NBN users uninterested in 12Mbps, PSTN voice: iiNet

NBN users uninterested in 12Mbps, PSTN voice: iiNet

Summary: Majority of customers opting for faster plans and VoIP over UNI-V, but lingering price and architectural concerns complicate satellite and equitable regional delivery.

TOPICS: NBN, Broadband, Australia

Fully 70% of the customers iiNet connects to the national broadband network (NBN) are opting for plans running faster than the 12Mbps minimum and only half are taking a conventional phone service, the company's chief technology officer John Lindsay has revealed.

Speaking at the recent CommsDay Melbourne Congress, Lindsay said the nation's third-largest ISP had over 20,000 NBN customers currently taking services over the network.

NBN customers offer higher ARPU on cheaper-to-service network than ADSL customers: Lindsay. Photo: David Braue

The NBN had proved to be a significant tool for acquisition of new customers, with more than 60% of its NBN signups by customers who were new to iiNet – many of them in NBN-connected greenfields estates that had recently been brought online – and the remainder switching from services delivered over what Lindsay described as Telstra's "dilapidated" copper access network.

The proclivities of iiNet customers for faster speeds contradicted recent survey results from research group Roy Morgan, which found that Australians overwhelmingly prefer cheaper broadband than faster broadband.

It's not the first time NBN customers' preference for faster services had been noted: in May 2012, then NBN Co CEO Mike Quigley revealed that 37% of all services connected to date had been for 100Mbps services. Just 18% had taken an entry-level 12Mbps service.

Nearly 18 months later, Lindsay's figures validate that trend, with iiNet alone now serving six times as many live customers as the whole NBN had when Quigley provided those figures.

New customers were being targeted on a geographical basis in conjunction with the NBN rollout, Lindsay said, with approaches beginning up to 12 months before services were actually available and greenfields areas proving ripe for the picking.

NBN services had proven to be a profitable business, with an average revenue per user (ARPU) figure of around $70 per user, per month. That's well ahead of overall ARPU across all iiNet broadband services, which in the first half of this year were reported as $50 per user, per month.

More than half of customers were bundling voice and data services, Lindsay added, although more than half of those weren't bundling the conventional landline voice services, available through the NBN's Uni-V voice port. Instead, those customers were taking voice over IP (VoIP) telephone services delivered as part of the NBN bitstream.

"We have a very academic view of [regional] people because generally they’re located at some distance from us. But I do hope the new minister and department manage to bring that focus back to those people that have been waiting the longest time. These networks have abundant capacity, and the incremental cost to unlock that capacity is tiny."

This trend led Lindsay to question the need for ubiquitous Uni-V availability: "the equipment cost of service to each customer runs to many hundreds of dollars, and the maintenance of that is non trivial," he said, "and all of that is to essentially emulate an HFC and PSTN network. I recommend as part of the rethink and review of the NBN that there be a review as to whether using last century's technology for delivering FttP is really the rational way forward."

Lindsay had harsh words for the design of NBN Co's satellite network, in which the ten satellite ground stations were geographically distant from key points of interconnect (PoIs) on the NBN backbone network.

This meant traffic to and from satellite users had to be routed both ways over hundreds of kilometres of NBN backbone in rural and regional areas, even just so satellite users could reach the dominant capital-city markets that represent the most common traffic destinations and international relay links.

The configuration led to a "sad" economic situation for satellite services "because there are so few customers and the mechanisms for connecting them have been made unnecessarily convoluted," Lindsay said.

"The economics of PoIs are a threat, and satellite economics are going to bite as soon as the POIs shift to regional areas. It does seem rather perverse to build the network this way, when you would be better off having some ground stations near the major data interchange points."

Lindsay was also scathing about the current $20 per Mbps CVC charges set to be paid by NBN Co RSPs, hoping they would be reduced under the new government.

“If you build something like a new network that has abundant capacity and then you arbitrarily limit that for commercial ends, you’ve basically created artificial scarcity,” he said. “There are people who have literally been waiting since 2006, since OPEL, to get a broadband service in Australia.”

“We have a very academic view of those people because generally they’re located at some distance from us. But I do hope the new minister and department manage to bring that focus back to those people that have been waiting the longest time. These networks have abundant capacity, and the incremental cost to unlock that capacity is tiny.”

