back to article NBN boss unleashes Australian Net Neutrality debate

Network neutrality has never been the flame-bait topic in Australia that it is in America, but that could be about to change, courtesy of the “Netflix effect”. That's the message delivered yesterday by nbnTM chair Ziggy Switkowski at a Sydney conference yesterday. Telco newsletter and conference co-organiser Communications …

  1. mathew42
    Facepalm

    Speed or data?

    > Consumer advocates in Australia will still argue that “I've paid for a connection, and I shouldn't have to pay extra to use the connection”, and they'll be just as right in 2020 as they are today.

    There are two variables in selecting an NBN plan: speed tier (AVC) and quota (CVC). For NBNCo, cost has to be less than revenue (AVC + CVC). Therefore if you remove the CVC then faster speeds become prohibitively expensive (assuming that the price of 12 & 25Mbps AVC is unchanged). The second impact is that NBNCo no longer have an incentive to run an uncongested network because additional data will not deliver more revenue

    RSPs should know that NBNCo are planning for revenue growth to come primarily from CVC as data usage grows. Netflix and P2P traffic are prime sources of growth.

    1. chugs

      Re: Speed or data?

      What are you talking about. The CVC charge is billed at per mbps.

      A NBN 100mbps tail with a 1:1 contention ratio would have a $1750 CVC charge - $17.50 X 100mbps. Whilst for the RSP it would be at least $100-200 for the backhaul at that ratio.

      And we still haven't even explored the NRC and RC (non-recurring charges) i.e. the NBN wholesale charges tail, $49.95, PoI setup fee - $20k X 120 and the rack and interconection charges at each of the PoI.

      The government has crippled the NBN through greedy pricing. In order to make money from a $89.95 retail fee.

      The root problem is greed. Greed by the big telcos trying to protect their government and enteprise customer segment margins and greed by the government.

      Firstly if the NBN supplied fibre to the home/business connections with ratios of 1:1 or even 1:10 businesses and even government departments would instantly flock to to these services.

      Over a fibre connection with its limitless bandwidth you can have voice, data and video all share without congestion or issue; if the bandwidth is there in the backhaul.

      Right now to buy a NBN like service as a corporation you have to pay thousands, tens of thousands a month per service. They buy a variety of services like telephony. Imagine a ubiquitous fibre to the home network across the country. You technically don't need a voice telco anymore. You could have the entire thing work with VoIP. A public VoIP interconnect register to offer interoperability between VoIP software and you could do away with the plodding telcos and their mega big switches.

      Even mobile.

      So the NBN represents a huge risk to everyone. That's why its crippled with absolutely massive costs.

      I'm really disappointed with the media on this. Why they can't see the greed that is dictating public policy is beyond me.

      The telco executives contribute massively to the liberal partyy. Investigate that one. Look up Paul Broad in the AEC website and have a look at why a staunch liberal like he has never donated to his party.

      Ziggy, Broad and Turnbull himself, not to mention countless other executives are liberal party members/donars/fund raisers. They are the ones that are behind the liberal parties telecommunication policies.

      One final point. The naysayers will make an utterly ridiclious claim that there isn't enough bandwidth/backhaul to offer the country 1:1 100/1000mbps services.

      FIrstly fibre backhaul is insanely cheap these days. Seriously when i started it was $2000 a mbps. Its easily $5 or less now and thats simply due to the telco's acting in a conspiracy to keep prices/costs at a certain level. See pricing managers are traded by telco's like football teams trade star players. These pricing managers value is in knowning what the price is for a particular product and what the competitors are selling it for. This is how the telcos keep prices high without having to meet in a smokey back room.

      Anyway this country is awash in fibre (as it is in drugs). There is so much fibre out there its not funny. And so much dark fibre laid by Telstra, Optus, Nextgen, AAPT, iiNet, AMCOM and so on that if it was lit would make basically wholesale backhaul a fraction of a cent per mbps.

      But even then we could bring more bandwidth to the table. The utilities, radio networks and various other companies have built massive intercapital fibre / microwave networks.

      Plus we have AARNet's SKA network - 3500km of fibre optic networks spanning the desert's of Australia but able to transport 8tbps!!!! The network and telescopes, data centres etc all paid for with less $1 billion.

