NBN faces new competitive threat

Australia’s $52 billion National Broadband Network (NBN) is facing competitive threats on multiple fronts.

Over recent months, both Telstra and the merged TPG / Vodafone flagged plans to launch 5G mobile products that would compete head-to-head with the NBN in lucrative capital city areas.

NBN Co’s corporate plan initially projected that only 20% of households would choose mobile-only internet over broadband. Thus, if competition from 5G heats up, and the technology delivers as promised, then mobile’s market share could rise significantly, thereby eating into NBN Co’s subscription numbers and revenue base.

Indeed, Telstra chairman, John Mullen, threatened that it could steal 10% to 30% of existing NBN customers in capital city areas:

“There is no doubt that the fixed wireless alternative will take share from the traditional fixed-line operators, it’s happening all around the world…

“[NBN] is going to have a tough time, I feel for them. It is going to be a migration of somewhere between 10 and 30 per cent probably.”

Now, veteran telecommunications analyst, Paul Budde, warns that some cities in Australia are rolling-out competing high-speed broadband services to the NBN:

ADELAIDE WAS one of the first cities to build a gigabit fibre optic network but soon others followed. Newcastle, Wollongong, Launceston and the NSW Central Coast Council are now all developing their own gigabit infrastructure.

Now, the NSW Government is putting $100 million dollars aside for the provision of “innovative systems” to improve the price, quality of service and internet access services in Wagga Wagga, Parkes, Dubbo and a corridor west to Cobar, along with a fibre access system for residents in Sutton, Bywong and Wamboin…

This will bring it in direct competition with the NBN. To highlight that situation, it further wants to see wholesale and retail prices significantly lower than the ones provided by NBN co.

Proposed monthly wholesale access charge excluding GST should not be higher than:

As an example, the NBN 500Mbs retail service costs $400. The retail price mentioned in the Gig City Expression of Interest (EOI) cannot be higher than $90…

Duplicating natural monopoly essential infrastructure is obviously bad from an economic efficiency perspective. It also highlight how badly the Coalition Government failed to deliver a world-class NBN.

This failure is certain to see NBN Co lose market share, meaning it will fail to meet its lofty revenue targets and will need to be written-down heavily by the federal government.

Unconventional Economist
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  1. What did you expect building a network with a large portion that is maxed out at 100mbps?

    • Had it been left in the original “everyone gets FTTP” guise, it would have been cheaply upgradable (relatively speaking; laying the fibre is the expensive part) for the life of the fibre (30+ years)

      • It’s much, much cheaper to upgrade 4G towers to 5G than it is to dig up roads and lay fibre. Which is exactly what is happening anyway. That’s why 5G will kill the NBN. That and because Rudd is a BA and not a PhD in electronics.

        • drsmithyMEMBER

          It’s much, much cheaper to upgrade 4G towers to 5G than it is to dig up roads and lay fibre.

          The first time, sure. How about the tenth ?

        • 5G has shorter range than 4G and penetrates material less well, requiring more cells. It is, like all wireless technologies, shared spectrum. At a physical capacity layer – so not the protocols running on top – a fibre will beat shared spectrum every time.

          Yes, 5G can deliver higher speeds than NBN offers now. That doesn’t mean the fibre isn’t capable of higher speeds.

          With the right equipment at both ends, a 10Gbit link over fibre is easily doable.

          I don’t know anyone in the IT industry who believes 5G negates the need for an FTTP NBN. Note I say FTTP; I’m not comparing 5G to the mish-mash of subpar crap most of the country ended up with under the LNP “better faster cheaper” plan. I do know that the LNP option was none of those things and, for the “better” part at least, was always unquestionably going to deliver a worse outcome than giving everyone fibre.

          • Irrelevant arguments. A Maserati will beat my Hyundai every time but I still bought the Hyundai because it gets the job done.

            When comparing internet plans the only questions normal people ask are:

            Is it fast enough to stream Netflix on my 4K TV?
            How much does it cost?

            Netflix says 25 Mb is all you need to stream 4K. 4G can easily do 25 Mb today (I typically get 50+ Mb), let alone 5G. QED.

          • drsmithyMEMBER

            The discussion isn’t about what car to buy, it’s about how much land to set aside for the freeway.

            People like you would have built the Harbour Bridge 2 lanes wide plus a single train track, because that’s all it needed at the time.

  2. but i was told by so many people here that 5g would never be able to compete with fibre!!
    It doesn’t have the bandwidth!

    • Michael Attwood

      That’s still correct.
      But 5G competes favourably with Copper which is what this dog’s breakfast NBN is now built on.

      We should just sell the whole thing to Telstra and accept a 30% equity stake in them for it.

      • Yes. Bottleneck in NBN is that last bit of copper to the premises. So NBN is effectively copper broadband. Lol.

      • nah its not correct

        99.99% of the population does not require fibre
        Those who do can pay for it to be installed via a commercial/business service with TPG/telstra etc
        OR they can move to an office that has fibre already available (which is a lot of places now that NBN has laid FTTN)

        • drsmithyMEMBER

          99.99% of the population does not require fibre
          Those who do can pay for it to be installed via a commercial/business service with TPG/telstra etc
          OR they can move to an office that has fibre already available (which is a lot of places now that NBN has laid FTTN)

          Twenty-odd years ago, exactly the same comment was made about dial-up vs ADSL.

          Twenty-odd years before that, it was letters vs fax machines.

