back to article Australia 'should not be scared' of NBN cost

Australia should not be afraid of the NBN's price tag, but should be scared enough to build the network, according to Phil Ruthven, founder and chairman of research company IBISWworld. Speaking at the launch of a study commissioned by IBM, A Snaphsot of Australia's Digital Future to 2050, Ruthven predicted the nation's gross …


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  1. Graham Wilson

    Too far out to call.

    "Australian university degrees being three times the price of Asian degrees, which means the nation could lose its education export industries and become a net importer of education."

    Bloody good thing. Then the prices might drop so the average Australian could afford an education.

    BTW, 30 years ago university education in Australia was FREE! Right, I said FREE!!!


    Re NBN. I'm in favour of the NBN but seriously how the hell you anyone know what the dollars will be like in 2050. That's too far out to call.

  2. Tim Roberts 1

    Now there's a thought!

    The Coalition - for those who don't know, the conservative party in oz and the usual champions of business - say the NBN is waste of money and now some big businesses are saying oz needs the NBN and that it is money well spent!

    OK, so I wonder what will happen to the NBN when the current government loses power in the next election, as they almost certainly will?

    1. Mark 65

      Re: Now there's a thought!

      It generally comes down to this...

      It'll cost the tax-payers a fortune as Governments are notoriously bad at a) controlling costs on active projects, and b) getting value in the first place.

      Some big businesses (already major players in IT, Comms, and internet etc.) will stand to make a lot of money once the NBN comes in as it'll open up new revenue streams and expand the value of others.

      They will be paying fuck-all towards it.

      They will be minimising their AU tax exposure as all shareholder responsible companies do so there is not necessarily a valid argument of "it all comes back through tax dollars"

      i.e. The little man pays, the big man benefits.

      Scare-tactics are the last refuge of the conman.

      I'm am still not swayed by the argument of FTTP over FTTC. FTTP makes sense for new estates but to retrofit is ridiculous when, for example, I already have a 30Mbps connection in the city. FTTC would provide a similar deal for others. 100Mbps just means things I download might arrive it 3mins rather than 9mins. So what?

      1. Graham Wilson

        Re: Now there's a thought!

        "30Mbps connection in the city"

        So it's a case of 'I'm alright Jack' eh? Very few others have anything like that. 6km from the CBD and one's lucky to get 5Mbps. My speed's been so low at times I can't even iView to work and the ISP says 'them's the breaks'.

        1. Mark 65

          Re: Now there's a thought!

          Not at all a case of "I'm alright Jack". I'm pointing out those connections are available in the city to anyone who wants it. It comes courtesy of a Foxtel cable using Bigpond Cable Broadband. That's available in quite a few places I hear. I could pay less for ADSL and get 2Mbps at best (3km from CBD) but I decided to pay more to get the better connection. I then go on to state that FTTC would provide a similar speed for others where this is not available. Yet no, the Government wants to offer FTTP to everyone, retrofitted, and at huge expense.

          The beauty of FTTC for existing builds is that you can then do the cabinet to the premises at a later date if required rather than, as another poster points out, build FTTP at great cost with outdated tech or insufficient capability to provide everyone with their purchased bandwidth or likely anything close to it.

          This is not an "I'm alright" post it's an "I pay enough taxes already, try not to just squander them away in an international pissing contest" post.

      2. Anonymous Coward
        Anonymous Coward

        Re: Now there's a thought!

        And what are your upload speeds like?

        The whole point of ubiquitous high speed broadband is that it's ubiquitous. If not everyone has it (or access to it) then you have to cater to the lowest common denominator, and that's pretty much exactly what we have today.

        As for some people making money out of it, well, that's no reason to not do it. How much money do the TV companies make off the back of some power wires that were put in before TVs were readily available in people's homes? How much of the economy relies on roads put in before today's drivers were born? If you're seriously suggesting not to put in infrastructure because someone might make the best use of it then go back to living in a cave, but don't demand society stand still because you don't think it's fair.

      3. Tim Bates

        Re: Now there's a thought!

        "100Mbps just means things I download might arrive it 3mins rather than 9mins. So what?"

