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The NBN is now being attacked from all directions

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Telstra Chairman John Mullen has criticised the NBN as a waste of resources (Screenshots via YouTube)

Australia's second-rate NBN has received further criticism recently as NBN Co struggles to make improvements, writes Paul Budde.

THE GLOVES ARE OFF now that Telstra has stopped using diplomatic language to savage the NBN. Its chairman stated that Telstra and its competitors could have built a better NBN at lower costs. It is, however, important to first go back to the original NBN — a fibre to the home network to 96 per cent of Australian households.

It would not make any sense to have the competition build overlapping fibre infrastructure. However, when the Government changed the game and went for its second-rate multi-mix technology version, I agree with Telstra that at that stage it would have been better for the Government to abandon the NBN altogether and leave it to the industry. We would have had, in many areas, a far better network at lower costs than the one we have today.

If we go back before the current NBN was conceived – around the year 2005 – the plan was to just spend $5 billion to provide high-speed broadband to regional Australia and leave the rest to Telstra and other players. However, at that stage, Telstra didn’t want to play ball, hence the Government’s intervention with a nationwide plan.

Only a day before Telstra’s savaged attack, I was interviewed by ABC Radio in Orange after several people there had received a letter from Optus telling them that their so-called Speed Pack 3 of the NBN Fixed Wireless subscription would be discontinued as from December 2019. This product provides a 47/18Mbps service, but instead customers would be provided with the Speed Pack 2 product which provides a 23/4.5Mbps service. Customers could also end their contract without any penalty fees and shop around for another service.

This clearly shows yet another problem we have with the NBN. Obviously, this is a serious setback for people in regional areas, as we see the quality going backwards. As I have mentioned before, it is people in regional and rural areas who arguably benefit the most from high-speed broadband in relation to its social and economic benefits.

The discontinuation of the service is not an initiative from Optus as such, it has been forced upon them as NBN Co is making changes to the underlaying wireless infrastructure. As a result, Optus can no longer guarantee the speeds promised in the Speed Pack 3 and under strict regulations from the ACCC they must deliver the speeds that they advertise, so they have no other option than to withdraw this product from the market.

In the meantime, I also received further information that NBN fixed wireless customers in other parts of the country have received a similar notification.

There have been widespread complaints about the performance of both the fixed wireless NBN and the satellite service the company provides. Both the Government and NBN Co have indicated that they are aware of the problems and that they are looking at solutions.

As is very often in this case, if you ask what the problem is, the answer is “money”. It looks to me that more capacity is needed in these networks to provide both higher speeds and a more consistent quality of service. This would require more infrastructure and will cost extra money. At a time when the NBN company is doing everything possible to get their financial house in order, the last thing they want to do is to spend more money.

But there is more trouble for the NBN. On the matter of maximising their revenues, it was interesting to hear Vocus asking serious questions about the mission creep of the NBN company into the business market:

  • Is NBN ‘wholesale-only’ when it proactively contacts one of your customers and directly negotiates a contract that sets out buying commitments and terms of service? 
  • Is NBN ‘non-discriminatory’ when it advocates for end-users to take up a 100 per cent NBN solution, then promotes certain retailers? 
  • Is NBN ‘wholesale-only’ when it signs contracts directly with end users to ensure long-term use of new fibre, when that customer has a separate contract with the retailer for a different term?
  • Is NBN ‘acting in a transparent and accountable manner’ when it asks end-users to sign confidentiality agreements and tells end-users they must seek NBN’s consent to discuss contracts with their own retailer? 
  • Is NBN ‘non-discriminatory’ if it provides a fibre-build quote to one retailer, but doesn't make that quote transparent and equally available to other retailers?

Obviously, Vocus thinks that all the answers to these questions are “no”. Originally, the NBN was launched as a wholesale only residential service, but as it's scrambling to earn enough money in order to make their business model work, they have launched a range of services into the business market.

There are also complaints from RSPs about NBN Co’s RSP Development Fund. Under this scheme, the company co-fund with certain RSPs up to $100,000 in the residential market and $100,000 in the business market to invest in a range of activities such as sales automation, billing system upgrades, CRM integration, software integration for “continual improvement” processes and sales and training development. The complaint here again is that this intervenes with NBN Co’s neutrality position.

It will be very interesting to see what the ACCC has to say about all these industry complaints.

As if the NBN company is not in enough trouble, it is now paying for international research that will show that the bad performance ratings achieved by Australia on the international broadband ladder are all wrong and it will provide its own research to prove the independent researchers are wrong. It will be interesting to see they outcome of the research they are paying for.

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

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