NBN CEO reiterates lack of demand for 1Gbps broadband

CEO of Australia's National Broadband Network (NBN) company Bill Morrow has published an opinion piece defending comments he made last week that consumers don't need and wouldn't use 1Gbps broadband.

In Morrow's self-proclaimed attempt to "set some things straight" about the lack of necessity for gigabit-speed broadband in Australia, he called the 25Mbps speed tier NBN's "most popular" wholesale service, and reiterated that 1Gbps services are available for retail service providers (RSPs) to offer their customers.

"I was asked last week by the media about the need for gigabit speeds in Australia," Morrow wrote.

"The fact is, NBN already offers a wholesale 1Gbps product to retail service providers, which RSPs can make available to more than 1.5 million homes, and has been on sale for around four years.

"Currently, there are no retail 1Gbps speed plans on offer from the retailers. This is, in our opinion, because there is still minimal consumer demand for these ultra-fast speeds -- especially at the prices retailers would have to charge for them."

Morrow added that consumers don't even want to pay what he labelled a "relatively small premium" of AU$20 to AU$30 extra per month for the 100/40Mbps speed tier, and that after researching overseas markets, NBN found that consumers do not need or use 1Gbps speeds.

"Even if we offered it for free, we see the evidence around the world that they wouldn't use it anyway," Morrow said during NBN's financial results presentation last week.

NBN's chief executive also used Google Fiber's rollout halt as evidence that delivering FttP is too costly across a large geography, saying Google discovered that "viable economics for gigabit broadband simply did not exist once the initial hype of the project had faded".

"1Gbps speeds are simply way beyond what even the most advanced end user needs today, let alone what is needed by regular families across Australia," Morrow concluded.

"There is literally not a single mass market consumer application -- or even a combination of applications -- that requires 1Gbps capability right now.

NBN must be "realistic" about the market, he added, before conceding that demand for 1Gbps services "probably will" change in future, but that NBN's plans for continuing to roll out fibre to the premises (FttP) and deploy DOCSIS 3.1 over its hybrid fibre-coaxial (HFC) network will cater for this.

According to NBN's 2017 Corporate Plan, just 17 to 21 percent of Australian premises will be connected by FttP, however, while the HFC footprint has been significantly reduced -- from 34 percent down to just 21 to 27 percent due to all premises within the not-fit-for-purpose Optus HFC footprint being moved to fibre to the distribution point (FttDP).

Morrow said the other network technologies being used by NBN, apart from satellite, also have gigabit upgrade paths, although no plans have been laid down for these; ZDNet last year revealed that NBN's FttDP network will be launched in 2018 without the G.fast technology that is available from this year.

NBN RSP MyRepublic last week called "bull****" on Morrow's claims, saying that 82 percent of NBN's users are on speeds of 25Mbps or less only because the incumbent RSPs have simply moved customers from their existing plans and price points onto the same plans and pricing on NBN services.

MyRepublic Australia managing director Nicholas Demos also blamed the lack of 1Gbps NBN products on the network company's connectivity virtual circuit (CVC) charge, which reserves a consumer's bandwidth from the point of interconnect and is priced depending on usage of data.

"It's absolute bull****," Demos said in an interview with ZDNet.

"The CVC pricing that the NBN are charging, it's not economical ... yes, they do offer retailers such as us a product with CVC pricing -- a one-gig product -- but it's just priced out of the market and no consumer will buy it at that price in Australia."

Morrow on Wednesday conceded that Australian RSPs are unable to offer cheap 1Gbps plans in Australia, unlike ISPs in Singapore and Hong Kong for instance, because they are "simply not in that position from an economic point of view" -- and that those countries began rolling out their networks two decades earlier and had therefore been able to since recoup their costs.

MyRepublic also announced that it plans to convince NBN of the desirability of 1Gbps broadband by bearing the cost of connecting consumers in one Australian town with 1Gbps services for just AU$60 per month.

Morrow's statements came despite the City of Adelaide last month putting out a call for providers for its 10Gbps fibre broadband network; Telstra launching a 1Gbps 4G mobile network; and the majority of RSPs in New Zealand offering a 1Gbps service as of the end of last year across the New Zealand government's NBN equivalent.

In Singapore, 10Gbps broadband services have been offered by both Singtel and M1 for a year.