Topics: NBN, Broadband, Australia


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Not surprised. This confirms the need for even faster speeds that Turnbulls patchwork plan is incapable of delivering consistently. Of course by the time he's finished rolling out all those power hungry nodes it inadequacies will only become even more apparent. Those complaining about the slow NBN roll out will be wondering why their broadband is so slow by then...
    Hubert Cumberdale
  • ADSL 2+ spped decreases with distace from exchange.

    Perhaps the Roy Morgan survey was skewed by the problem with high speed ADSL 2+ in that the further you are from the exchange, the less likely you are to get anywhere near the quoted maximum speed. Whereas NBN to the premises will provide maximum speed where ever you are - unlike Malcolm Turnbull's proposed alternative.
    • +1

      Thats what I was thinking too
    • ADSL2+

      Not quite correct. I live well away from exchange but node is only 300 m away (Telstra's "tophat" technology). I get 24.5Mb/s download and 1Mb/s upload. That plus landline phone for about $60. I think most people would be chuffed with that service and value.
      PS I do online consultations on Skype, it serves me well. I don't see the value in being able to download movies in seconds when they take hours to watch.
      • re:

        That comment was related to domestic users only.
      • HHmm

        I think you're right - MOST people would be chuffed with that service. I am LUCKY to be on fast ADSL1 (about 6-7Mbps). Of course that severely limits anything like nice Skype, VoIP, online backups or viewing my security cameras remotely, as 320Kbps is about the best upload speed I get. I WOULD love to go to 1Mbps just to partially enable the above. But for anyone who needs any kind of uploading like the examples above, 5Mbps would be bare minimum, but I'd give anything for 40Mbps upload on fibre.

        This is only going to get far worse as our applications are moving to the cloud for storage (Skydrive etc).

        Still say we need FttP. Nothing else will be enough even in the next 5 years.
      • You're connected to a RIM

        The reason why you're getting close to the max speed at a far distance from the exchange is because you're connected to what is known as a RIM (remote integrated multiplexer) street-side cabinet, which basically functions as a sub-exchange. They are normally seen in areas in which the closest main telephone exchange is too far away to provide service.
    • So true

      We went back to a cheaper ADSL1 plan after a brief stint on ADSL2.
      Not because we chose price over speed but why pay extra when repeated tests revealed absolutely no improvement over ADSL1 thanks to the length & state of our copper.
  • Half of the speed and value I get from my ADSL 2+ bundle

    Look at a marketing point of view... I have a bundle from TGP for 80$ with Unlimited 24Mpbs/1Mpbs and Unlimited phone call in Australia, and 11 oversea countries.

    How this going to work? Do they think customers are dumb or what?
  • fast broadband

    I tend not to take any notice of roy morgan or any poles.when construction is finished in my area in January ill be signing up to the fastest speed possible with iinet.im 1 person household at moment and ive waited years for fast net.adsl2+ is called fast now but its only good if u live close to exchange. I live in same street as exchange 1.5km from it and I only get 5mbps on a good day.but fibre is different I order 100mbps I get 100mbps or near enough. If nbnco decided to still go ahead in December and release 1gbps residential speed id get that as well.
  • 1 Mb/s may have been great in the text-only days, now 12 isn't enough.

    I have upgraded all in-house networking to 1Gb/s and for moving around large video files it's still slow. Transmitting completed work across ADSL+ can render my online access useless for several hours, and I still haven't been given an adequate technical reason for the disparity between upload and download speed.

    As far as wireless data on a phone, I've already gotten back to the computer and done it properly before the phone has even established a decent link.
  • no to 12Mbps

    I live about 300 km from Melbourne in a country town. I have 17/1 Mbps now so there is no way I would willingly drop back to 12 Mbps. However, at this time I see no great value in 100Mbps. Many servers struggle to provide a decent response to users now. It won't get any better at 100 meg given that the delay is not in the network. That may change as competition hots up. If I ever get fibre to the home I will start at the low end speed and move up if it seems worthwhile.
    • drop back to 12 Mbps

      You don't have to. The copper is only being shut down when replaced by FIBRE (FTTP), Still available if the NBN service available is wireless or satellite
      Abel Adamski