        People saying "I already get X mbps and I'm OK" are really failing to see the big picture that is Australia. And the Federal Government is the body that deals with that big picture.

        Just for one example, business users are crying out for faster internet. Time is money, and that 6 minute saving you mentioned is 6 minutes they can be doing something else.

        1. Mark 65

          Re: Now there's a thought!

          Can people here not read? I'm not saying "I already get X mbps and I'm OK" FFS, I am saying "I already get X and I don't see why the Government should spend $45bn on achieving ubiquitous X+ via FTTP when it could achieve it by FTTC for less cost". It is not about giving everyone less speed than I have it is about the base level being capable of greater speeds than I have via FTTC not FTTP. FTTP can then be added later if required, from the cabinet that's already been wired to.

          Christ, is that so bloody difficult to comprehend?

  3. Anonymous Coward
    Anonymous Coward

    Typical gov shill crap

    The current PM is a hairs breath away from her governments total collapse an she may even be replaced before the next election. Scared of losing the next election all these protect the large boons projects of the labour govt start coming out in the press. Why so scared of losing it?

  4. -tim

    Future proof?

    So far there are at least 3 NBN standards that have been installed and two are already obsolete and will have to be rebuilt. So far none of them do a real gigabit outside of a lab and even that involves tricky calculations. Telstra already put in the wrong fibre once and had to replace it so at least some people know that not all glass will be useful forever. The current NBN is an over priced and over grown fibre only cable TV network which shares 2.5 gig with everyone else on the link. The only future proof system would be to put pairs of single mode to the exchanges and switch it there. The idea of back hauling it to a few major points around the country will lead to some very long outages in the future.

    Meanwhile many ISPs are still rolling out ADSL2+ but only to exchanges where they can get their own links. If your on one of the thousands of multiplexing RIMs your out of luck until the NBN is installed in a decade or so.

    1. Graham Wilson

      Re: Future proof?

      Who cares?

      Are you aware of the real (naked) bandwidth of a fibre optic cable? Obviously not. That's the hard and expensive bit, modems and switches etc., are throwaway items.

      The installation's been going a few years now, sure it's time to upgrade the peripherals. Big deal.

      Don't obfuscate the facts: fibre will last a damn long time--probably as long as copper, and that's 100+ years.

      FYI: I've little doubt the government's stuffed the costs etc.--as with everything it touches--but that's little to do with the intrinsic high speed nature of the technology.

      1. -tim

        Re: Future proof?

        Are you aware that this isn't point to point but point to multi-point? If you have been paying attention, its time to change the optical part of the network and the endpoints.

        You know the naked speed of the PON system has been sitting at 25 gig for the past 2 decades? That is using every trick that the point to point stuff has been using to push far more bits through the glass. Look at that NT&T is doing in Japan to try to fix the limits of their *PON installs? They are now using a term that roughly translates to "two star" for their interim solution which involves duplicating their existing networks.

        PON in all its flavours is a push network. For the head end to listen, you have to coordinate when all the end points talk which means you waste bandwidth. A 1500 byte ethernet frame is about 25 mm long in that fiber. If you want 100% utilisation, you must coordinate the client ends to about a tenth of a nano second. To add to the fun, the optical distance of the fiber changes as the cable moves in the wind. The performance limit of shared links is the turn around time, not the capability of the medium. The same applies for HFC and radio links.

        1. seven_tech
          Thumb Down

          Re: Future proof?

          May I ask then why NBNCo. is saying, unequivocally, it will be able to upgrade us to 1Gbps DEFINITELY (already happening) and possibly 10 or even 50Gbps, on the current fibre, with simple swap outs of the switches and NTU'S?

          Are you saying they are just plain up lying? Or that the companies providing them the equipment (Cisco, Alcatel-Lucent, Ericsson) are plain up lying to them?

          By the way, only 25% of the fibre rollout is aerial. And, while certainly not a network or fibre expert, I know for a fact that error compensation mechanisms are in place for EXACTLY this sort of thing. So it adds 5ms to the overall journey there and back. Big F$*#ing deal.

          1. -tim

            Re: Future proof?

