It's data, not speed that carries the NBN

Summary:The key to the National Broadband Network (NBN) having an edge over wireless technologies is data quotas, not speeds.

The key to the National Broadband Network (NBN) having an edge over wireless technologies is data quotas, not speeds.

There's no doubt that prices and speeds for mobile broadband are getting better. A report from the Australian Competition and Consumer Commission (ACCC) released on Friday found that overall 3G mobile users were paying less now for their plans, and the data on those plans. You only have to look at the announcement of new prices from Telstra this week to know that Australians are, overall, paying a lot less for mobile data than they used to.

Yet, Australians are still sticking to fixed lines for the majority of their downloads. According to the ACCC figures, between December 2008 and December 2010, 91 per cent of the total 155,503 terabytes downloaded were through fixed-line services.

While one could arrive at the conclusion that much of this is due to the lower speeds available on wireless, with most broadband customers on connections with download speeds between 1 megabits per second (Mbps) and 24Mbps, I wager a good portion of these figures has to do with the still relatively high prices associated with mobile data quotas compared to fixed line.

At Optus' recent announcement of its long-term evolution (LTE) network, a question was put to Optus executives on when they thought mobile data plans would be in line with that offered on fixed-line networks today. The answer was: it will get better soon, but there won't be parity for quite a while.

No doubt LTE pricing will be the one to watch, with leaked pricing from Telstra suggesting that its "4G" will be priced on similar levels to its current Next G mobile broadband pricing. In other words: you'll get much better speeds at the same price, which is higher than fixed line.

Optus, on the other hand, has indicated that it may look to charge a premium for its LTE product. Huawei last week demonstrated that it can now enable telcos to offer tiered speeds and services to customers over LTE. This would allow an operator to push a premium on higher speed LTE services, if it so desires.

Meanwhile, the three biggest mobile operators — Telstra, Optus and Vodafone — seem very committed to getting customers onto the NBN, and both Optus and Telstra have financial incentives to do so. I can't see a situation where their mobile offerings would undercut the cost of services on the NBN. Even if they considered going down this path, there are questions about whether their networks would be able to cope with the volume of downloads on fixed-line services.

One interesting fact out of last week's NBN pricing announcement by iiNet was that essentially the company was going to end up charging customers the same amount for 100Mbps connections that it currently charges for bundled ADSL2+ services today. While this was criticised by coalition MP Paul Fletcher as proof that no one would be willing to pay more money for higher speeds, maybe offering more downloads for less money at higher speeds is the differential that NBN needs to prove it has a big advantage over wireless technologies.

Topics: NBN, Broadband, Networking, Optus, Telcos, Telstra

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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