Australia’s ranking for broadband speeds could ‘fall off a cliff’ despite huge investment in NBN

Despite spending $51 billion on the NBN, Australia is now 60th in the world for broadband speeds, and one expert is warning it will likely get worse.

By the time the NBN is completed next year it may not deliver the benefits expected despite Australia spending about $51 billion on the broadband network.

When then prime minister Kevin Rudd announced details of the project in 2009, he described it as “the most ambitious, far-reaching and long-term nation building infrastructure project ever undertaken by an Australian government”.

The Labor leader said high-speed broadband would revolutionise teaching, medical centres and hospitals; make businesses more efficient and able to serve their customers; and help regional towns grow and stay connected.

“High-speed broadband will create jobs. High-speed broadband will spur innovation and enhance our economy’s growth and productivity in the long term,” Mr Rudd said.

“And high-speed broadband will plug our nation into the global economy and help us overcome the tyranny of distance.”

Ten years later and with the project to be completed next year, the National Broadband Network has yet to fulfil its promise.

Laureate Emeritus Professor Rod Tucker of Melbourne University said it was difficult to know the exact impact of the NBN but his “gut feeling” was the promise contained in Mr Rudd’s words had yet to be realised.

“It hasn’t turned out like that yet,” he told news.com.au.

The NBN hasn’t yet delivered the benefits expected. Picture: Bianca De Marchi

In particular, Prof Tucker pointed to the comment that broadband would “overcome the tyranny of distance”.

“The fundamentally important issue is the rest of the world has moved faster than we have,” Prof Tucker said.

“Australia now ranks 60th in the world for internet speed.”

Now that the NBN is almost complete, Prof Tucker believes Australia’s ranking will get even worse thanks to changes made by the Coalition, which switched the technology and how the project was delivered.

“In the longer term I think Australia will drop even more rapidly. We are going to fall off a cliff because the rate of improvement won’t grow.”

Prof Tucker contrasted Australia’s position to New Zealand, which is now ranked 21 in the world with an average speed of 96.97 megabits per second (Mbps). In NZ, fibre-to-the-premises is now available to more than half the main towns and cities.

“If we had gone ahead with (fibre-to-the-premises) we would also be ranked close to 20th instead of 60th,” he said.

Prof Tucker said this would have made the $51 billion investment worth it.

“It would have been worth it if it had been done properly,” Prof Tucker said.

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WHY WE DID IT

The origins of the NBN actually predate Mr Rudd to 2006 when former Labor leader Kim Beazley announced plans for a “superfast” national broadband service he hoped would drive Australia towards being a “high-skill, high-wage, hi-tech” economy rather than following a “low-wage, low-skill, low-tech road”.

Mr Beazley dubbed his broadband plan a part of his “Blueprint for Prosperity” and wanted it to help Australians work smarter and improve productivity.

He hoped broadband would provide Australia with new opportunities and an alternative to the commodities, such as resources and agricultural products, that Australia usually relies on to trade in the global economy.

There were hopes NBN would drive innovation and productivity.

HOW THE DEFINITION OF ‘SUPERFAST’ CHANGED

When Mr Beazley first announced his plans for “superfast” broadband it was going to deliver speeds up to “25 times faster than what’s available now” to 98 per cent of Australian homes.

However, over the years the definition of “superfast” broadband has meant different things at different times.

After Mr Beazley was replaced by Mr Rudd the policy was changed to deliver minimum speeds of 12 megabits per second, which was touted as 40 times faster than most speeds at the time.

Originally the network was planned to be fibre-to-the-node connecting 98 per cent of Australians, with the remainder to get “improved broadband services” by June 2021. The estimated cost was $15 billion, with the government contributing $4.7 billion.

But by 2009, Mr Rudd announced plans for a more ambitious rollout of fibre-to-the-premises to provide speeds up to 100 times faster for 90 per cent of properties. It would deliver speeds of up to 100Mbps by the end of 2021, with the rest of the network to get speeds up to 12Mbps per second.

The cost grew to $43 billion, with the federal government contributing $30.4 billion and the rest coming from private investment.

Kevin Rudd promised to deliver a fibre-to-the-premises network to 90 per cent of homes.

With the change in leadership to Julia Gillard, peak speeds were increased to one gigabit per second, and she also gave priority to regional and rural areas.

