Could NBN leave Rudd Iridium-faced?

The NBN has never lacked critics arguing that it will be too expensive and will be irrelevant for millions of Australians already serviced through other means. Yet even as ACMA reports an explosion in wireless broadband, can we assume this growth dilutes the case for the NBN? Some have, but not all are convinced.

Exetel executive John Linton's well-reported recent blog attack on the NBN certainly polarised ZDNet readers. Yet as I read and re-read his blog, which clarifies his infatuation with wireless broadband and leaves no question about his political affiliations, my thoughts turned to Iridium.

Observations that PSTN services are on the decline doesn't mean people are abandoning broadband, since 'naked' services have also exploded.

Iridium, you may recall, was a 66-satellite global communications service launched back in 1998 when mobile coverage was still patchy and the opportunity for seamless global coverage seemed too good to imagine.

US$5 billion later, the service worked but a drastic shortfall in subscriber numbers sealed its fate: simultaneous massive investment in mobile networks, worsened by the obscene cost of Iridium handsets and service, left it all but irrelevant to everyone but mountain climbers, transcontinental shipping vessels, and Antarctic explorers.

Of course, that wasn't the story's end: Iridium continues to operate today, presumably delivering quite handsome returns for operator Iridium Satellites LLC, which picked up the constellation for just US$25 million in a buyout that remains the stuff of business-school legend.

Linton is a long-time foe of the NBN, so it was hardly surprising that he should come out swinging, arguing that the spread of wireless broadband (as reported recently by ACMA) will make the NBN an irrelevant waste of money that's testament to the "total wanker", as he so eloquently puts it, currently sitting in the Prime Minister's office.

With 6.72 million fixed broadband subscribers and 2.1 million subscribers, there's no question: 3G wireless is exploding in this country. Yet is it necessarily to the detriment of fixed broadband, as Linton assumes? And can we assume that, because lots of people like wireless broadband, that they don't need 100Mbps services?

The ACMA figures certainly don't suggest this: after all, there is no representation as to how many of these services are owned by people who also have fixed broadband at home. And unanimous observations that PSTN services are on the decline doesn't necessarily mean people are abandoning broadband, since "naked" broadband services without PSTN connections have also exploded in recent years.

Indeed, the ACMA figures suggest that the market added 1.06 million fixed broadband subscribers between June 2008 and June 2009 — a nearly 19 per cent annual growth rate that hardly suggests a dying market. But this is exactly what Linton is arguing, dismissing traditional NBN use cases such as healthcare, on-demand video, triple-play services, and so on. Take those away, he believes, and there isn't much left to justify the NBN.

Whether or not Linton believes the $43b investment by our "moon-faced moron" would be better spent subsidising 3G mobile carriers to expand their networks in our "insignificant country", one cannot say. Whether he believes the current Telstra-dominated broadband market is structurally acceptable and financially sustainable, one can only infer (on a curious related note, Linton has been quite open about Exetel's difficulties building a viable wireless broadband business).

Whether or not he's considered that the NBN can certainly also be used to deliver tiered, slower services at quite economical cost, isn't totally clear. And whether or not he's considering that there will be many business and government users of the NBN whose economies of scale fall into an entirely different category than those of the average home user, is not apparent — although a subsequent blog is devoted to the opportunities presented by the business market and expects it will be easy to sell 400 new business connections a month "based on an estimate that there are around 400,000 customers for Ethernet products between 10 and 1000Mbps".

If Exetel can deliver services at those speeds over wireless, I'll eat my hat; an NBN-like fibre-optic network is an absolute necessity for that type of service, and that's what the NBN's critics seem so ready to forget.

Telecom was born all those years ago out of a desire to bring phone services to all Australians, and the NBN is its 21st-century equivalent.

People still love their fixed broadband, and many of those broadband services will be progressively transitioned to the NBN as ISPs rush to (presumably) more-favourable wholesale terms. But the fact is, whether it attracts 100 customers or 10 million, the NBN is nothing more (or less) than an attempt to set a reference benchmark for data services so that Exetel and hundreds of other service providers can focus on delivering all sorts of services to all sorts of places — many of which will be no more than dreaming of landline-equivalent wireless for years to come.

Telecom was born all those years ago out of a desire to bring phone services to all Australians, and the NBN is its 21st-century equivalent. Wireless broadband is useful, but it won't change the fundamental need for physical infrastructure.

Whether or not the NBN becomes another Iridium, we must of course consider: there is no point in building networks nobody will use. There are, to be totally fair, still many questions (and many ideas) about how the NBN will actually be used. But the NBN will be used, whether by families taking cheap-as-chips 1Mbps services or by SMBs paying 100Mbps for a sustainable, robust internet lifeline. Given its patchy coverage and variable performance, wireless broadband simply cannot be seen as a viable alternative. For now, at least, it complements rather than replaces the NBN.

One would certainly hope (and assume) that the network can be planned effectively enough that it won't need to be liquidated within a year of its completion. But calling it irrelevant this early in the game isn't an answer either, because the alternative is simply unacceptable. Before they rush to condemn the NBN, even the naysayers should perhaps remember that even though it fell far short of mass-market status, even Iridium found its calling — eventually.


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