Time to fix NBN's missed opportunity

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.

TOPICS: NBN, Government AU

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.

(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


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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  • Population Demographics?

    With Brunswick, large swathes of the area are rental properties. With the deployment rules of the time forcing NBN to seek permission to connect each property , this would have deflated the number of connected properties. I can imagine that the process of obtaining Landlord permission would have a significant impact on take-up rates.
  • I'm not surprised at the Tasmanian results. A clear sign that state should have been avoided completely when rolling out the NBN.
    Hubert Cumberdale
  • What happens when the copper is gone!

    The take up will be 100%, except for the voice only people.
    The copper is scheduled to be pulled up at some period after completion of NBN, it really should have been pulled up at the completion of the fibre rollout.

    It's true that the NBN rollout had to pander to Oakshott, Windsor and Wilkie to sell the project, it would have been much better if the CBD's and dense suburbs surrounding had been scheduled for the initial builds. A much greater number would have now been connected and the Liberals would have had a much harder sell to discontinue the project.
    Kevin Cobley
    • Necessary

      I understand many are upset that Rural areas were prioritized, actually they earn the money for the nation and are the neediest. Metro first, great figures , Libs come in and rural will never have any better tan FTTN/ADSL, no centres of excellence growing in association with education and research etc etc

      However back to subject.
      Good item on TodayTonight and The Project early this week on Literacy. 50% of Tasmanian's are functionally illiterate or at least greatly challenged, 42% of the Eastern States.
      Note this is not premises, just individuals. However note the correlation with take up rates

      However functionally literacy challenged would NOT own a computer or have or be interested in a broadband account.
      That ubiquitous 4Port GPON NTU where port 4 could be a Government provided thin client useable by the elderly or less technology adept. Literacy lessons could be part of the thin client's brief
      Abel Adamski
  • $30B for Slightly Faster Than ADSL?

    So Malcolm is going to spend $30 Billion to place a node on every city block & then expects us to pay around $69/mth upwards as well as continue paying line rental on the copper for up to 25Mbps which will soon struggle to deliver the media already on it's way over the next 2 years.
    A primary driving force on domestic broadband uptake is media consumption which will soon overwhelm the capabilities of FTTN once 4K UHD TV & internet TV takes off in the next couple of years with files of up to 100GB on offer. Netflix is already planning on streaming content of 50GB within 2 years.
    Even Foxtel's HFC & satellite networks are far more capable than the proposed FTTN copper one which may help to explain Murdoch's anti Labor FTTP campaign over the past few years.
    Turnbull's myopic $30B FTTN sooner/cheaper investment barely exceeds our present requirements & will soon fall drastically short on our future requirements.
    Guess many of us will just forget about using the internet for our entertainment then, drop our landlines & divert the $30/mth line rental towards a wireless plan & dongle to use just for email & web access rather than continue suffering the endless buffering that already deters us from accessing much online video content.
  • Missinformation and outright Propaganda

    i think you will find that the reasons you have stated, education, financial status etc will have little or no impact on uptake rates. I mean seriously how stupid would you have to be to not see the benefit that 100mbps+ will bring. I have seen and heard first hand the outright rubbish that is being told to consumers by Telstra reps in stores specifically in the NBN active areas and call centers nationally and I get the distinct impression this direction is coming from the top of that chain.

    To give you an example, let me start by responding to your comment that NBN should be free by telling you it is!

    Even someone who only has a phone and no ISP, all they have to do is call their current provider to request the switch to NBN and all providers are obliged to honour the request and NBN Co will install all the end user equipment free on and in the premises and you will simply pay the same costs as your previous copper service. The problem though is customers are being told by telstra that either:
    a) the lines aren't active
    b) it will cost up to $500 to get the work done
    c) you can only get it if you are broadband customer
    d) they will need to spend a few hundred on a new telephone for the NBN to work
    e)a whole range of lies in other words to put just enough fear in to the customer that they stay complacent and don't switch "unless they have to" is what they are being told.

    So in that sense yes, education will play a small part but not schooled education but the street-smarts that comes with living in larger city as you are a little more reluctant to just take someones word at face value, even if they work for the company and you want to see things in writing. So until the ACCC gets involved for the misleading and deceptive conduct of a company that is desperately trying to hang on to one of Australia's last Monopoly's then the uptake probably won't improve for the near future at least and now it may be to late. Oh and Murdoch hasn't helped with that missinformation thing either.
    Sam Kingston
  • Free ?

    Phil I understood that connection to the FttN was essentially free. That is great for people that only want to connect to the government intranet - and frankly for most other people too. If people want to pay for the luxury of 50Mbps+ speeds let them - I just don't want to be subsidising them. Especially when 70% of people apparently don't need or want it.
    • 70% of people dont want it?

      Well um no. I want it. I have it. And i use it. It is currently cheaper than ANY adsl or cable equivalent and more usage than i have been able to use (and trust me, i tried).

      On top of that, just being one of the 'small' "30%" that do want 50+mbps means that i help pay for people like you who only want 12mbps and those who cant actually get fttp.

      As opposed to malcolms node lotto where you might get good speeds but you will atill have to pay the same.
      • *still

        They need an edit button