NBN kills 4G on cost for the data-hungry

NBN kills 4G on cost for the data-hungry

Summary: Many people have taken Tuesday morning's announcement from Telstra to downplay the need for the National Broadband Network, but they're ignoring Australia's growing hunger for data.

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Many people have taken Tuesday morning's announcement from Telstra to downplay the need for the National Broadband Network, but they're ignoring Australia's growing hunger for data.

There's no doubt that Australians do love their mobile broadband. According to information released by the Australian Bureau of Statistics (ABS) in September last year, Australians are flocking to mobile broadband in droves, with mobile broadband accounting for approximately 36 per cent of all internet connections in Australia.

Even the government-commissioned report on the NBN Co corporate plan said the government needed to pay attention to the rise of mobile broadband and the possible effect this might have on NBN Co's bottom line.

The timing of Telstra's announcement of its 4G network upgrade only fuelled the ongoing fixed versus wireless debate, with Shadow Communications Minister Malcolm Turnbull pouncing on the announcement, saying it decreased the viability of the whole NBN project.

Mobile broadband is certainly rising. But you can't just measure how we connect to the internet — but also what we do once we're connected.

The ABS statistics also revealed that in the period between April and June 2010, Australians downloaded a whopping 151.8 petabytes (PB) of data, an increase of 21.5 per cent on the previous six months. Conversely, mobile broadband downloads suffered a decline, dropping 6 per cent from 13.9PB to 13PB.

So why the decline, if mobile broadband is all the rage?

My guess would be the price.

For example, a person using Telstra wireless broadband today can expect to pay $69.95 for 12GB per month of downloads. This might have been acceptable in the late '90s but it's 2011. For an extra $30, that person could get 1 terabyte of downloads per month with a fixed-line plan from iiNet.

Why would mobility matter if, in addition to paying for content you want to download in iTunes, a user also has to suffer paying outrageous prices for a small amount of download quota?

Telstra isn't claiming that its new 4G network will be an alternative to the NBN; however, if that's what people want it to be, mobile broadband prices are going to have to drop significantly before the end of this year.

Interestingly, the ABS excluded smartphones in its account of mobile broadband connections, but we know that's already a huge market for mobile internet. We Gen Y love our smartphones. Telstra added nearly 700,000 smartphone users to its network in the last six months alone. I've certainly written enough on here about how attached I am to my iPhone. But are we downloading anything more that way? I can't speak for everyone but all I'm really doing is checking email, news sites and the usual Facebook, or Twitter. I personally rarely use my iPhone to download anything other than a few megabytes.

And why is that? I get 700MB per month of downloads on my iPhone plan. A paltry offering compared to the hundreds of gigabytes at my fingertips on my fixed-line connection at home. Given the exorbitant prices telecommunications companies charge if you exceed this cap, I'm constantly concerned about exceeding it and paying the price.

To me, NBN and wireless are not an either-or situation. Sure, a select minority of people may choose to just get by relying on mobile broadband as their only means of being connected, but while I do love having internet available to me wherever I may go, with terrible download quotas for mobile broadband plans, I still call my fixed-line connection home.

Topics: Apple, Broadband, iPhone, Telcos, Telstra, NBN

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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82 comments
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  • I suggest you survey non-geek friends, most of mine are wireless only households. They don't download big stuff, or when they do they grab it on their phones at a cafe / etc.

    I will always have a fixed line connection too - but im not sure that justifies the excessive cost of installing a fibre connection to my apartment.
    gumb0r
    • When all but 7% of premises in Australia have a fibre connection, they will almost all be sharing it with Wi-Fi, like the odd cafe does now, but without you having to buy a $3.50 coffee to use it. So 99% of smartphone use will comprise roaming to Wi-Fi in or near buildings, where the low latency will also permit VoIP and video calls without jitter. And since only 1% of smartphone use will require wireless broadband, i.e. when you are out of range of Wi-Fi, this will require far fewer towers to deliver. Today's tower numbers don't even suffice for today's wireless data demand. Vast numbers of power-hungry towers would be needed (estimates range from 60,000 to 80,000) to support tomorrow's short-term wireless needs if we weren't also putting fixed fibre in to take the presssure off the airwaves.
      umbria
  • Hey Gumbor,

    I'm pretty sure you just explained the problem. They have to "grab it on their phones at a cafe" i.e. use somebody elses bandwidth because they dont have enough, or only have "just" enough to get by.

