NBN enters ‘death spiral’ phase

The competitive threat from mobile broadband is an ever present problem for Australia’s National Broadband Network (NBN).

Telstra, TPG and Optus have each rolled out relatively cheap, fast Fixed Wireless Access 5G broadband, which can deliver significantly higher data transfer speeds and lower latency.

5G is already stealing market share from New Zealand’s far superior NBN-equivalent infrastructure, and the same is happening in Australia with the NBN losing around 3% of customers a year to 4G and 5G:

“Increasing competition from 4G and 5G network operators is driving sustained and increasing net churn off the NBN,” the company said.

“Based on contemporary market conditions, net churn for FY22 is forecast to be 3.1 percent or 263,000 customers.

“In FY23 nbn expects net churn to be higher still at 3.3 percent or 283,000 customers.”

The exodus from the NBN could worsen with NBN Co’s submission to the ACCC on proposed changes to its wholesale pricing model suggesting that broadband prices could double over the next decade:

NBN Co wants to lock in price rises until 2040, and double the price of entry-tier plans over the next decade, as part of a redacted submission published by the Australian Competition and Consumer Commission (ACCC) on Monday…

The push for a price hike is likely to be poorly received by retailers. A TPG spokesman said, “The only thing clear from NBN’s convoluted pricing model is that internet services are going to get more expensive for Australians in the future…

“The NBN’s pricing proposal can be summed up as price hikes and no improvements.”

Given NBN Co’s high fixed costs, it can only remain solvent if a high percentage of the population agrees to sign-up.

But if people continue to leave the NBN, then these fixed costs will be spread over a falling subscriber base, leading to further price rises and more people leaving for cheaper 5G alternatives.

If this process continues, then the NBN could face a ‘death spiral’ of falling subscriber numbers and rising costs.

Unconventional Economist

Comments

  1. DingwallMEMBER

    I recently swapped from a business connection to retail connection with Telstra. My NBN network box and Telstra router worked perfectly fine and I told them that.
    They insisted on sending me a new router as well as sending an NBN technician with a new network box to install. What a complete waste of money and time.

        • Some random contractor came out. That doesn’t mean Telstra didn’t order it.

          Though, if your service was new in some way, involving a physical connection somewhere and not a boring billing change, then it would make sense.

    • A mate of mine has about 10 Telstra routers for his connection in his garage. They keep sending them to him, despite him ringing them to get them to stop. I grabbed a couple of spares last time I was having beers with him in case my current one craps itself, so win for me!

  2. Leroy Huggins

    So it turns out some of the criticism levelled at Labor’s program may have been valid?
    Who knew?!

    So we had: NBN will be quickly outdated (tick), NDIS costs will blowout and be unsustainable (tick), the boats will start again (watch this space)…

    I wonder what landmines they will lay under the nation in their current term?
    They are off to a good start with a childcare program which will see untold billions syphoned off by private industry via fraud and over-charging…

    • “So it turns out some of the criticism levelled at Labor’s program may have been valid?
      Who knew?!”

      I was thinking similar, however below……..

      “………………, NDIS costs will blowout and be unsustainable (tick), ……………….(watch this space)…”

      Well, maybe because of the “for profit” model approach that the LNP gov took is the reasoning there.

    • drsmithyMEMBER

      Labor’s NBN wasn’t implemented.

      What we have is the Coalition dog’s breakfast NBN, which is suffering the problems everyone said it would.

      • Genuine question, Apparently they can’t sustain current services without massive price hikes (which I presume place us close to the top of the worlds most expensive internet access). Also, the majority of consumers don’t opt for high speed plans as they are not needed currently and are too expensive for the average punter. So if the network was gold plated, significantly increasing the capital spent and thus profit required for the same ROI, how would the NBN be in a better position today? Would it not be faced with the same competition, the same requirement for price hikes (off an ever higher base cost to consumers)?

        • drsmithyMEMBER

          It’s very arguable whether the “gold plated” NBN would have cost any more, and it would have had the advantage of being enormously more scalable, thus allowing substantial capacity upgrades throughout its life with little need for major re-engineering and upgrades (see the example below from kiwikaryn).

          That said there were plenty of other problems with Labor’s NBN, like requiring a public service to turn a profit in the first place. But from a technological perspective, the issues the NBN has today would have been largely nonexistent if it had been built properly the first time.

