Time to fix NBN's missed opportunity

Summary:Whatever technology the NBN ends up using, two factors will always influence take-up rates, and it's time to fix both of them.

The leaked update to the NBN Corporate Plan, produced on June 28, 2013, contains a lot of information that will, no doubt, be scrutinised to see whether the extent of any cost blowout is as horrendous as Malcolm Turnbull's pre-election claims.

Equally as interesting are National Broadband Network (NBN) take-up rates. They list 21 locations, eight of which have been in operation for 100 weeks or more. That's quite a long time, and more than enough for customers to have finished a contract with their internet service provider (ISP) and made a switch.

Yet, there's a big discrepancy in take-up rates. In Minnamurra, near Kiama in New South Wales, 64.4 percent of households have jumped onto the service. In Smithton, Tasmania, where the NBN has been around for almost three years, the figure is only 23.7 percent.

This raises two questions: Why the variation, and, more significantly, what went so wrong in the NBN vision that we started to worry about this sort of thing?

First, let's look at the reason for the variation. There are two obvious factors. Areas that have high take-up have a large penetration of family households — a steady population who can afford to enter into a contract with their NBN service provider.

In Minnamurra, for example, 83 percent of households are families. Conversely, in Brunswick, where the take-up rate is just 32 percent, families make up just 55 percent of households.

nbnuptake
Image: Phil Dobbie

The exceptions are Scottsdale and Smithton — both in Tasmania, each with take-up rates below 30 percent. They have a relatively high ratio of families — about 66 percent. But they also have a low education ratio — in Smithton, for example, only 2.9 percent have a tertiary qualification against a national average of 14.3 percent.

This highlights two big impediments to a ubiquitous national network. Irrespective of the technology used, education and income, together with household composition, are likely to have an influence on take-up rates. Some people can't afford it, while others are in a transitory stage and don't want to commit to a contract.

Yet, we all get water and electricity to our homes. We can never consider broadband to be truly ubiquitous until we see it in the same way — as something that is there when you move into a house, even if you are only there for a short time.

Which gets us back to economist Joshua Gans' comments in a Twisted Wire podcast back in 2010. In the program, we asked, "Shouldn't the NBN be free?" Or, at least, access to basic government services. That would mean the take-up rate of the network would automatically be 100 percent, whether you used it or not. If you wanted access to the greater internet, then you pay a service provider.

That's a proposal perfectly suited to a fibre-to-the-node network. The copper is connected to the home and will stay that way. Everyone will be connected to a national network, just as they are now with voice. If you ensure that each household is also given data access to a government extranet, then we can expect faster uptake of government services online. Those people who are slow to adapt will have an opportunity to get online, and medical monitoring devices can switch to IP knowing there will always be a network there to support them.

Removing the ubiquity of access will leave uptake rates constrained by the stage of life, income, and education that the customer has. Whatever the technology used in the NBN becomes, it'll only guarantee that we'll spend a lot on infrastructure but still have a digital divide.

If this is a time for evaluation and a new way forward, this proposal is worth at least a little thought.

Topics: NBN, Government : AU

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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