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Building independent Gig Cities: The result of a second-rate NBN

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Adelaide has been one of the first Australian cities to embrace the new fibre optic network (Image via Wikimedia Commons)

Some cities in Australia are rolling out their own independent broadband networks as a result of the failing NBN, writes Paul Budde.

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 is part of the $400 million Regional Digital Connectivity program; the other $300 million is allocated for mobile blackspots.

The Government said “Gig State” would:

...seek the most effective and innovative ways to upgrade the critical digital links for regional NSW to deliver improved digital services, ensuring the potential of regional communities, businesses and local economies is not limited by geography and technology...

Obviously, there is the backbone rationale that will give these cities a far more reliable and resilient network with good redundancy. However, this is not where the project stops. From here, it wants to see these networks built out to residents and businesses. 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:

Source: Paul Budde Consulting based on EOI document NSW Government

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.

As you can see, these charges are significantly lower than the NBN charges. Apart from the quality of the Multi-Technology Mix deployed by the company, it has been the NBN wholesale charges that have been one of the major reasons why the uptake of higher-speed services has been low in Australia. In comparison, countries with significantly lower prices for the higher-speed broadband services have a much higher uptake.

As we have argued many times before, the low uptake of high-speed services has nothing to do with the fact that Australians don’t have an appetite for it but instead has all to do with the pricing. Why would Australians not like higher speeds if in all countries with lower prices the uptake of such services is significantly higher?

Furthermore, cities have a good understanding of the need for high-speed networks in order to stay competitive both in relation to attracting businesses as well as residents. If they want to create a smart city for smart people, then one of the most important infrastructures needed is a gigabit broadband network.

The coronavirus crisis is clearly showing the importance of such a network and while the network is holding up well, there are also plenty of cases – in particular in regional Australia – where there sometimes is not enough capacity in the NBN service to provide high-quality broadband services — for example, if a family of four people are using their NBN connection to work and study from home.

The other issue that I flagged in a previous article is the need for high-quality services such as telehealth.

There is no way that we will go back to the same situation prior to the crisis. All the above (telework, tele-education, telehealth as well as entertainment) will see a permanent increase as it is far more efficient. That is not to say that this will replace the traditional services, not at all. But even if these teleservices only increase by 25 per cent, it will require a better network than that we currently have.

It is understandable that many cities that see the pressure of providing good social and economic services understand the need to have access to first-class digital infrastructure. Both in quality and in price, the NBN is in many cases – and certainly in regional Australia – not always delivering this and there is no clear plan from the Government on a way forward for the NBN. Therefore, we will see more and more cities becoming involved in pursuing the Gig City movement.

The fact that the EOI document also indicates the price ranges makes it nearly impossible for the NBN company to bid for these networks. Other players will most certainly be looking for 5G options to reticulate residential and business services from the regional gig hub. So we can see some innovative approaches to this EOI.

Another interesting element of the project is that it will also include data hubs co-located with the central gig hub. I have mentioned before that for the digital economy it is essential that we have a distributed data hub system in the country. I can see at least 100 cities (perhaps even double that number) that should have such a central data facility as it will be an essential element for their economic development.

While it is great to see these first-class infrastructures being developed, it is at the same time sad to see that we are duplicating infrastructure. All of this would not have been necessary if this government had stuck with the original FttH plan as that would have made it possible for everybody in the country to have a first-class broadband service.

Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.

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