Friday, August 29, 2014

Demand for higher NBN speeds not restricted to early adopters

NBN Co revealed at its full year results presentation that take-up of NBN services in the first 15 FSAMs is 68%. These are the areas that have already reached the copper disconnection date and gives the best indication of long term demand.

NBN Co also revealed that the product mix in these FSAMs is mirroring that for the network as a whole, including more than one in five customers choosing the 100 Mbps service.

More detail has been provided today in answer to Questions in Notice in the Senate. The table below shows the number of premises passed and the number of connections active and orders pending for each FSAM.


This shows take-up as only 63% for the whole 15 FSAMs. However, it has been widely acknowledged that fibring ARM-02 and ARM-03 was a mistake, as these are rooms in University student residences at the University of New England which are serviced by the campus LAN.

Excluding these provides the 68% take-up, which passes 70% once the pending orders are included.

The next table shows the distribution of the speed-tiers in each of these FSAMs. This is based on the speed tiers of completed orders rather than current connections and so will double count any case where there has been an upgrade or a subsequent disconnection.

The table shows that 22% of customers are ordering the 100/40 Mbps service.

This raises more doubts about the demand forecast used in the Cost Benefit Analysis. The report suggested a number of reasons for the strong take up - including “selection bias”, saying:

“it would be expected that households and businesses with a preference for higher speeds would take up the NBN where available first and other households would move to the NBN when alternative services would not be available.”

Asked about the discrepancy today Communications Minister Malcolm Turnbull said:

“Well they’re two different things. People may buy a plan that has a top speed of 100 megabits per second, but then the question is, what do they actually need? What is the speed they need to do the stuff they want to do online?”

This might be a satisfactory argument for making a technical decision to limit the capability of the network, but the demand analysis for the CBA is meant to be measuring what people want - what they are prepared to pay for.

If the demand for higher speeds - what people want and will pay for - is understated then the benefits of FTTP are also understated compared to technologies that will be less able to provide these speeds.

It also appears that demand for any of the over 100 Mbps products available on FTTP has simply been ignored.

The good news for NBN Co is that end users really do want their higher speed services at the prices RSPs are charging for them. That has to give the Board and management confidence as they continue to invest in completing the network.

3 comments:

Robert Webster said...
This comment has been removed by the author.
David Havyatt said...

Robert - the point was made above. The rooms are served by campus LAN which is in turn connected to AARNET.

Roo said...

Turnbull said: “Well they’re two different things. People may buy a plan that has a top speed of 100 megabits per second, but then the question is, what do they actually need? What is the speed they need to do the stuff they want to do online?”

What kind of businesses is Turnbull running? One where he knows better than the customer and looks like he is refusing to take their money.

Turnbull has been quoted saying things along the lines of 'Government has no place dictating the access technology used' yet he seems to be doing just that.

He even seems to think he knows better what the customer needs. It's just sheer arrogance from Turnbull, the customers on the 100/40 plans are the ones that will pay for the network and subsidise on the lower plans and everyone is happy with that. Apart from Turnbull because he can't admit he was wrong.