NBN pricing not to blame for people choosing slow speeds: Morrow

NBN users are not ordering higher-speed services due to a lack of need, not because of NBN's pricing, CEO Bill Morrow has said, adding that speedier services would cost just AU$2 extra per week.
Written by Corinne Reichert, Contributor

The lack of uptake of high-speed National Broadband Network (NBN) services is not due to NBN's pricing, CEO Bill Morrow has said, with those services only costing around AU$2 extra per week.

In a speech to the American Chamber of Commerce (Amcham) on Monday in Melbourne, Morrow reiterated his previous statements that users do not need and would not use 1Gbps internet speeds currently, as reflected by the fact that a majority of NBN users are still opting for the 25Mbps speed tier.

The chief executive added that the lack of high-speed uptake is not due to NBN's pricing structure as has been claimed by some retail service providers (RSPs).

"The reality is that very few Australians have a use for gigabit speeds today. The fact is, the very few applications that demand this amount of data simply aren't at scale yet," Morrow argued.

"In our own uptake patterns, people are gravitating to speeds that meet their needs; 83 percent of all our activated homes have opted for 25Mbps or less. In other words, only 12 percent have chosen the top tier.

"And contrary to what some may think, this is not due to price premiums imposed by NBN; those higher speeds are only slightly more, at AU$8 per month over the billing period, which is around AU$2 per week."

Morrow added that the lack of uptake across high-speed services is also not due to NBN's technology, pointing out that even fibre-to-the-premises (FttP) customers are opting for slower speeds.

"Installing gigabit speeds today for everybody would be a significant investment with a questionable rate of return. Ultimately, this why we are building the network Australia needs today and ensuring the technologies we are deploying each have a very clear upgrade path into the future," he said.

"This is fiscally prudent and it is our commitment to you as taxpayers."

However, Morrow recognised that such needs will change in the future, and said NBN has already accounted for this in its business model -- with the upgrades to be funded by NBN itself rather than taxpayers.

"We are trialling the technologies we will use, and we have a close eye on the market for new entrants and innovations in this space," he said.

"We've built the network so it's readily scalable. And, as the need grows, we will put those technologies in place. Importantly, we'll fund these upgrades ourselves. We won't need to call on taxpayers."

NBN has been trialling upgrade paths across most of its network technologies, including carrier aggregation on its fixed-wireless network, G.fast and XG-FAST on its hybrid copper-fibre networks, and full-duplex DOCSIS 3.1 on its hybrid fibre-coaxial (HFC) network.

However, ZDNet last year revealed that NBN's FttDP network will be launched in 2018 without the G.fast technology that is available from this year.

Morrow also used his Amcham speech to argue that NBN is an enabler, not a solution, with the benefits of ubiquitous broadband to take "many years" to be realised.

"The NBN is an enabler, not a solution in itself. It will give Australia an enormous competitive advantage and an opportunity to reinvent ourselves. To create a nation that truly benefits from the accelerating change going on around us," Morrow said.

"But the real benefits of the NBN -- of universal, high-speed connectivity -- won't magically materialise. They need to be created. And, in some cases, they will take many years to realise."

Morrow outlined two issues that can be solved by NBN: Helping to create digital industries, jobs, and skills for the next two decades; and conquering Australia's "tyranny of distance".

According to the chief executive, up to 40 percent of all jobs in Australia could be lost within the next 15 years to automation, robotics, artificial intelligence, and "algorithms".

"Technology is going to redefine every industry and every job. And, along the way, it's going to make many of them redundant," he said.

"But, thankfully, technology doesn't just take industries and jobs. It opens the door to new ones as well. And the NBN will play an important role in helping us walk through that door."

NBN is also helping to bridge the digital divide between rural and metropolitan areas, Morrow said, with 1 million regional premises now having access to its services.

"Through the NBN, we can conquer this tyranny of distance once and for all. And, in doing so, we can double our digital dividend," he said.

Morrow's comments on connecting regional areas with high-speed services follow a report by Ovum commissioned by NBN last week saying that NBN is investing more in regional broadband than its international counterparts.

The main thrust of the report was that while national networks being built out in Canada, Ireland, New Zealand, the United States, and the United Kingdom are offering higher speeds to most customers, they are leaving behind the last few percent of their market on very slow speeds.

"Unlike other countries, regional areas have been prioritised for funding and access, rather than left to later stages of the national deployment plan. This is despite Australia's large geography and low population density," Ovum's Australia's leadership in providing rural broadband: An international comparison of rural broadband funding initiatives said.

"With a minimum available wholesale speed of 25Mbps for all end users, irrespective of their location or technology platform, Australia has set the bar far higher than seen in equivalent markets such as the United States or New Zealand, where programs to date have only mandated speeds of 5Mbps."

Ovum said NBN's approximate investment of $7,000 per household on regional and rural broadband is trailed by the next-highest spend of $3,200 per premises in US, AU$1,200 in New Zealand, and less than AU$1,000 by the UK, Canada, France, and Ireland.

The report added that NBN is "unique" in offering high-speed broadband to 100 percent of the population thanks to launching what Ovum has previously labelled world-leading satellite services and fixed-wireless with "fibre-like speeds".

Morrow last week said that NBN's fixed-wireless network is "the envy of other countries around the world" and ensures there is no digital divide in Australia.

While fixed-wireless is emphasised by NBN, however, Ovum's reiteration that the Sky Muster satellite service is enabling high-speed broadband for Australia's remote users flies in the face of accusations by several states and territories that NBN is discriminating geographically by providing regional and rural users with lower-quality and slower-speed broadband.

In submissions to the Joint Standing Committee on the National Broadband Network, the South Australian government said satellite should be a "last resort"; the Queensland government said the use of "lower-grade" NBN services for those living in regional and remote areas of Australia is unacceptable and inequitable; and the Northern Territory government slammed NBN's "technically inferior" satellite service.

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