    Even with just Skype video calls, which can hardly be called "geeky" 12GB goes pretty quickly these days. And don't forget most mobile devices have Wifi, which lightens the load on the 3/4g network making it faster for everyone
    willem.rt@...
  • Geez. Consumers are so myoptic!

    Small/Medium business needs the NBN because they are the ones really getting slugged for business grade internet (Telstra = $1700/20GB/mth/symmetrical + $1000 setup = 1/2 a shop assistant per year). Businesses need symmetrical upload/download quotas because of email, VPN data access by field/home employees, inter-business data transfers and inter-site data transfers.

    We are a two person business with wireless Telstra 12GB/mth. Telstra is the only carrier offering reasonable upload speeds. When I have worked for months on end from my home office, we went through almost that quota every month. During that time, I sent emails with multi-MByte attachments daily, while having a continuous VPN connection to the client's office.

    If we had any more employees, we would have to run parallel wireless connections, as ADSL+ just is not up to par more than 1/2 km from an exchange and both it and cable have low upload speeds.

    Now, if NBN was ubiquitous, it would have been a no brainer for us. We would still have low wireless plans on our two phones and my laptop, but at a total across them of $60/4GB/mth of which we only use a 1/10, it is an expensive luxury.

    Yes, people are taking up wireless like crazy, but it is never going to be the main data source for families or businesses. Those two demographics are huge, and the prime candidates and beneficieries of the NBN.

    Most employees of enterprises have access to the internet at at least 40Mbps, and many at much more. Now MT et al would have us believe that the rest of the population and smaller businesses are not entitled and would not benefit from similar speeds at prices that enterprises get with the cost of their huge data allowances amortised over all their thousands (or tens of) of employees.

    Consumers, don't project your broadband usage criteria unto the millions who would benefit by cheaper and faster business broadband.

    And then there is the real opportunity the NBN has to get businesses out of the cities. No business, used to city communication needs, will move out if it loses all the advantages because it cannot communicate properly enough to run its business. VoIP can bypass the STD costs of landlines, but not if upload speeds cannot support many calls plus emails.

    The government should offer incentives for city businesses to setup in areas where the NBN is installed. This is where the NBN can really cut down on the huge infrastructure costs of trying to support overcrowded cities. Ease the city congestion and move them out to where infrastucture is a lot cheaper to provide. But a business is not viable without adequate communication!
    Patanjali
    • Patanjali,

      There is an incentive (aka subsidy) inherent in the NBN in country areas already. And that has cost a fair bit of political skin already. It is a bit rich to be asking for more subsidies already before the attractiveness of the country for NBN users has had an opportunity to work.
      Listohan
      • I am not talking about just communications, but coordinating with councils et al to really faciliate moves by businesses.

        Lack of communication is a deal-breaker, but there many enablers. Businesses have to feel welcomed.
        Patanjali
  • What would be a pertinent calculation is what is the total infrastructure cost to support the average SMB in city/urban areas, as opposed to regional/country ones, and how many would have to be moved between the two to pay for the NBN?
    Patanjali
    • People have choices, they decide to live in the back blocks with poor mains power if at all, and sceptic tanks, they want high speed data connections???
      If you want high speed data, see you in Sydney metro, again not the back of beyond!
      Blank Look
      • So naive Visionary! Your closed minded opinion on this topic is cancerous to our economy.

        Where do you expect our country to get it's revenue from? In fact, do you know where our main source of revenue for economy comes from? I'll tell you, it comes from the "back of beyond". Our revenue comes from our mining exports as well as our farmers. So without either where do you expect our revenue will come from?

