1Gbps a 'marketing gimmick': Turnbull

Following Sony's announcement in Japan of 2 gigabit-per-second (Gbps) services and NBN Co's announcement on Friday that it plans to offer 1Gbps services by the end of this year, Shadow Communications Minister Malcolm Turnbull has said that 1Gbps services are just "marketing gimmicks".

Under the Coalition's AU$29.4 billion NBN fibre-to-the-node proposal, all residences would have access to at least 25Mbps speeds by 2016, and at least 50Mbps by 2019. Opposition leader Tony Abbott, in announcing the Coalition's policy earlier this month, said that 25Mbps was "more than enough" for the average Australian household.

Speaking on ABC radio in Newcastle on Friday, Turnbull said that download speeds in excess of 1Gbps were "useless" for residential customers.

"It's a marketing gimmick," he said.

He said that it was better to postpone spending money rolling out fibre to every premises if the applications requiring 1Gbps speeds weren't available yet.

"Let's assume that we can spend $900 on average to get a premises up to the most part [to] 50Mbps, but no-one less than 25Mbps, and we can do that now. And let's assume it's going to take us the best part of another $3,000 to get them up to 100Mbps and up to 1Gb with fibre to the premises, but let's assume that there's not going to be any demand for that very high speed in those residential areas for, say, 10 years," he said.

"I'm saying you would be better off postponing that investment, keeping that extra $3,000 in your pocket, earning a return on it somewhere else, or not having to borrow it; and then when the demand is there, making the investment then. It's just labour costs; labour costs will rise with the price of inflation, but so will everything else."

The issue of what residents can do with 1Gbps download speeds is something many countries and companies across the world are currently grappling with. In March, when Slate visited Kansas City, where Google has rolled out 1Gbps fibre services, the residents in that town couldn't explain how to fully utilise 1Gbps services.

Turnbull also rejected the analogy that is frequently cited in the national broadband network (NBN) debate, comparing the project to building the Sydney Harbour Bridge.

"But the big difference is, if you build a bridge, you cannot build a bridge with demand just 10 years ahead because you can't just keep adding lanes every 10 years. You've got to think ahead 30, 40, 50 years," he said.

"With a telecoms network, you've got the ability to build it for now and the foreseeable future, and you've got the ability to upgrade it progressively over time as demands change, and you don't really know what the demand's going to be, and above all as technologies develop.

"And so while postponing investment until it's needed may seem a bit hard-headed and sounding too much like a canny accountant than a visionary politician, it actually makes great sense, because if you postpone that investment until it's needed, the opportunity cost on the money that you haven't invested and that would have earned no return in that time, so you've got your investment in your pocket or doing something else. But also when you do come to invest, you're using the latest technology, and that's a powerful argument to take a more steady and businesslike approach to it."

On Friday, Turnbull said that should the cost to run fibre out to every premises be significantly lower than the AU$3,400 per-premise cost he has forecast, than many more premises in Australia could receive fibre to the home under a potential Coalition government.