          Also worth noting is that the hero numbers for 5G are very location and time dependent, due to the nature of the technology.

          • ErmingtonPlumbingMEMBER

            If everyone were to go onto 5G it wouldn’t be as good anymore and suffer similar problems to NBN.

            As for “ there were plenty of other problems with Labor’s NBN, like requiring a public service to turn a profit in the first place”

            In our new world off techno-feudalism of course all forms of telecommunications should be publicly owned and not run for profit

          • Jumping jack flash

            “If everyone were to go onto 5G it wouldn’t be as good anymore and suffer similar problems to NBN.”

            exactly!

            The small town where I lived before moving to the big smoke had one or maybe two at most mobile phone towers servicing the town which were shared by all the providers.

            I had a 3G broadband connection at that time (pre NBN), which suddenly stopped working. Intermittently the mobile phone data would also just stop.
            The problem was the mobile phone tower associated with my provider had run out of capacity.

            I had to diagnose the problem for the telco I was with, and then after they decided I was right, they sent someone to upgrade the tower. The whole episode took roughly 6 months.

        • Fart Mechanic

          Its all about the medium to transmit signals and speed. The old
          phone network is copper and cant handle the high-speed.

          The original NBN was replacing that with fiber which has speed
          of light. Then the box at the exchange, and the box you have at
          home determines the speed. New faster tech only need to swap the
          boxes (future-proof).

          Liberals stopped the fiber roll-out and left the copper in there
          saying nobody needs faster than this anyway.

          This means that we now have to re-digg up all the Liberal-NBN
          and put in the original Fiber, or we burn them at shit-internet forever..

          The price difference you get on internet today is purely controlled
          by the ISP that purposely reduces your speed for a cheaper plan.

          If everyone was at original NBN speed they are all connected at
          100mbit (or more) and is software-downgraded by the ISP for cheaper plan.

          Except.. the Liberal NBN.. that cant be upgraded or controlled
          without digging up half the street to put in fiber again.

          (somewhat simplified but you get the idea)

        • Thanks, with you on the 5G argument, clearly not a tech that can displace an NBN style network anytime soon.

          What the NBN is talking about now is having o increase pure wholesale costs is it not? Including large increases to even the lowest speeds, why? Is it purely the result of needing a commercial ROI? Maintenance costs well in excess of what was estimated? User base impacted in a way not modelled by NBN co (I.e TPG fibre)? It doesn’t seem to have anything to do with upgrade costs because they are not talking about delivering better service, just the requirement for large price increases on the existing ones?

      • Stephen Morris

        It reminds me of those people who used to claim that Communism was never really implemented.

        It’s an argument impossible to counter because one cannot test the counter-factual case.

        One must rely on reasonable inferences from scanty evidence. Of course, we have significant experimental data to suggest that human beings interpret evidence to support their pre-existing beliefs.

        • drsmithyMEMBER

          It’s an argument impossible to counter because one cannot test the counter-factual case.

          The technology differences between Labor’s NBN and the Coalition’s NBN are not only well known and understood (as they were beforehand), but directly comparable.

          You just have to look at the places that the NBN was properly implemented (ie: FTTH). I believe in some of those areas its already possible to get gigabit connectivity, without – as someone mentioned above – digging up and replacing huge amounts of infrastructure beforehand.

          • It’s stunning that even today some people have still doubts if copper or fiber should have been used for NBN. I (as a right leaning voter) remember vividly arguing with Abbot/Turnbul party voters fanatics that Labor’s plan was probably one of the most brilliant they [Labor] or or even Australia could’ve implemented. Nope. Supposedly it was too expensive, 2GB said so. And they (yes boomers) didn’t need the benefits of fibre anyway.

            drsmithy, I pretty much disagree with you in 98% of cases but regarding NBN you’re 100% spot on.

          • Stephen Morris

            human beings interpret evidence to support their pre-existing beliefs

            The foregoing response is a classic example of the phenomenon. It frames the issue entirely in terms of:

            a) technological specifications; and

            b) a choice between FTTH and the Coalition’s hybrid system.