        If it wasn't for people living in the "back blocks" to work in our mines and to grow our produce and run livestock our economy would be a shadow of what it is today. In saying that, why should the people who prop up this economy be forced to endure poor services and high speeds? The Capital Cities only have what they have today because of our mines and farms. NSW was practically built on the mining industry and continues to benefit from the numerous mines that operate in NSW that pay royalties to the State Government.

        You want these people to move to "Sydney metro" in order to receive "high speed data connections" but you have no idea on the impact overall. There is the reduction of revenue as a result of everyone leaving the "back of beyond", there is the increase demand for housing (which is already dire) in our metropolitan cities, there is the extra traffic on the roads and the congestion and then there is the extra load of students in the public schools and the extra patients in our public hospitals.

        Therefore I think that balancing out the cost for every Australian to gain access to an affordable, high speed next generation network is not only good fiscal planning, but it removes the imbalance of city vs. country services and prices.

        On another note, the so called 'move to wireless' is totally overstated. I am advised that all of the Aussie Telco's count customers with mobile data packs as being a wireless subscriber. On this basis Telstra would consider that I have three wireless accounts, one for each of my two mobile phones and one for my iPad 3G. If this is correct then the 'move to wireless' is completely overstated. My main broadband connection is via ADSL2+ and I have data packs for my mobiles and iPad for LITE internet usage away from the home. After all the speeds, cost and latency achieved by my mobile devices is an absolute let down and only gets worse during peak times of the day.

        The NBN is going to revolutionise our country's economy and the way we connect to the internet and with each other. Ultimately the plan is to create such a ubiquitous network that our lives will be so integrated with the internet that we will never be disconnected. In saying this we will achieve continuous connection through fixed fibre services augmented by wireless carriers, so wireless will have a place in our NBN future as it will compliment our fixed services rather then compete with them.
        Singo79
        • Oh seriously Sing079, all these fellows in the back of beyond need is a spade or a tractor. The real decisions about the economy are made by the qualified economists, bankers, accountants in cities. That is the brain of the economy, the back blocks are the arms and legs.
          Blank Look
          • You don't get out much, do you Visionary?
            RL-079ec
          • I dare say, having read Visionary's comments previously, that he is simply being playfully facetious and taking the **ss...

            As such, I would like to do like wise and make a facetious analogy of my own

            The rural farmer/miner is the arms and legs.
            The economist, banker the brains
            And Visionary the? (hint begins with a and end with nus)...LOL!
            RS-ef540
      • There are many regional centres that can support more businesses and will have cheaper infrastructure costs than overcrowded cities. These are the areas to target first.

        For farms, the writing has been on the wall since the industrial revolution, and has meant that pregressively lesser numbers of people have to live on farms to feed the nation.

        But people do not need to live in cities, but can live in country towns and regional centres, if sufficient communication is available.

        Such 'back of beyond' talk is just another attempt to hijack rational discussion about Australia's communicatin future by making out as if there are only full-on cities and farms, and nothing in between. Not so!
        Patanjali
  • Yes and telstra makes sure people have to use wireless because their exchanges do not allow for anything but dialup even in Capital cities
    tomweir@...
  • I for one have mobile and fixed line, i rarely use the mobile as it is slow and clunky and as said in the article so much more expensive than fixed line.
    I do think that there may be a home for fixed and mobile living side by side though. If the 4G is as good as it is supposed to be, why not hardwire the major cities and towns with fibre optics, and for the smaller regional towns and more remote locations, let them use 4G on a very reduced or subsidized rate, wouldnt this save a significant amount of money for the NBN rollout and still offer non city people with a good internet connection?
    peternt2001
  • Let's hope ABS see fit to include smartphones, and tablets, in future. It may be why the ABS figures also dont align with the recently released Cisco forecasts for worldwide mobile data usage, for example they expect the US to increase by 83% PER YEAR up until 2015 (21-fold growth), and the US is near the bottom of increases. Not surprisingly Cisco see the increases mostly driven by mobile video downloads.

