits and throttling.

Whether you have a 20, 30, or 200 GB limit, it pretty much doesn't matter when compared to *literally* unlimited, as in South Korea. (I've never heard of any ever being throttled there.)

The NBN has barely started to materialise yet. The rollout schedule is nothing more than listing dates that they've made announcements; it's not a list of construction/completion dates:

http://www.nbn.gov.au/follow-the-rollout/australian-mainland-rollout/

When will it materialise? God knows.

Australian Internet? More like assie shiternet...

Side Note: Regarding, "nervous, paranoid, starving, unstable, dangerous neighbour" -- This is a horrible misconception about the relationship between North and South Korea. North Korea plays a game of brinksmanship, but nothing more. Nobody in the South is remotely concerned about any kind of conflict. The streets of Seoul are far safer than the streets of Melbourne or Sydney.

[MaxForce]

The NBN Lemon

The Australian/US wage comparison can't be used in this case without considering how much some workers earn in tips in th USA. Nonetheless I believe it would have been more interesting to show how existing plans for many in Australia are now cheaper than the proposed NBN plans of the same speeds and download limits. That should surely ring alarm bells. It should also be remembered that not only the current Labor Government but the previous Coalition Government are responsible for sabotaging Australia's telecommunications along with Graham Samuel's ACCC. Had the Government acted wisely Telstra would have been allowed to build the NBN at no cost to the taxpayer and we would be using fibre now.