NBN fixed-wireless designed for 512kbps committed rate, then streaming happened

It was a different world in 2009 when then-Prime Minister Kevin Rudd and his Communications Minister Stephen Conroy unveiled the National Broadband Network (NBN), and along with purchasing a satellite that was incapable of handling phone calls, another assumption has returned to haunt the company.

Responding to Questions on Notice (QoN) to the Inquiry into the rollout of the NBN in rural and regional areas by the Joint Standing Committee on the National Broadband Network, NBN revealed how maths from a decade ago no longer matches modern internet usage.

"The original design of the fixed-wireless network envisaged a 512kbps committed information rate. This was deemed appropriate in a pre-video streaming world, because of the bursting nature of user browsing or discrete downloads (for example of an image or document)," NBN said.

"The statistical models that were employed in network design predicted a good experience for a large number of people on a cell, simply because it was unlikely that a high number of users would be bursting at exactly the same time.

"Sustained applications such as video streaming changed the models, and NBN has responded by doubling capacity on the network."

The change in usage was cited by NBN as a reason to kill off its plans to offer a 100Mbps speed tier on fixed-wireless, telling the Joint Standing Committee that the only way to keep "an acceptable use experience" for users and offer higher speeds was with substantial investment in the network.

"It would likely cost in excess of AU$1 billion to provide a service that we would expect to be used by less than 1.4 percent of active fixed-wireless premises," the company said.

"For clarity, that is only around 5,000 of the approximately 410,000 active fixed-wireless premises expected, and less than 0.1 percent of the 8 million active premises we will have across the nation."

Former NBN CEO Bill Morrow said in May that as well as being prohibitively expensive, there was insufficient demand for 100Mbps plans.

"We can look at where we have fibre, we don't have 20 percent take-up of 100Mbps in fibre. So I would not say there is a mass-market demand for 100Mbps service today," he said.

"It's not only the level of demand, but the price that consumers are willing to pay."

Responding to concerns from Labor senators that the abandoning of 100Mbps plans on fixed-wireless amounted to a digital divide, Morrow said one could argue a new divide exists between those on fixed-line, and fixed-wireless and satellite connections.

"I think we have to acknowledge that ... the vast land is going to drive economics that will likely mean the regional end users using broadband over this network are likely never to see the kind of bandwidth capability that will be coming to a city centre," he said.

"You can already see it today: We have over 40 percent of the fixed-line network that can offer 1Gbps speeds, you don't see that in the regional areas, and I can't imagine a time frame where that necessarily will be available to all of those people in the regional areas.

"Regional Australia had near nothing with broadband access ... the divide has actually closed because this is a universal access of everybody having at least 25Mbps."

NBN detailed in another QoN that its shift to DOCSIS 3.1 is set to cost AU$80 million.

"These costs are, however, more than offset by ongoing capacity management benefits, including fewer HFC node splits and operational benefits of spectral efficiency," NBN said.

Speaking earlier in the week, NBN chair Ziggy Switkowski attempted to hose down calls for a write-down of the network.

"The ability to properly value this asset is probably not going to be available to us until the 2020s," Switkowski said. "Yes, I can rule out a write-down -- this is my personal view.

Switkowski said write-downs are not within the purview of management or government, and are driven by accounting rules.

"I could certainly generate, and do generate, figures around AU$50 billion for this company in the 2020s," he added.

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