      But hey journo's somehow the NBN has to spend $70b plus charge $17 per mbps on CVC charges. Doesn't add up does it. Especially when the government failed, in the largest ever infrastructure project, to compulsory acquire the network assets (at a fair price) that could have saved tens of billions on construction. Instead the NBN under the ALP and Liberals overpaid massively for copper and HFC assets that were almost written off by the carriers.

      The NBN is a scam.

  2. mathew42

    Utilities measure usage

    Other utilities (power, water, phone) measure usage and charge for it. Measuring usage avoids the tragedy of the commons where people over utilise a common resource causing degradation. Usage based charging enables everyone to access the faster speeds and encourages people to think about their usage rather than streaming 4 Netflix channels 24/7.

    1. Anonymous Coward
      Anonymous Coward

      Re: Utilities measure usage

      I'm fine for paying for what I use if the fee is reasonable.

      On dial-up, we had accounts where you paid for data in "hours" of connect time. They offered two styles of account: one where the hours rolled over, the other did not.

      The former meant you could keep paying a steady average rate and manage costs. Both allowed you to top up at any time.

      The current system is like buying a 2m long section of aluminium from a hardware shop (because that's the length they sell it in), using half of it for a project, then having the hardware shop staff sneak in, snaffle it and send it to their aluminium supplier at the end of the month. It's not like foodstuff that goes off, it's a flipping number for crying out loud!

  3. dan1980

    I agree that there needs to be a discussion. Here - I'll start it:

    In Australia we have download caps.

    The end.

    Okay, maybe that's a little to simplified but it's not that far from the core issue. In the US, there are, by-and-large, no download limits. That means that people can stream 24/7 if they want. I am fully aware that bandwidth is not the same as download limits and, everything else being equal, a subscriber downloading 100GB really doesn't cost the ISP any more that it does for them to download 10GB.

    BUT, what a download limit does do is to restrict how often people download data, which means that at any given time there will be fewer users utilising the pipe and thus more bandwidth available for those who are downloading.

    Download limits may not completely solve the 'problem' of ISPs trying to recoup their costs but they go a long way.

    That's because you can charge people based on how often they are consuming the shared bandwidth available on the pipe. And so charging based on download amount is, indirectly, a way to charge people for the bandwidth they use - averaged out over their billing period.

    This one, simple difference between the US and Australia changes the debate considerably because in most instances, the US providers do not have a mechanism for charging the subscribers based on how much of the line they are using and so the question is around them then trying to charge those on the other side of the equation. In Australia, that mechanism is in place and has been since day one - it is largely accepted by most people.

    The point is that the Australian system is already geared around charging subscribers based on how much they use the line. So, if a subscriber start using Netflix, one of two things happen: either they restrict usage so that it is within their existing plan or they increase their plan - and thus pay more - to be able to cope with the amount they want to use.

    I.e. - the more 'Netflix' they watch, the larger the plan they will need and the more they will pay.

    'Discussion' over.

    1. aberglas

      Download Caps

      Download Caps should indeed make this discussion mute. Not relevant to Australia.

      So why is Ziggy talking about them? That is the question.

      Because people will scream if the NBN ends up costing more than their current connections, which have been becoming cheaper over the years and for most (but certainly not all) people are already fast enough. Yet he need to justify the huge cost of the NBN. So he is floating the idea that Netflix et. al. can pay for it. In other words, that the extra cost for broadband will be hidden inside the fees Netflix charges customers.

      That is what it is all about.

      Meanwhile, I just wish they would stop wasting money FTTH or FTTN or whatever else that few people want and focus on Fixed Wireless so that I can get off my very dubious ADSL line!

      1. mathew42

        Re: Download Caps

        > Because people will scream if the NBN ends up costing more than their current connections, which have been becoming cheaper over the years and for most (but certainly not all) people are already fast enough.

        I wish I was surprised people aren't screaming already. Each edition of NBNCo Corporate Plan from the first one has clearly explained that for NBNCo to cover costs the ARPU will need to quickly grow to above $100/month from a starting point of $32. Sadly most people were blinded by the shiney fibre light and not evaluated Labor's plan critically. Now they are reaping the rewards.