    To a degree, mobile data has been a victim of its own success.... why would the telcos drop prices when they are selling heaps ... there are still waiting lists for some popular phones on new plans. Due to the reliability debacle at Vodaphone, they have provided relief with the recent disruptive campaign of lower pricing to claw back market share (and credibility)... which T and Optus will follow eventually. Also expect two tier 4G/3G pricing when 4G is released... with the 3G services the price may go down, or download limits up.
    FiberLover
  • " .... Most employees of enterprises have access to the internet at at least 40Mbps, and many at much more. .... "

    Don't be too sure about that.... business-grade internet delivered over fibre is not that cheap.... many (most?) large organisations do with less than 40MB bandwidth.... peak Internet access is usually at lunch time when employees surf the web... companies dont care too much if the Internet is slow then, it dissuades staff from using it.
    FiberLover
    • Web browsing access is the poor relation and is allowed the rest of the availble bandwidth after QoS quotas have been allocated for priority and real-time business services.

      What employees do with the internet is not really what I am referring to, but the TOTAL bandwidth requirement for ALL of an enterprise's communication needs. Most enterprises VoIP internally and between their sites, even OS ones, if not to POPs. That can be a large data usage that will have its own peaks, but it will ALWAYS be given priority over general web browsing. Data synchronisation between data centres will also be given priority.

      Some enterprises may have a fairly even flow of business data, whereas others have highly variable flows. With business use being more predictable, the former may not allow much bandwidth for general internet use, and the latter may have to allow for high peaks, giving lots of opportunities for really-high-speed general use.

      I did my testing at some times around lunchtime, but I have no idea how much data this enterprise does underneath those transfer rates. I had at least 40Mbps available to ME at those times. Many times I had 80+Mbps.
      Patanjali
  • Maybe if mobile carriers didn't have to pay obscene licensing fees to the government, they'd be able to offer some more competitive plans.

    But, as you say, there is a place for mobile and there's a place for fibre. There's also a place for HFC and copper, but the government are making sure those are eliminated. They need to eliminate the competition so that they can have sufficient (monopoly) revenue to finance their NBN.

    Imagine if all the mobile networks except for one were shut down, do you think the last remaining network would turn around and offer a good deal?

    And anyone who says mobile and fibre should complement each other is a hypocrite if they also say that the government is justified in subsidising the fibre with tens of billions of dollars, plus the implementation of an anti-competitive regime that will ensure revenue for the fibre network (the revenue will be inflated by the government, essentially there will be an internet tax applied to all fixed line services).

    Ok, so fibre and mobile should complement each other, in that case, cancel the NBN and allow private companies to invest in fibre. Then we will have an even playing field.
    coolguy4
    • coolguy4, we've seen fifteen years of private companies investing in high-speed broadband, and 40% still have none, while the average ADSL speed is 2.8 Mbps and one gigabyte of mobile data costs at least $10!

      By borrowing money for the purpose of laying universal fibre in large towns, then wholesaling capacity at a fixed price to all retail providers, regardless of the geography and last-mile technology to the customer, the free market will compete to the best outcome for the customer. This requires no budgetary expense from other government programs, and the wholesale revenue will repay the construction cost.

      In fact, as the article shows, end-user demand growth will drive up the wholesale revenues very quickly. In my view the growth estimates in the NBN Corporate Plan are conservative to a degree that cannot be supported by the historical growth in demand. If demand growth occurs faster than forecast, wholesale revenue growth will repay the build even sooner.

      Only 7% of Australians will be without fibre (and even some of these communities will pay the cost difference to get fibre in the first round). The rest will get 12 Mbps committed bandwidth on wireless or satellite and also keep their copper phone lines (as confirmed last week by NBNCo). This is the best outcome for Australia, and will not cost the taxpayer anything.
      umbria