ACCC should stop Conroy's 100Mbps claims

ACCC should stop Conroy's 100Mbps claims

Summary: The Australian Competition and Consumer Commission (ACCC) has put a stop to telco's marketing "theoretical maximum" speeds to consumers. Should Conroy be banned from making speed claims too?

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commentary The Australian Competition and Consumer Commission (ACCC) has put a stop to telco's marketing "theoretical maximum" speeds to consumers. Should Conroy be banned from making speed claims too?

The $43 billion taxpayer funded National Broadband Network (NBN) is bigger than just high speed broadband. It's about providing competition in under-serviced regions, restructuring the telecommunications market, ending Telstra's monopoly and upgrading broadband technology — all important and worthy goals.

But, to sell the network, Conroy has repeatedly trotted out the line that the NBN will deliver speeds of "up to 100Mbps". The last time he used that line was in Tasmania on 1 March. "Ultimately, 200,000 homes, businesses, schools and hospitals in Tasmania will have access to optic fibre and superfast broadband speeds of up to 100 megabits per second."

'Up to' or 'peak network speeds' are likely to be misleading if in fact only a small proportion of consumers using the network can expect to achieve the stated speed.

ACCC

This claim, for any telco, could attract a $1 million fine if the government passes the Trade Practices Amendment (Australian Consumer Law) Bill 2009 this month. The impending Bill prompted September's guidance by the ACCC to telcos over mobile speed claims, which put an end to, for example, Telstra using a 21Mbps "theoretical maximum" speed to sell Next G. But the reason for the ACCC's guidance appears to have escaped Conroy.

"A speed claim that conveys the representation that consumers will achieve 'up to' a stated speed is misleading if the stated speed is no more than a technical speed achievable in controlled conditions but otherwise unachievable in the real world," the ACCC wrote in its September guidance on the issue.

The ACCC, of course, was referring to technical limitations, but surely the "real world" includes people's ability to pay.

At this week's press briefing announcing the mainland NBN trial suburbs, I asked Conroy: would the government be willing to subsidise access to 100Mbps services on the NBN, if it would cost at least $130 per month to access such speeds? (Other ISPs offer similar or higher pricing for 100Mbps services.)

Conroy's fine print became clear.

"If a [retail service provider] wanted to charge $130 for 100Mbps, people would be free not to take it out. There will be a whole range of pricing points. You picked the premium end."

I certainly did pick the premium end. But it's the same 100Mbps premium end that Conroy has been trotting out all along, not the 20Mbps fibre connection that the majority of Australians will realistically end up with.

As the ACCC explains: "Representations of maximum, 'up to [speed]' or 'peak network speeds' are likely to be misleading if in fact only a small proportion of consumers using the network can expect to achieve the stated speed."

If Conroy complied with the same rules that apply to the country's telcos in the name of consumer protection, then he should make a choice: either stop using the "up to 100Mbps" claim for the NBN since it's not going to be available to most "real-world" Australians, or subsidise the retail cost so that it is.

Fortunately for Conroy, while he is a kind of proxy for NBN Co, he is not a telco, leaving him as probably the only person in the entire telecommunications sector that has the liberty to make ridiculous speed claims.

Topics: NBN, Broadband, Government, Government AU, Telcos

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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25 comments
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  • Claims

    "Fortunately for Conroy, while he is a kind of proxy for NBN Co, he is not a telco, leaving him as probably the only person in the entire telecommunications sector that has the liberty to make ridiculous speed claims."

    Oh he seems to take the liberty to make far more ridiculous claims then just about the speed of the NBN.
    anonymous
  • You're right but you're wrong

    Unlike ADSL the fibre to the house service is not succeptable to significant attenuation over distance. Most households will be able to get full 100 MBps theoretically.

    The modems in most price ranges on the client end will also be able to support maximum speed. The other end of the fibre - i.e. the backhaul will too support the maximum speed.

    The ability of the ISP to sustain higher speed connections comes down to the amount of quota given to the customer. Surely increased speeds by its customers will put a bigger strain on the ISP infrastructure, but it's orders of magnitude less than that one imposed by the ISPs outgoing link capacity.

    I don't think the comparision to $130 a month service is fair as a significant portion of that would be the last mile cost, which is what NBN is trying to solve. Once the fiber is at the house the fixed cost for the infrastructure is the same regardless of whether or not the link speed is restricted.
    anonymous
  • Escape

    "But the reason for the ACCC's guidance appears to have escaped Conroy."

    There's a lot of things that have escaped Conroy - intelligence, common sense and human soul (to name three) escaped long ago and are running free in the outback somewhere.

    Anyone who spots them please capture and return, because egotism, nepotism and stubborness are doing a hopeless job keeping this shell of a human being running.
    anonymous
  • How is this thing costed??