        • People often make the mistake of thinking that infrastructure is related to now.
          You dont build a train line because that would be handy to have today.
          Covid-19 and everyone working from home with a brand new inferior NBN is perfect example of failure to understand this.

    • Aussies on Twitter: “Mate, without Saint Rudd’s ubiquitous fibre network we’ll end up like Djibouti!”

      Here I am being a sucker using Optus 4G home broadband at 50/5 Mb to make a living as a software engineer while my kids stream YouTube Minecraft videos.

      • Yeah my home business uses about 1TB of data month, and until a few months ago I was using optus 4g 2x500gb plans

      • Perhaps if there was no NBN at all your 4G connection would be a little congested (unusable)?

  3. The NBN was a mistake from the start. Should have just left it up to the free market to deliver broadband services. Lots of companies would have stepped up, all without costing the taxpayer a dime.

    • The free market does not build infrastructure. Never has. The goal of a company is to make profit. There is not profit in building infrastructure, or to make your life better.

      Like Telstra, it was probably the last telecom company in the world to offer dial-up until 2015 when the rest of the world had changed to ADSL 15 years ago. They had 20 years to build infrastructure they knew everyone was changing to, but there are more profits in you paying for dial-up.

      So Liberal decided to make it cheaper, faster, better for less $ and changed the technology behind NBN with a free market perspective. What you have right now is pretty much exactly what the free market would build. ..Enjoy your North-korean Broadband Network (NBN)…

      • Telcos build their own infrastructure all the time and they offer plenty of choice. What do you think Optus, Vocus, TPG, Vodafone etc do? In Europe, Japan, US etc, do you think the governments built the telco infrastructure? Nope. It’s all done by private enterprise. No government run NBN style schemes over there. Even Elon Musk is getting in on the act by building a satellite internet network.

        • Fart Mechanic

          The brands you mentioned, Optus, Vodafone, TPG etc. are not building anything, they are resellers of NBN.
          They bought a 3G/4G/5G box with antennas and then they put on a stick, with the wire going from there down to NBN (fiber) and sell it to you for a profit.

          Elon Musk is the only exception here. He *really* does build infrastructure, and innovates, but he is not a normal “private enterprise” at all… he doesnt seem to care about profit..

    • 15kms from the Perth CBD and your free market utopia (privatised Telecom) couldn’t even deliver an ADSL connection. Had to wait until 2018 to get commie NBN HFC.

  4. Ah yes, the good old days when Telstra enjoyed a “natural monopoly” and Telstra technicians were honest and competent and never ever abused their monopoly power.

    Leith, whenever you go off the reservation and rave about the NBN it’s obvious that you’re an economist and not an engineer. Because actual working engineers build redundancy into their systems. In theory it’s economically “inefficient” but in practice leads to much higher reliability and the spare capacity can be used as a beachhead to enter new markets.

    Competently run companies like TPG, Vodafone and Optus smell blood in the water competing against the NBN’s incompetent body shop contractors from the subcontinent managed by even more incompetent Aussie diversity hires.

    Thank goodness Elon Musk doesn’t believe in natural monopolies or SpaceX wouldn’t be launching the Starlink constellation of internet access satellites.

    • Not long now either till this burns NBN to the ground…

      “SpaceX is launching 60 satellites at a time, aiming to deploy 1,584 of the 250 kg (550 lb) spacecraft to provide near-global service by late 2021 or 2022.[17] However, these are only internal projections and not set dates. “

      • If anything Starlink could help the NBN as it would probably be cheaper for the NBN to pay for their regional and Outback customers to use Starlink and get rid of the existing fixed wireless & satellite networks. The NBN’s Sky Muster satellites are geostationary (i.e., high latency) and slow (25/5 Mb) so Starlink would almost certainly make them non-viable.

  5. If the NBN has the slightest sense it’ll offer everyone max speed right now, before there is a movement to 5G & the 5G networks get up a head of steam with wider coverage, capitol raisings, income streams etc. (THough they would still be fighting the natural tendency for people to go to one supplier, which would be 5G as it works for fixed & mobile, though maybe the NBN can offer wifi hotspots everywhere 5G goes)

  6. Our house has been WFH with 5 people, 3 at work & 2 at FT Uni. We have NBN. 80% of what we do is using 4G. Quite simply dealing with NBN/Internode re the multiple times the NBN cuts out is not worth it. So we all go 4G for work & just dabble with NBN privately for Sh!tflix etc. We have almost agreed that there is pretty much no point continuing with NBN/Internode as it is expensive & you are always paying a fee for no service. So why bother? If 5G becomes available to our household we will be all in. NBN/Internode is redundant.

    • Same – as soon as 5G is available where I live I will run away from NBN and their terrible non-technicians as soon as I can. Aussie BB try hard, but there’s nothing they can do except book another pointless appointment. Most visits from NBN techs end up creating more problems than they solve. There is simply no-one I can hold responsible for the endless string of failures.

  7. Pedantic point – with 5G, NBN is no longer a “natural” monopoly. It never really was a natural monopoly as competition was blocked. It was a statutory monopoly but that no longer works. I’d sign on to 5G in a flash. NBN has been and is useless.

  8. Crocodile Chuck

    1) As Frank Blount, Telstra CEO was leaving in the early ‘oughts, he stated that the company had already begun planning for a national broadband network which IT would finance.

    2) The government didn’t build the packet switching network required for cash dispensing ATM’s in the early ’80’s. The banks did.

  9. The NBN was a Labor failure from the start. It would be gone if Turnbull followed Abbott’s instructions and gotten rid of it.