Op-Ed: Speed of change is the broadband talking point

When Infrastructure Australia last issued its Infrastructure Audit in 2015, it reported 346,000 premises connected to the national broadband network.

The 2019 Infrastructure Audit, released this week, tells a very different story. Today, more than 10 million premises around Australia are able to connect, and nearly 5.8 million premises are connected.

Infrastructure Australia has rightly highlighted, in both its 2015 and 2019 audits, “the transformative role the NBN would play in Australia’s future telecommunications network”.

But what really stands out is the rate of change in just four years. NBN has gone from being a theoretical possibility for most Australians to a large-scale operational network used by millions and adding customers at the rate of 125,000 a month.

NBN’s financial results for 2018-19 show how strongly it is growing — with the number of premises ready to connect up 41 per cent on the previous year and revenue up 43 per cent.

Network construction is 85 per cent complete — with the rollout due to complete next year. Importantly, nearly two-thirds of customers take a plan that is 50 megabits per second or above. In other words, most customers value the high speeds that NBN offers.

For most customers, fixed-line broadband speeds, prices in real terms and download limits are much better today than 10 years ago. In 2009, most Australians received their fixed-line broadband over ADSL. It worked well for some, but speeds were very patchy depending on how far you were from the exchange. And some 700,000 homes around Australia could not get fixed-line broadband at all.

For those who could get ADSL, the average speed was 8Mbps — many customers received much lower speeds, often less than 1Mbps. It was a long way from today’s 50 and 100Mbps plans.

For this service, you paid $110 a month (in 2019 dollars) — including line rental, which was a compulsory payment if you wanted broadband.

And in a very big difference from today’s broadband plans, 10 years ago fixed-line broadband plans had download limits. A typical 2009 plan was capped at 45 gigabytes and if you went over this you paid extra.

Broadband costs significantly less today than in 2009 in real terms, with a typical 50Mbps plan costing about $80 a month. And unlike the plans of 10 years ago, many plans today do not have download limits. As a result, people are using much more data.

The average NBN customer today uses 240GB of data a month. In December 2010 the typical amount of data downloaded over fixed-line services was just 11GB per month.

Quite simply, thanks to the NBN, fixed-line broadband services today cost significantly less — and deliver very substantially more — than 10 years ago.

A big part of this has been changes to Telstra’s retail broadband pricing, as the ACCC noted in its Communications Market Report 2017-18: “Telstra’s fixed broadband retail plans are showing a marked increase in value over the past three years, as Telstra has transitioned its business to meet heightened competition.”

In other words, the NBN is doing what it was designed to do: change the market structure from one in which the vertically integrated Telstra had the market power to keep retail broadband prices high.

Today, Telstra is largely a retailer of fixed-line residential broadband (as are many other companies) and NBN Co operates a wholesale-only national broadband network.

This is the market structure that was imposed, and legislated, by the previous Labor government.

An unsurprising consequence of this market structure is that, as Infrastructure Australia notes, NBN Co faces calls from retail service providers to reduce its wholesale prices.

In fact, NBN does regularly review, and change, its prices. It has such a review under way right now.

A previous review led NBN Co in 2017 to change its price structure to reduce the premium charged for higher-speed plans such as 50Mbps. This led to a sharp increase in the proportion of customers taking such plans.

As Infrastructure Australia observes, NBN Co has several objectives — supplying services at specified speeds, providing access to all premises no matter where located, selling wholesale services at prices that allow affordable services to end users and achieving a return on taxpayers’ capital invested.

Under Labor, little practical progress was made on achieving these objectives — and when government changed in 2013, barely 50,000 premises were connected to the NBN fixed-line network.

But since that time, under our Liberal National government, my predecessors, Malcolm Turnbull and Mitch Fifield, had driven the NBN rollout very hard.

Of course there remains plenty to do — but NBN Co’s results today show, and as the two contrasting audits four years apart also highlight, we have come a long way.

Paul Fletcher is the federal Minister for Communications, Cyber Safety and the Arts.

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Originally published in The Australian on 15 August 2019