    During a recent trip to a friends house in suburban Melbourne, I pondered at how vast our city is, and the gargantuan effort it would be to roll out a new high speed telecommunications network throughout one city , let alone across a nation.. Whether it be in Telstra's existing ducts or overhead, which is the NBN plan B if they do not receive Telstras cooperation, I would question whether the estimates of 30 something Billion would be sufficient to finalise the task. What happens if the costs blow out? (and they will)
    anonymous
  • Non-story

    Yet another non story on zdnet. As you point out in your story:

    "The ACCC, of course, was referring to technical limitations, but surely the "real world" includes people's ability to pay."

    No, the false advertising provisions levelled against Telstra etc for 21Mbps Next G, and ADSL2 providers for 24Mbps ADSL2, are about the available speeds. The fact that people may choose to buy a lesser service is their choice, but it certainly is not false advertising to claim 100Mbps on the fibre network - unless of course it becomes an 80Mbps service with 20Mbps reserved for IPTV and VoIP with no provision to actually get a 100Mbps internet/web download service.

    Slow news day ZDNet? Or just a vested political agenda?
    anonymous
  • Ridiculous article

    I agree with the comment above... the fibre can deliver 100Mbps, unlike ADSL or Wireless which is a best case scenario and often FAR slower.

    "The ACCC, of course, was referring to technical limitations, but surely the "real world" includes people's ability to pay."

    Damn, so Telstra can't even advertise ADSL1 at 512Kbps now, because if I'm unable to pay then I'm unable to get that speed?

    Come on guys, raise your reporting a notch.
    anonymous
  • Their choice...

    I assume you, like I am, are an Australian taxpayer. You are being sold a network on the basis of speeds which in theory will be available to everyone.

    However, before you know whether you will be able to afford the speed that is being used to appeal to you, you're being asked to to sign on the dotted line. The unfortunate fact is that no one, except perhaps a few within NBN Co, knows how much 100Mbps will cost at the retail end. What we do know however is that this currently costs at the very least $130 per month. I'm not sure about you, but as far as I am aware, not many people do spend this much per month on broadband.

    And to answer you question, no, there is no vested political agenda. I just don't like misleading sales pitches.

    I have not heard Conroy ever say before that you can choose 'not' to buy 100Mbps. The emphasis has been everyone will be delivered speeds "up to 100Mbps". It's also at a cost to the taxpayer - the same taxpayers that will be its indirect customers.

    As for what how services will be structured on the NBN, and what consumers will have available to them, well that's an industry structure question, the answer for which will have to wait until Conroy decides whether or not to release DBCDE's implementation study.

    Regards,

    Liam Tung
    Journalist
    ZDNet.com.au
    anonymous
  • Taxpayer: YES. Service provider: NO.

    I'm not being asked to sign on the dotted line. NBN is a wholesale company. An ISP may ask me to sign on a dotted line, and they might make claims on the level of service provided. At this point the ACCC might make a determination on the accuracy of that claim as it pertains to the Trade Practices Act.

    This is a total non-story. As for the claims by commentors of a "vested political agenda" - often when you see a conspiracy, most of the time it's just incompetance.
    anonymous
  • Quit the FUD

    "What we do know however is that this currently costs at the very least $130 per month. I'm not sure about you, but as far as I am aware, not many people do spend this much per month on broadband."

    So your argument is that because you can't afford it, it shouldn't be advertised at all? I didn't realise the planet revolved around you.

    The ACCC ban is referring to the technical limitations in the real world. You've taken it right out of context. There is no technical limitation of reaching 100Mbps in every household. This article is all FUD.
    anonymous
  • Apples and Oranges

    ZDNet needs to better oversee the gushings of its junior reporters.

    Fibre will indeed deliver to each household full 100 Mbps speeds, and eventually any speed of which the exchange switching hardware and backhaul are capable. Unlike speed loss from shared wireless with its susceptibility to interference, the physical infrastructure to premises will be a permanent asset that is utterly future-proof.

    As to the cost, remember that it will undoubtedly include all telephone calls, global television, with multiple simultaneously HD streams and lightning-fast downloads, and other areas of cost offset to the household budget. And inevitably its cost will come down in line with Moore's Law.

    The NBN is also primarily about first delivering to the have-nots, including RIM sufferers in cities and 56 Kbps dialup-only rural communities, except the very isolated ones which will need wireless.

    Perhaps ZDNet thinks it is supporting the Coalition by sniping at this magnificent agenda. It would do better to help Mr Abbott et al to realise that it is the best technical solution to Australia's tyrranny of distance, and to focus on its efficient delivery, an area where the ALP may indeed have exploitable weaknesses.
    anonymous
  • It is not misleading

    Liam, mate, I'm sorry but I have to agree that the price is irrelevant in arguing the case of misleading and deceptive conduct if it isn't included in the promise.

