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Is the NBN a Dog?

If you’re sitting at home right now trying to use your internet connection to stream television programs or research information and the internet connection keeps dropping out because you don’t have any band width, you may be wondering how this can happen when you are paying for a connection that promises you 50 megs per second.

We were told by Kevin Rudd and Stephen Conroy, in 2007, that a shiny, new, publicly owned NBN would give everyone in Australia a superfast broadband connection and that the $35 billion cost would be worth it because it was a productivity enhancing investment in necessary infrastructure. In 2013 and with costs blowing out, Malcolm Turnbull promised a scaled back version that would ultimately be cheaper because it would use the old Telstra copper network in a fibre to the node configuration or would or would use the hybrid fibre cable that was underground in many urban areas. This would provide download speeds of up to 100 megs per second.

Stephen Rue the CEO of NBN Co has announced that the network will be finished by 30 June this year at a final cost of $51 billion. Every household in Australia is now apparently connected to superfast broadband. There are only two problems the network is losing $4 billion a year and the customers are creating a welter of complaints. Experts say that both these problems are down to the internet service providers who are not buying enough band width, which is causing network congestion and cutting into the NBN revenue. The ISP’s say the NBN is too expensive.

Now the NBN is facing a new threat in the form of the 5G network. Indicative pricing from the telcos claims that the cost of fixed 5G will be the same per household as the current NBN connections and the speeds will be higher.

According to the trade magazine ‘Whistle Out’ Optus says its first commercial 5G Home Broadband service has achieved peak download speeds of 295Mbps and an average download speed of 100Mbps.

Optus has also said its 5G technology had the potential to reach speeds of up to 1Gbps during peak times. Of course, whether those speeds can be achieved at your home will depend on a range of factors including strength of signal and network congestion.

At the moment the highest speeds offered by NBN supported services are 100 MBPS but these are not often achieved. This is because of the quality of the fibre to the node connections and the network congestion. Curretly ISP’s offering NBN packages tend to prioritise customers with fixed data packages over those with unlimited data packages who have to share the residual bandwidth.

It’s hard not to see a mass migration, at least by urban customers, to the 5G networks as they become available. This will leave a hole in the NBN’s revenues and losses which the Government will have to cover.

There are three prospects for the NBN: the Government will have to sell it at a substantial loss to a major telco; it will end up as a stranded asset; or Labor will rebuild it as a full fibre to the premises network at huge expense when it gets into government, with little hope of getting the money back.

None of these seems very appealing from a taxpayer or communications consumer perspective.

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