            You're confusing technologies. I'm talking about a rickshaw and you are saying you can make F1 cars go faster. I'm talking about the shared passive optical fiber network that NBNco is building.

            They currently have a 2.5 gig budget per splitter. You can get gigabit on one direction only if everyone else is on adsl speeds. The still have plans to roll out 25 gig in the future but no one has made that work reliably yet but its been in development for nearly 20 years. The latest cheap HFC kit is now faster in real world deployments than what the NBNco is installing now.

            The 10 gig and faster are direct point to point connections with two fibers going from the customer to the switch and that stuff is exactly the same stuff any telco in the country can supply today but thats not part of the NBN rollout, its just another service offered by NBNco.

            With the point to point stuff, you can just upgrade the switches but that doesn't work with shared fiber.

            When you count on the error compensation mechanisms, you are throwing away bandwidth. If the end points can just talk when they want, they will be stepping on each other all the time which gets worse as people try to use the upstream bandwidth as your collision go up exponentially just like old thin-net ethernet when everything on the network wanted to talk at once. There are tricks using different frequencies but that only pushes the problem closer to the core switchs or make the ONTs very expensive. The core switching is going to be interesting as well since the sheer number of bits going by will exceed the number of bits switched by the worlds largest peering points.

          2. Graham Wilson

            @seven_tech --Re: Future proof?

            "May I ask then why NBNCo. is saying, unequivocally, it will be able to upgrade us to 1Gbps...."

            Because that's how fibre works. Fibre's intrinsic bandwidth is just enormous and growing. If you have any doubts then read this current El Reg post:


            Already blindingly fast, it won't be long before fibre's so much faster it'll have left the bandwidth map altogether.

            The issue is not that NBN Co can swap out switches and up the bandwidth, it's everything else that surrounds the project including historical events such as that fact that governments sold off the cable network when it sold Telstra--an action that'll have at least doubled the cost of the NBN by the time it's finished.

            Past and present government fuck-ups surround the NBN everywhere, and guess who ultimately pays? Right, we gullible, non-complaining subscribers do, as usual.

  5. xj25vm


    Thanks for taking a whole article to pretty much quote word for word what the IBM dude is spouting - but not taking a single paragraph to explain what NBN is. This might be an IT website - but not each and every one of us if fully conversant with every single topic. It makes for good journalism to assume some of your readers are new to the subject - and provide a touch of background info.

    That's all.

  6. The Ref


    Fiber to the Node is a great idea and i support that solution 100%

    Fiber to the home - well the only business cases for that I see are

    a) movies on demand

    b) hosting your own server

    c) running a medium sized business from home

    A) is not a business case and will do nothing for the nation, (B) provides a poor solution compared to existing cloud offerings, and for (C) if you are running that size company you should be able to afford your own decent link.

    ADSL is not currently as available as it should be due to the exchange connectivity issues which would be sorted by FTTN. Basically the Government is not producing a business case because the numbers dont add up. People are moving to mobile access in droves and the revenue will not be what is expected.

    The Government spouts this as the age of Fibre but fails to mention that fibre is already standard for cities and large rural infrastructure (like hospitals) so the business justifications presented are seriously flawed and often deceptive. A FTTN solution including regional areas would produce most of the expected benefits with a fraction of the cost.

    And finally, I dont expect any Government to bring in a project of this size on budget, and this Government has a history of notorious failures. A rumour is that the original FTTN design was abandoned because the "Fully costed" solution failed to account for paying Telstra for its fibre, so the best solution was to change the design (with a 10x price multiplier)

    Absolute fail!

    1. seven_tech

      Re: Fail!

      Lots of PEOPLE are getting wireless, but the DATA they use OVER that wireless makes up....7% of the total data downloaded. And it's getting lower, slowly:

      Fixed line downloads are increasing at 26% a year, while wireless downloads are increasing at 20% a year. So they're both growing, but fixed line is rowing faster AND makes up 93% already of the data downloaded.....unless you're suggesting 4G can handle this amount of data flowing through it? aren't are you? Cause that would be quite ridiculous.