    As for the question of whether you can choose to buy less than 100Mbps, the short answer is the economics only works if you can buy less than 100. The reason being that as a vendor NBN Co needs to apply a degree of price discrimination to capture the true "value" consumers place on services.

    You are dead right the NBN Co is unfundable and unviable if every consumer gets 100Mbps and gets it for one price. But there are four thernet ports and two ATA ports on a typical ONT. NBNCo's business model needs to be one that costs the end user more if they fill these up, and costs the end user about the same as a telephone line plus DSL if they just use one ATA and one Ethernet port capped at, say, 20 Mbps.
    anonymous
  • 100Mbps NOT the minimum

    Besides, if you can't afford the $130 per month for 100Mbps, you can always choose the 25Mbps service for around half the price.

    Take a look at Internode's FTTH service: they are providing FTTH at three speeds: 25Mbps, 50Mbps and 100Mbps. Surely the NBN will provide similar services where you can choose the speed of your connection.
    http://bc.whirlpool.net.au/bc/isp-9-15/internode-home-fibre.htm
    anonymous
  • RL

    Just wanted to clarify this "RL" is not Renai LeMay, in case someone was wondering. I liked Liam's commentary tho.

    Cheers,

    Renai LeMay
    Ex-News Editor
    anonymous
  • No there IS a point to a Minister keeping to facts

    I don't think this is a non-article.
    If the typical consumer and now ACCC are working hard to force telcos to make only realistic speed claims, then it is beholden upon the Minister to keep within the same 'consumer protection' guidelines when spruiking any service (including a government-owned one).

    I agree that price is not the issue, meaning that lesser speeds may be available at lesser prices, but no-one should cite a speed that will not actually be achievable in practice, irrespective of where the bottleneck might occur.
    anonymous
  • Fake!

    Imposter!

    Readers please don't allow yourselves to be confused by this imposter.

    I'm the real former ZDNet News Editor Renai LeMay and I most certainly *was* commenting on Liam's piece.
    anonymous
  • Not achievable?

    Why do you believe the speed is not achievable in practice? It is using fibre optics. The speed does not degrade over distance like adsl. So whatever speed you choose, it will run at that speed assuming the network can cope.
    anonymous
  • when GPON looks like ADSL

    In fact, with FTTP using GPON, every home gets 2.488Gbps down. The active interface at the home in the ONT offers a 100Mbps Ethernet connection. But GPON is a point to multipoint service. If there are 64 multipoints, then the 2.488Mbps is shared across 64 users. If all users are flogging downloads simultaneously (IPTV), then each would only get, on average, 39Mbps.

    And GPON is asymmetric, like ADSL, with the uplink speed 1.244Mbps. The 64 homes are allocated a 1/64th time slice for uplink access. But, in general, there is alos dynamic bandwidth allocation, so, perhaps, up to 100Mbps is available.

    So, this is the NBN at Layer 2. Should 100Mbps be being used? IP and statistics of bits means that bursting to 100Mbps would be not unusual, provided IPTV is managed, otherwise 39Mbps is all that is being offered - and for downloads.

    If a Layer 3 service provider differentiates on bandwidth and aplies quota limits, will market forces (theory) send it broke?
    anonymous
  • 100Mbps misleading as it simplifies complex issue

    As anonymous points out, the end user on GPON is actually getting 2.88 Gps down and 100 Mbps up, so he could say 2.88Gps instead of 100Mbps incomparison to ADSL.

    However the access ONT typically supports 2000 users on a shared backhaul to the aggregation switch. This might be two redundant fibres (to ensure voice reliability) running in lag mode, typically 1 Gbps.

    Some of the bandwidth on this pipe would be reserved for video (~ 10 Mbps per active HD channel), more for data services and some reserved for future use.
    Thus it is VERY UNLIKELY that any individual would be able to get 100 Mbps for a majority of the time, certainly not during peak periods.

    It is of course almost as unlikely that the
    servers they talk to can send data this fast, or that a home user actually needs a fraction of this speed.

    Therefore 100Mbps is sure misleading under the ACC definition
    anonymous
  • Err, No

    Saying up to say 2.88Gbps instead of 100Mbps would definitely be misleading. Each end user will not be getting 2.88Gbps of useable (by them) bandwidth.

    If you download from 100 different sources all over over the world with each capable of providing 1Mbps, will you be able to get near 100Mbps throughput? If the answer to that is no, then you might have a case for being mislead.

    All consumer ISPs oversubscribe their backhaul, none of them could cope with the network load if all of their users went full throttle at the same time. I don't think it's reasonable to suggest that fibre based network should be any different.
    anonymous
  • WTF

    Here's the proof: I am NOT Renai LeMay! LMAO!

    Now that's a non-story!
    anonymous