            Other factors which might have been considered are:

            a) economic rate of return (a point implicitly acknowledged in the earlier comment which complained about “requiring a public service to turn a profit in the first place”);

            b) the degree to which any analysis depends upon unknowable consumer surplus and external benefits (akin to the Brisbane Olympic Games supposedly producing $1 billion of “improved community spirit”). Can anyone really say what “latency” is worth to a user? and

            c) comparison against other options (including a combination of i) doing nothing, b) 5G with ever decreasing cell sizes and iii) FTTH where provision is cheap or where demand is high).

            No doubt this comment will elicit yet more directed reasoning designed to defend pre-existing beliefs.

            p.s. This is not to suggest that such beliefs are “wrong”. It’s just that they are only beliefs, no matter how much Believers might regards them as self-evident or demonstrable truths.

          • drsmithyMEMBER

            My reply was in terms of technological specifications and comparison only with FTTH, because those were the conditions set out in the comment I replied to (“[Labor’s] NBN will be quickly outdated”).

            It has nothing to do with “pre-existing beliefs”. It is a simple comparison of the possible alternatives (what was proposed vs what was implemented), in the ways specified.

            You are trying to turn it into some type of nihilistic philosophical issue for reasons I am unable to fathom, save for perhaps the sort of narcissistic trolling skippy enjoys so much.

            PS: This is not to say that the other aspects of the NBN are unimportant to a discussion about it, simply that they are not directly relevant to my response.

      • One of the rare times drsmithy and I agree.

        The hodgepodge dogs breakfast of substandard technologies we have in the “as built” NBN is the problem. Had TPTB stuck with FTTP there would be far fewer issues.

        It’s common to hear people say “My NBN sucks, my 4G is better” and when you ask them what technology their connection uses, they have no idea. It’s just “NBN”. When you put their address into the NBN address checkers you find they’re on NBN wireless or worse, Skymuster.

        I’m on FTTC and we’ve been having constant dropouts – hundreds per week – for the past 3 or 4 months. Thankfully we’re scheduled for a free FTTP upgrade next month which will hopefully fix it.

        Having been on FTTP previously I’m looking forward to being able to go back to Gigabit. I might even splurge for 1G/1G symmetrical.

      • Labor’s NBN was never feasible. Connecting up every house to fiber would have been a massive undertaking which would have involved digging up every street and every front yard. The project would have at least doubled in cost and wouldn’t have been completed until the mid 2020’s at the earliest. And entry prices would have been far higher for customers and margins for NBN would have been tighter so NBN today would be in even more trouble if implemented.

        Using existing infrastructure along with new technology was clearly the only feasible option. Note: The NBN is still scalable , even with copper wiring. There’s nothing stopping NBN installing fiber deeper into the network when doing future upgrades.

    • Fart Mechanic

      You are forgetting your Lib buddies here.. they destroyed
      the original NBN by downgrading it mid roll-out. Basically
      replacing parts for the future with parts from the past.

      A bit like building a new coal-power plant as the funeral
      music starts playing..

      So if your NBN sucks then you got the Liberal-NBN version.

      And if you think 5G is replacing a fixed line internet
      as mentioned below: physics don’t lie..

      • kiwikarynMEMBER

        They actually didnt build much of anything new. So its more like taking a mothballed coal plant and firing it up again, and then trying to bring it up to modern day standards while spending a fortune on keeping it running.

  3. TheLambKingMEMBER

    The laws of physics say it won’t.

    5G is good for downloads, but the shared nature of uploading (zoom sessions) and the power/distance requirements are an inverse square relationship (so for ever doubling of distance requires 4 times the power to get the same speed) mean that it can’t compete in the work from home crowd (which is almost everyone)

    • This argument has been made I don’t know how many times but old mate refuses to listen to it.

      • Fart Mechanic

        Having arguments against Physics has historically been futile.
        But we got flat-earthers these days so..

      • The LNP misinformation campaign around the NBN was one of their most successful and enduring.

  4. kiwikarynMEMBER

    Our fibre connections just got a free network upgrade a few months back – everyone is now on a minimum of 300 Mbps connections (100 Mbps upload). If you want faster you can get 1, 4 or 8 Gbps connections.

  5. “which can deliver significantly higher data transfer speeds and lower latency

    Latency on my Telstra 5G is worse than any of my teammates on NBN. The only reason I remain on 5G is mobility.

