Australia's NBN damaged
by wombats and politicians As gigabits deploy, why throttle down to 100 megabits? Since 2005, DOCSIS 3.1 was designed to go to a gigabit and more, shared. But NBN will only offer 100 megabits when it rolls out in a year or two, NBN CTO Dennis Steiger tells Alan Breznick at Light Reading. The equipment cost for a gigabit will be similar to the 100 meg cost. Next year, most cablecos will begin using gigabit-capable modems for new customers whether or not they have gigabit service. The cost to the carrier of the extra bandwidth would normally be less than $2/month/customer, often far less. 

The saving from throttling is minimal, a dollar or two per month. Bandwidth isn't free but in most of the world bandwidth is darn cheap. Conroy was considering building/buying an undersea fiber link for NBN if that's what was required to bring down transit costs. Conroy made a political decision to keep the basic NBN price low by drastically raising the prices for higher speeds and more usage. He wanted to make sure no one paid more for NBN than they paid for DSL, no matter how inferior the connection was. He knew in the long run that was a mistake but his party had only a one vote advantage in Parliament. 

"There is massive demand for very high-speed broadband supporting more than 100 Mbit/s and up to 1 Gbit/s," Breznick colleague Simon Stanley writes.

Worldwide evidence is gigabit service finds customers where offered at a fair price.  We all know Google has seen excellent take rates in Kansas City despite a 50-100 cable alternative. Literally dozens of small U.S. telcos are happy to offer a gigabit. In Korea, many customers aren't going for the full gig - but many are. Almost no homes have practical reasons for speeds higher than 50-100 megabits but for $5-10/month extra some will sign up for the occasional thrill, ego boost and future possibilities. Steiger is probably right that if a gig cost $50 or $100 more demand would be small.

Steiger presumably means they don't think many people will be interested at the high price NBN and partners want to charge. 

A political decision by then-Minister Conroy leaves Australia/NBN with ridiculously over-priced backhaul. The extra bandwidth actually used at the higher speeds would cost closer to 20 cents than to $2 in most of the U.S. or Europe but the effective price for most of Australia's "retail service providers" is much higher. 

Conroy was being criticized because the NBN would cost some Australians more than their DSL lines. How many needed more than 10 megabits? the opposition asked. The answer to that is obvious today. Passing the NBN was a very tight squeeze. Conroy's party had only a single vote majority. Conroy insisted they move away from ordinary cost + markup pricing to a highly inflated backhaul cost, allowing a lower price for a local connection at low volume. The eventual NBN plan especially hurt the smaller ISPs.

I've urged both Conroy and Turnbull to fix this. Politics is still a problem. In addition, international transit prices to Australia have always been high. A few years ago, I confirmed that transit in Australia cost literally 5-10 times what the same service would cost in the U.S. and Europe. It's still something like 5x today because of cartel pricing. Conroy threatened to solve that problem by constructing an undersea fiber link to the NBN.

Malcolm, time to be a decisive leader. Your statement promised a gigabit and there's no reason NBN can't deliver a gigabit.

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Thanks to Alan Breznick for asking the right question. A half dozen Australian reporters picked up the "gigabit network" in the NBN release and didn't think to ask whether customers would actually get that speed. Thanks to a NBN spokesman for a fast reply, which I'm quoting virtually in full. 

• At launch we targeting speeds up to 100/40 top on HFC NBN Network to match our current FTTP speed offerings.

(editor)Confirming the accuracy of Breznick's reporting.

• Docsis 3.1 will allow us to produce speed up to 1Gbps – but these will only be offered if there is sufficient consumer demand

In 2005, John Chapman of Cisco amazed the Fast Net Futures Conference explaining how cable will get to a gigabit. Chapman, a friend, continues to lead the DOCSIS 3.1 effort. Petroc Wilson of Commsday has a good interview with John http://bit.ly/PetrocChapman that explains how Cisco is ready to deliver early gigabit gear.

• It is a question of whether our RSP customers are prepared to offer these 1Gbps services to end-users

Which I discuss above.

• The Docsis 3.1 move is also not just about speeds. Moving to the technology also helps us to get to a much more intelligent network which provides better services to end-users.

He is right. There are a slew of improvements in 3.1. I wouldn't use the term "intelligent network" to describe them, however. David Isenberg seminal paper http://bit.ly/stupidnetwork is proving generally true. "Intelligence" in the network makes it more complex and much more expensive to manage. Empirically, on large networks it's often more cost effective not to muck things up with "intelligence."

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A particularly well-informed Australian writes 

"NBN Co don't want to offer a gigabit initially because of a peculiarly Australian notion of equity - that since only a quarter of the population can get HFC and the rest FTTN (which will take longer to roll out so technically many still on ADSL2+ when DOCSIS 3.1 is switched on) it would be unfair on the others if only some can access a gigabit. That is the way Australian politics works like it or lump it."

I can't speak to the "Australian notion of equity." I do know that AT&T came to a similar conclusion for marketing reasons. To avoid a backlash from customers who couldn't get the highest speeds, initially AT&T throttled down U-Verse speeds to those close enough to the DSLAM to receive higher rates. They changed that policy, now offering 45 megabits & 75 megabits to some, without a meaningful backlash.

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There's another explanation for NBN's slower network. They have no competition and can do what they want. NBN is a monopoly and monopolies need strong supervision. Malcolm - a faster Internet is good for Australia.

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Here are the comments from Minister Turnbull and NBN  

NBN to Be World Leader in Next Generation HFC Technology

More than 3 million homes around Australia will have access to the next generation of technology available on Hybrid Fibre Coaxial (HFC), or Pay Television networks, from 2017.

The NBN Co has announced it will be one of the first telecoms companies in the world to deploy the technology, known as Docsis 3.1.

Just as 4G revolutionised the services available over mobile phones, the new generation of Docsis will dramatically improve the services available over the fixed-line HFC networks.

It means that end users will be able to access speeds of 1 gigabit per second download and 100 megabits per second upload, if their retail service provider offers those speeds.

Around the world, HFC networks are among the most commonly used means of delivering superfast broadband.

Under Labor, the Commonwealth had agreed to pay billions of dollars to decommission the HFC networks, under commercial agreements with Telstra and Optus.

The Government and the NBN Co renegotiated the agreements in December to allow the NBN Co to take ownership of the networks at no additional cost to the taxpayer.

This follows a Strategic Review conducted by the NBN Co in December 2013, which found that by deploying a multi-technology mix – including the use of HFC networks – could save the company four years to complete the project and around $30 billion in costs.

The upgrade to Docsis 3.1 will be in addition to more immediate upgrades to the HFC networks which will be undertaken to increase capacity and relieve congestion ahead of the NBN selling products over the networks in 2016.

The NBN Co has also increased the reach of its fixed line network from 197,000 premises serviceable as of the election, to 622,000 premises now serviceable.

There are now 296,000 end users receiving NBN services on its fixed line networks, up from 49,000 at the election.

 

NBN Co to unleash fibre speeds for cable customers