      Also, the failure of the old FTTN design? It was not about Telstra FIBRE, but Telstra COPPER. FTTN requires that you cut into the copper, as you have to put the cabinet closer to the permises to get ANY gain of speed using FTTN. Telstra admitted that while the cost to the government for construction of the network was around $5 Billion, they would NOT accept less than $10-15 BILLION for their copper network, which would now be useless as a standalone copper network. That put the total to close to $20 Billion....and it was only going to cover about 60% of Australia...

      ALSO and perhaps most disturbingly, one of the good things about the NBN is the wholesale uniform pricing. ALL RSP's can access it, anywhere, for the same cost. Under a FTTN, the ULL (Unbundled Local Loop) system which has allowed competitors to use their own DSLAM's to compete over Testra's copper, WON'T EXIST. The architecture of an FTTN system is INHERENTLY monopolistic, with no way for more than one provider to access a premises. Also meaning only ONE company can provide actual access....imagine if it was Testra....hmmm, no wonder they wanted the Howard government to build the FTTN. It would essentially remove THAT's why the ACCC knocked it back!

      Absolute fail indeed....

  7. sueme2
    Thumb Up


    If you dont want fiber then go back to your shitty 14k dialup. That is the difference it will make to you and your world. I have 18Mb most of the day, and most of the day I do not have a use for it. Most of the day I could live on 14k dialup. But when I want, believe me, I want. You could give me 1Gb and I could find an occasional use for it. Anything to do with moving a shedload of data from here to there will benefite. But what i see as significant is that the depreciation on the copper is about the same as the spend on the NBN, and they did not even mention the scrap value for the copper melting into obsolence.

  8. Anonymous Coward
    Anonymous Coward

    Broadband fail

    Here are a couple of reasons why we need the NBN to be rolled out to all:

    Example 1 - a person buying a brand new house in a brand new development on Sydneys outskirts - They can not get any ADSL as the Tesltra exchange has no available ports and Telstra has no plans to expand the exchange. Telstras solution was to try and sell expensive Wireless broadband.

    Example 2 - a person buying an established house in a Sydney suburb with existing infrastructure - They can not het ASDL 2+ because the phone system for the estate was wired (in 2003) as "Pair Gain", to allow Telstra to save a few bucks, when that technology had been obsolete for decades. Telstras solution - Pays us hundreds of dollars ane we will upgrade your phone connection to support ADSL 2+ but we can't guarantee there will be any ports available in the exchange and we can't say what speed you will get.

    Neither of these suburbs have Foxtel or Optus cable.

    Example 3 - Living in a unit in an Inner Sydney suburb for a number of years with both the Optus and Foxtel cables running past the front door - Unable to get Bigpond Cable as there was no Cable Server in the area and Foxtel/Bigpond had no plans to roll out any more cable servers to service the area. Also to get the Cable connected to the block every person in the block of units had to signup for Foxtel or Oputs cable TV (despite the fact that only a couple of units wanted highspeed internet and none wanted Cable TV) Fortunately in this situation ADSL and ADSL 2+ was available.

    Fibre to the Node doesn't help in situatuions where "the last mile" doesn't support high speed ADSL.

    As to the reasons for having high speed internet one that was completely overlooked by "The Ref" was "tele-commuting". With a decent connection speed I can work from home at least 3 days a week thereby reducing the load on the road and public transport networks.

    1. Tim Bates

      Re: Broadband fail

      "With a decent connection speed I can work from home at least 3 days a week thereby reducing the load on the road and public transport networks."

      I'm a tech in a retail computer shop, and even we've discussed that idea... With an IP KVM on the bench, and a decent upload speed, I could work from home, or even head off on a road trip (someone else driving of course)

    2. Graham Wilson

      @A.C. - - Re: Broadband fail

      Precisely correct. Why are people still arguing such fuzzy nonsense about the NBN when the technical facts (and installation situations/environments etc.) are clear cut?

      It has to be on political or idealistic grounds for what other reason can there be? Their logic reminds me of Reichsmarschall Hermann Goering's quote [paraphrasing] 'Two plus two equals four except when I say it equals five' (but methinks he understood his reasons better than these naysayers). NBN opponents so often oppose the NBN by stating the laws of physics and other facts are something other than they are.