        > So why is Ziggy talking about them? That is the question.

        I suspect that RSPs don't care if NBNCo makes a profit. What they care about is driving down the wholesale charges to reduce their own costs.

    2. Kent Brockman

      I wonder if we are about to see a sea change in the status quo..

      I have no data cap on my optus unlimited cable connection and the latest versions of the bundle are throwing in 6 months of Netflix as well.

      After the Telstra rep told me that when you breach the limits with them they'll throttle you to 500k it was a no brainer.

  4. ChrisInAStrangeLand
    FAIL

    CVC price gouging.

    The key issue is that "CVC" or "backhaul" to an ISP owned DSLAM via leased or owned fiber is less than 1/10th the cost per Mbit that NBN is charging for connection to their last mile infrastructure. ISPs can't afford to allow ANY services to run at fiber speeds because CVC is just so ludicrous compared to what they are paying now. NBN's position on the matter of CVC charges is "fuck you we're a national telecoms monopoly".

    There's only one way to solve this, it's for the ACCC to mandate that NBN provide wholesale access to the unlit local fiber loop. ISPs can colocate equipment at every POP so as to avoid ludicrous CVC and AVC charges and offer the world class service that NBN won't provide.

    1. mathew42

      Re: CVC price gouging.

      > ISPs can colocate equipment at every POP so as to avoid ludicrous CVC and AVC charges and offer the world class service that NBN won't provide.

      Small minor problem. NBNCo is supposed to deliver a 7% return on investment (ROI). If you cut both CVC & AVC pricing then where does NBNCo source revenue from? Unfortunately if you want a high speed network then somebody has to pay for it.

      1. Jasonk

        Re: CVC price gouging.

        Mathew if you have read he CP16 the ROI is now down to 2%.

        But then it's a bit hard to talk about AVC and CVC when for $56B NBN cant deliver the same speed to everyone. How about delivering enough electricity to run one light bulb while your next door neighbor can turn every light on. Yet according to you they should be paying to same price of a connection. Yet one can use more than the other and pays according. While the other to get the same level of service has to pay $K worth.

        1. mathew42

          Re: CVC price gouging.

          > How about delivering enough electricity to run one light bulb while your next door neighbor can turn every light on.

          That is a very apt description of the impact of speed tiers.

          > Yet according to you they should be paying to same price of a connection.

          Sounds reasonable if the connection fee is low as a percentage of the bill.

          > Yet one can use more than the other and pays according.

          If a person chooses to stream multiple video streams 24/7 or use P2P shouldn't they pay significantly more than Grandma who wants to video conference with the grandkids a couple of times each month?

          Usage based charging encourages NBNCo to keep their network uncongested and in good working order because that maximises the potentital revenue. Cheap connection (access) fees encourage more people to sign-up. Win-win.

    2. aberglas

      Re: CVC price gouging.

      Politically, nobody cares about the internal charging model between the the NBN and the ISPs. What they care about is the total monthly retail charge, which currently averages roughly $60/month, and has been falling. If the NBN package costs more then people will grumble. $100/month ain't on.

      Ziggy knows that. So the trick is to hide the NBN charge elsewhere. If he can charge the likes of Netflix, then the charge will be hidden in the monthly fee that Netflix charges users. But the trouble is that the NBN is too late. Netflix et. al. are already out there, and have established a price expectation. And Netflix are likely to itemize the NBN charges separately.

      At the end of the day, the NBN will just cost taxpayers a few thousand dollars per house hold, which may or may not be a good investment. Then it will all be sold off cheap to Telstra#2, and that is when the real gouging will begin.

  5. Michael Xion

    The reason uploads haven't increased...

    Is because the upload speed is crap. FFS, if I had a decent upload speed I would have my home data backed up offsite and be able to work from home. As it is, I can't. Yes, I can (and do) download somewhere between 50-100gb a month with online gaming, software updates, Netflix etc, but I can't upload fuck all at the measly .7meg upload speed. Faster internet infrastructure isn't just about downloads, give us a decent upload speed and watch the knowledge economy grow.

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