    For reference:
    Pinging http://www.macrobusiness.com.au [172.67.74.235] with 32 bytes of data:
    Reply from 172.67.74.235: bytes=32 time=33ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=33ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=43ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=43ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=37ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=41ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=40ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=41ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=42ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=28ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=42ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=37ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=42ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=40ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=29ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=40ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=28ms TTL=53
    Reply from 172.67.74.235: bytes=32 time=40ms TTL=53

    • Was running a speed test with a mate visiting from Melbourne who’d just switched to 5G. The difference in ping was negligible and my 4G connection had about 15% more bandwidth. Seems maybe there are tiers of performance we’re not getting yet… If only Huawei were allowed to enter the market. Better ping, better download and better social credit.

      • My teammates on the higher NBN tiers were consistently (low jitter) getting closer to ~10ms response times.

        I will also add that my experience with 4G is that the networks eventually becomes oversubscribed to maximise profits. Especially true for the non-Telstra providers.

  6. There is no death spiral with the NBN and competition from 5G. Your analysis is flawed, people have been telling you this for years.

    5G can not replace the NBN for at least 2-3 decades, because the more users that jump on the 5G band, the slower it becomes.

    Your analysis is even more flawed because we all work from home now.

    • Even when I was working from Cairns last week I was remote desktop into my home PC to leverage the NBN connection at home.

      • Even if Cairns had 5G, the constant syncing of files between the office and PC would kill any mobile data plan.

        • That is beside the point! All it matters now is that we turf out the treasonous Labor government ASAP.
          And Dan Andrews. Fcuk, yeah!

  7. alwaysanonMEMBER

    I was worried when my new place had HFC NBN rather than FTTC or FTTH. After two years with it though it has been solid (knock on wood) – not a single drop/outage. It doesn’t give me true gigabit, but the month that I did try NBN Ultrafast I was getting ~500 Megabit down and ~50 up. The latency is an acceptable ~10ms to most local things here in Sydney and pretty consistent.

    I couldn’t justify the high cost of Ultrafast ($150/month with Aussie Broadband) and saved the nearly $500/year dropping down to 100/40 (which we truly get all the time from them). We have to wait slightly longer on downloads/updates but otherwise it does everything we need with no buffering etc. With us both working from home I have been very pleasantly surprised that it is never either of us that has issues on our end with work Zoom/Teams calls etc.

    It works well enough that the only thing I am unhappy with at the moment is the price. As long as we are using it this heavily though it’s been worth it…

    • JoeJackMEMBER

      I too am on HFC with Aussie broadband.

      I have very rarely had a drop out and i get the speed I am paying for.

      I find it interesting that the complaints list here are mostly part fibre connections.

      It makes me wonder if there were screw ups with the installation of fibre portion of the network.

      I get cooper is dumb but it seems that not all the problems listed here involve a part cooper connection.

  8. Joke thinking 5g replace anything when to do it right you need to have users plug in local nodes to… a non equivalent.

  9. MB has been completely wrong on the nbn since they supported Abbot/ turnbull tearing up the fibre network (now slowly being upgraded again at massive cost). And as above, still not understanding very basic physics.

  10. NBN is a joke. I have no idea why anyone would bother.
    WHat when one can get ample home internet in every room of their home via a 4G router for about $2.90 a month… ?

    NBN – biggest waste of tax-payers’ funds I’ve witnessed in my life

    • $2.90/month buys you how much data?

      Anyone seriously saying 5G is a competitor to NBN FTTP does not understand the technology.

        • Ahh, an “introductory plan”. How many of these intro Kogan $2.90 plans have you personally signed up for and used in the past 12 months?

          Given mobile SIMs in Australia require ID, it’s easy to limit people who try this strategy.

          Also, the deal appears to now be 20GB: dubdubdub.kogan dot com/au/buy/kogan-mobile-sim-prepaid-starter-pack/

  11. Maybe the ATO will prop up the NBN (like they do the private health insurance scam) by incentivising subscriptions via tax breaks ??

  12. I found both unreliable so I have to subscribe to both as failover: if one fails the other still works. My confidence in both technologies as implemented by mediocre commercial culture is not that great. It’s just all part of the higher costs for the privilege of living and working in Australia.