      If one must attack the NBN then it's easy--start and end the attack with the long list of government fuck-ups (for instance, how Telstra was sold off complete with the caleways intact).

  9. petzl


    Q: What has Tony Abbott promised Murdoch?

    A: A broadband network that will be so slow as to offer no competition to his pay TV interests.

  10. mathew42

    NBN take-up is below expectations

    The NBN take-up is under half (~18%) the lowest expected rate of 40% during the build (page 77 of NBNCo Corporate Plan). What this means is that although NBN has positive support, when people have to put their money down they aren't. The best reported take-up figure is 34% in Kiama.

    NBNCo decided to re-introduce speed tiers into the Australia Market. The advantage of this is that it provides a lower headline price, but the NBNCo Corporate Plan predicts 50% will connect at 12/1Mbps (page 118). Current selected speeds are higher than this, but this figure is heavily biased by early adopters. In Australia internet usage is limited by quotas, so speed tiers don't make financial sense.

    NBNCo intend to raise ARPU and this will impact primarily on high end users. Prices for the same service will (almost certainly) decline, but at a rate significantly less than the uptake of faster services / downloading more. The effect of this is that if Australian's don't pay more their relative ranking in speed and quota will drop.

    Plans for AVC pricing are outlined on page 101:

    * 1000/400Mbps falls from $150 to $90, while the average speed grows from 30Mbps to 230Mbps.

    * Price falls by 40% while average speed grows by 760%

    Plans for CVC pricing are outlined on page 103:

    * Starts at $20Mbps/Month when the average data usage is 30GB/Month and falls to $8Mbps/Month when the average data usage is 540GB/month.

    * Price falls by 2.5 times, while the average data usage grows by 18 times = growth in revenue from CVC of 720% when accounting for price falls.

    The real challenge is that mobile phone companies are rolling out 4G which is cheaper and faster for many than 12/1Mbps, especially if your mobile phone plan already includes a data allowance. NBNCo are already predicting that 13% of premises passed by fibre will opt for wireless because it is cheaper.

    1. ChrisInAStrangeLand

      Re: NBN take-up is below expectations

      I'm predicting that with the low latency of LTE and the enormous cost of a speed competitive 100Mbit circuit from the NBN monopoly, the majority of users will elect for leaving that brand new $3000/install fiber dead when it's brought into their homes.

      75% of users are happy with 256k ADSL and/or dialup. They'll be equally happy with wireless.

      1. seven_tech

        Re: NBN take-up is below expectations

        You are quite obviously either a troll or badly misinformed. For a start, the fibre install of $3000 is only relevant to those outside the sities and part of the reason a NATIONAL rollout is required, to subsidise these connections.

        Secondly, my current ADSL costs me $70 + line rental, so $100 a month. I get MAXIMUM 8Mbps, average 5.5Mbps. With 200GB quota.

        On the NBN, I can get even just a 12/1 plan, which is still better than what I have, with 200Gb, from iinet, for $60. No line rental required. That's a $40 saving. If I want 25/5? $70. 50/20? $85....would you like me to keep going till I get to 100Mbps?

        75% of users are happy with 256k ADSL....mmm, now I know you're a troll. Look up, hell, just a newspaper sometime and take a quick look at the average broadband speed in Australia.....5Mbps.....yes, we're DEFINITELY happy with dial-up...which makes up 3% of the total internet connections in Australia.

        Seriously, troll somewhere else, we're trying to have a discussion here.

      2. Graham Wilson

        @ChrisInAStrangeLand - - Re: NBN take-up is below expectations

        "75% of users are happy with 256k ADSL and/or dialup. They'll be equally happy with wireless."

        Come now, pull the other!

        What's your phone? Two baked bean cans with interconnecting string or the up market model made with two plywood sounding boxes interconnected with steel wire.

        Methinks it must be the former.

  11. mathew42

    Return of a monoplist

    Technically the NBN plan is world class, but the implementation has some serious issues.For decades telecommunications has been held back by Telstra acting as in inefficient monopoly. We only saw real change when rivals were able to install their own DSLAMs in exchanges, resulting in faster speeds and cheaper prices. Unfortunately the NBN is the re-introduction of a monopoly.

