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Exetel on ACMA: No demand for 100Mbps

In his latest attack on the Federal Government's plans to build a 100Mbps national broadband network, Exetel boss John Linton this week said a new report from the Australian Communications and Media Authority (ACMA) showed there was clear demand for mobility, but none for high-end speeds.
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Written by Liam Tung, Contributor on

In his latest attack on the Federal Government's plans to build a 100Mbps national broadband network, Exetel boss John Linton this week said a new report from the Australian Communications and Media Authority (ACMA) showed there was clear demand for mobility, but none for high-end speeds.

"The average person needs a 100Mbps internet connection about as much as they need to have their arms amputated," Linton told ZDNet.com.au.

In a fiery blog posted yesterday, Linton said: "The NBN2 [national broadband network] was dreamed up by a total wanker (Krudd) who had and has less than zero knowledge about telecommunications, based on summary/key point 'briefing papers' done on the fly by pretty average civil servants."

The decision to throw taxpayer dollars at a high-speed fibre network had been made without any consideration of what people are willing to pay, nor what their priorities are, according to Linton, who said they want mobility and are content with speeds at 10 per cent of what's being proposed under the NBN.

"If I can't use it at the beach house or during a work break, then I don't want at all," he said of what customer's valued.

His comments follow the Australian Communications and Media Authority's (ACMA) latest Communications Report, which showed a 162 per cent increase in the uptake mobile broadband services over the last two years from 809,000 subscribers between 2007-08 to 2.1 million between June 2008 to June 2009.

"The NBN is making the assumption that there is demand for high speed. Has anyone demonstrated there is a need for it? So where is the demand coming from?" he asked.

If the figures in ACMA's report can be taken as an indication of what consumers want, then Linton is right. Growth in "high-speed" broadband was modest in comparison to mobile broadband.

As dial-up continued its decline over the past three years, consumers rapidly turned to ADSL services offering speeds between 1.5 to 8 Mbps, but in the last year that increase was just 10 per cent, bringing its stake to 30 per cent of all internet connections. Uptake of services above this speed grew just one per cent, which ACMA noted was carried by business and government agencies.

Linton said the figures showed the switch to broadband had peaked and that it may even hint a decline at higher speeds.

But if, as the government has argued, Telstra's copper network is ageing and in dire need of replacement, what should it be replaced with? "With wireless," said Linton. "It's already being replaced by wireless. Do you want to try to run fibre everywhere?" he said. "[Wireless is] already running at whatever Telstra say it is — somewhere between 5 to 7 Mbps. That's what you get on ADSL anyway, and it's more than enough."

"Most people that I know, including me, put a much higher priority on mobility than they do on speed," he added, noting the impending arrival of LTE or Long Term Evolution wireless technology.

During the Federal Government's Broadband Future Conference in Sydney last December, NBN Co chief Mike Quigley said it would be "foolish" to think that wireless could satisfy Australia's traffic requirements when high definition TV was taken into account, also noting the scarcity of available spectrum. There is also the issue of backhaul, which is currently a constraint on realistic mobile broadband speeds.

The other constraint is what consumers are willing to pay for services under the NBN. Estimates have ranged between $70 to the $200 per month suggested by AAPT's chief Paul Broad.

At the lower end this is almost double what Linton reckons is the "sweet spot" of $40 per month. "Above $50, the numbers fall dramatically," he said, adding that this price, which includes either a naked VOIP line or phone service, covered 90 per cent of his 100,000 customer base.

Market Clarity telecoms analyst Shara Evans agreed that, anecdotally, $40 to $50 per month was the realistic limit of what people were willing to pay for the internet.

Highlighting the challenges the government faces in explaining to mainstream Australia why it needs 100Mbps broadband, Evans said $200 per month needed to be viewed in the context of so-called "triple-play" services, which bundles, phone, television and the internet — something which most people don't know how to assess given its rarity today.

"The average revenue per user would increase to over $50 if there were other services that could be bundled in with broadband. But there's also the softer benefits that become available from ubiquitous connectivity," she said.

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