Fibre to the Node: At what price?
This is a joint-statement from Internode and iiNet.
The answer, of course, is nobody really knows how much Fibre to the Node (FTTN) will cost, because of the misinformation available on the subject of broadband - but we'd suggest that looking at 2008 prices for 12 Megabits per second (Mbps) internet access is a good start.
Today, $50 a month can buy you a great ADSL2+ service from a number of ISPs with their own infrastructure(1). The market offerings are many and varied and there are a number of options for consideration, but let's stick to internet broadband access.
Can $50 get me 12Mbps? Absolutely!
ADSL2+ reportedly offers customers access speeds up to 24Mbps, given the right conditions (some even report speeds above that). iiNet have released actual speed data previously(2) - indicating measured speeds on customers connected to their ADSL2+ network.
New surveys conducted in 2008 support the early results. Both iiNet and Internode measured the speeds experienced by more than 16,000 customers connected to their networks. Combining the results of these two ADSL2+ surveys indicates that half of all their customers(3) regularly enjoy download speeds of 11.9Mbps. In addition, 80% of customers, today have access to speeds about 6 Megabits per second.
So, the answer to the question of how much should customers pay, seems to be fairly straightforward - They should pay no more tomorrow than they pay today.
This answer, though, begs further questions. Like...
"If I can get 12Mbps for $50 a month today, why does Australia need to spend another $10 billion, with $4.7 billion coming from the public purse?"
That's a good question and given iiNet and Internode's results, there's a strong argument that public funds should be focussed on areas that can't get the required speeds, not spent duplicating or replacing services already delivering them.
The legacy of seven or eight years of Telstra offering no more than 1.5 Megabits per second to consumers, the Bureau of Statistics data (https://www.abs.gov.au/ausstats/[email protected]/mf/8153.0/) shows that more than 50% of DSL customers currently elect to use a broadband speed below 1.5 Megabits per second.
Clearly more than half of existing DSL customers are either constrained by price or - neither want nor need higher speeds. It is clear to me then, that any future replacement broadband network would need to offer lower prices than the existing network, to avoid the take-up of high speed broadband services actually going backwards, not forwards, in the future.
Another question might be...
"Is the FTTN going to provide me with the option of a $50 plan?"
This looks being one of those 'That depends..' answers. Telstra doesn't seem to think that'll be possible. Details of an FTTN proposal from Telstra were not published by Telstra, however, media articles have suggested wholesale access charges from Telstra ranging from $58 (512kbps) to ‘well over' $100 per access per month(4).
Let's just say that again -
Australia invests $10 billion so that customers will have to pay more to buy the same services they can get today... yeah, right.
The alternative to Telstra's offer is provided by G9's FANOC. Their undertaking to government certainly indicated(5) an access cost of less than $27 for 12Mbps, so $50 retail looks possible, but why build that FTTN in place where the service is already available at that price?
Questions, questions, questions.
Some facts are available, though. In 2008, half of Internode and iiNet's Sydney customers are getting 12Mbps and only paying around $50 a month for it. There is a poultice of suppliers in the market and an array of choice. That doesn't look like a problem needing a $10 billion solution.
A new network sponsored by the Australian government has to improve on today's offerings. Not duplicate it.
- Improve on the retail price;
- Improve on availability;
- Improve on reach;
- Improve on choice.
They must ensure the cash goes to delivering services to the bush, eliminating RIMs and pair-gain systems in cities, making sure those missing out today get the 12 Mbps already possible. Ensuring customers have a choice of suppliers, wherever they are.
Internode and iiNet don't have the political influence or financial clout of some of the other players in this industry, but they know if you focus on the customer and service delivery, there's a lot that can be done for consumers right now. In 2008. They know, they're doing it.