    NBNCo reached an agreement to not raise prices by more that 5% with the ACCC. This is laughable when you consider that demand for speed and data is continually rising and the price of providing it is falling. Think back to what speeds and quotas were available 5, 10, 20 years ago. To suggest that NBNCo might need to raise actual prices hints they are worried about failure. However NBNCo are planning to significantly increase ARPU by not reducing prices as quickly as demand rises. This will impact on high end users.

    A fixed return of 7% has been mandated by the government. This might sound good, but bureaucracies exist to perpetuate themselves and managers increase their status by having more staff and larger budgets. When the only impact of cutting costs is that wholesale prices in the next year are cut, there will be little incentive unless there are cost overruns.

    Due to a decision of the ACCC, the NBN is effectively 121 separate networks that Retail (Internet) Service Providers (RSP) need to connect to. A better approach would be to call for tenders to run each of the networks, in a similar way to private companies running bus and train services. In some areas, tenders would pay for the privilege while in other areas (e.g rural) the government would pay a subsidy. Uniform wholesale price caps would provide consistent pricing across the country. Bonuses could be offered for increasing take-up, while penalties could be applied for failing to meet service level agreements. Such competition is likely to be more efficient than a single government monopoly.

    To compound the problem, the government intend to privatise NBNCo when the network build is completed returning us to the same monopolist controlled mess we are in now.

    1. seven_tech

      Re: Return of a monoplist

      Hi Matthew!

      Still pushing your mantra I see. Notice how nobody except me has replied?

      Aren't you bored of this yet?

    2. Graham Wilson

      @mathew42 - - Re: Return of a monopolist

      "To compound the problem, the government intend to privatise NBNCo when the network build is completed returning us to the same monopolist controlled mess we are in now."

      Precisely correct. I've not the time to argue the case here in much detail (and I've done so many times before), however the proposed sale of NBN Co. is a damn worry and I'm wondering if the Australian public has sufficient guts to kick up a real political stink about it before any sale.

      For years, I've said that governments have committed treason against the Australian people when they sold off Telstra as a package deal complete with cableways and the cableway rights-of-way across the country. Not only did this necessitate the need for duplicate communications networks (Optus etc.) to be built (as Telstra continued to have the cable monopoly), but also the current buyback of the cableways from Telstra would never have been necessary had governments not been dishonest with the truth and light-fingered with our money. Despite a few sensible voices crying on deaf ears at the time, unfortunately the Oz public were conned by Oz Government Inc., they were fully duped by its glossy marketing.

      Clearly, when Telstra was sold the obvious, sensible and equitable solution should have been for the cableways to come under the control and management of a revenue-neutral cableway authority that would have sold telcos wholesale access to the network. To keep such a cable authority honest, efficient, delivering services on time and financially transparent, it would be managed by a telco-government quango on a 49%-51% voting basis. Telco involvement would ensure the authority ran efficiently (thus minimise telco wholesale prices), and the government would ensure users and subscribers received a fair deal and that the network was managed properly and in the national interest.

      It's anyone's guess what the sale of the cableway and its buyback will ultimately cost the Australian public (in tax revenues which should have been better spent elsewhere), and the additional cost to NBN Co's current and future subscribers by increases with increases to their subscriber's fees, all to pay for the fiasco.

      I'd guess the loss of monies would easily amount to tens of billions of dollars. The 'defrauding' of the Australian public through deception and monetary sleight-of-hand by the politicians who were entrusted with the deregulation of Australia's telecommunications will, in all likelihood, go unpunished, as they've the power to dismiss any attempts to bring them to account.

      To me, and I suspect to many other Australians too, the 'mismanagement' of the deregulation of Australia's telecommunications by successive Australian governments mounts to a misfeasance on such a grand scale that there's no other satisfactory description for it other than that of treason.

      Unless there's an almighty outcry from the Australian public--which methinks is unlikely in the current political climate--nothing will happen, as those guilty of the 'fraud' not only have power but also they come from both sides of the political spectrum.

      The best attack seems to be to publicise the debacle everywhere and demand a truthful and independent review/audit of all finances back to year dot.

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