Under the leadership of new prime minister Tony Abbott, the plan was changed in 2013 to a multi-technology mix approach including primarily fibre-to-the-node connections as well as fibre-to-the-curb, hybrid fibre-coaxial, fixed wireless and satellite.

The Coalition’s plan was to provide speeds of between 25 and 100Mbps installed by late 2016 in 90 per cent of the fixed line footprint, and between 50 and 100Mbps per second by the end of 2019. It would provide just $29.5 billion to NBN Co to deliver this.

The cost of the project has since ballooned out to $51 billion.

The government’s initial $29.5 billion investment was topped up with a special $19.5 billion loan from the government in 2017.

SO WHAT DID WE END UP WITH?

The project has largely been delivered on time, but instead of a fibre-to-the-premises model, most Australians have been connected using fibre-to-the-node under the Coalition’s model.

This involves fibre optic cable being installed to a particular point, called a “node”, with existing copper wire connecting the fibre to individual homes.

Unfortunately, this model means many consumers have had trouble accessing top speeds during peak periods and have issues with dropouts when retailers like Telstra and Optus don’t buy enough bandwidth to cope with demand.

NSW resident Ben Wilson told news.com.au in 2017 he had never seen his internet speeds get above 49Mbps on his fibre-to-the-node connection, nowhere near the 100Mbps he was expecting.

Mr Wilson has since moved to a property that is connected via fibre-to-the-premises and said he would hate to go back.

“I do not suffer from constant drop-outs anymore,” he told news.com.au. “During peak periods the slowdown is almost non-existent.”

He now gets download speeds of about 98Mbps for about the same cost of $99 per month. He is able to have two mobiles, an iPad, computer, laptop and TV all connected without impacting other devices.

“Streaming movies is hassle free and I can download PC games that are sometimes 30 to 50 gigabytes in size,” he said.

The Speedtest Global Index has ranked Australia 60th in the world for its average fixed broadband speed, which is now 40.37Mbps.

Prof Tucker said speeds of around 40Mbps was probably the most you could expect from fibre-to-the-node.

“On average that’s the best we’ll ever do,” he said.

Average broadband speeds of around 40Mbps are probably the most we can expect from fibre-to-the-node connections.

‘WE’RE GOING TO FALL OFF A CLIFF’

Prof Tucker said he had watched Australia’s world rankings for broadband drop over the last few years.

Speedtest Global Index now ranks Australia 60th in the world, and in the past year it has dropped from 49th position. In 2013, Australia ranked 30th in the world according to Akamai’s State of the Internet Report.

There may still be some improvement to Australia’s average internet speeds as more people connect to the NBN. As of June 2019, only 5.5 million households and businesses were connected to the NBN, less than half the estimated 11.5 million that will have access to it by 2019-20.

But once more Australians are connected, Prof Tucker believes average speeds will stagnate as the rest of the world continues to move forward.

“The NBN is almost rolled out so we’re not going to get much more improvement,” he said.

“We are going to fall off a cliff because the rate of improvement won’t grow.”

He said the problem was the rest of the world had moved faster than Australia had.

“And it’s not just download speeds that matter,” he said. “Businesses need to upload data just as much and Australia has an upload speed of 17.40Mbps. The world average is 33.53Mbps.

“We are half the world’s average and that includes all the worst nations.”

Australia is beaten in the world rankings by countries like Moldova, Belarus, the Czech Republic, Serbia and Uruguay. It’s only two positions ahead of Vietnam.

“This doesn’t tell me that we are breaking down the digital divide and the tyranny of distance,” he said.

Interestingly Australia is now ranked second in the world for its mobile internet speeds.

“The disparity between mobile and fixed line broadband is just one glaring example of where the NBN has fallen short,” he said.

A NBN spokesman defended its performance, saying the average download speed of 40.37Mbps compared favourably with the average speed in early 2018 when it was only about 26Mbps.

“This step change in the average speed of fixed broadband performance points to an overall improvement in speeds once customers connect to the NBN,” the spokesman said in a statement.

“In July this year 65 per cent of NBN connections were on 50Mbps plans or above and by 2020 we expect 90 per cent of premises connected to NBN’s fixed line network to be able to access download speeds of at least 50Mbps.”

NETFLIX IS A ‘SAVIOUR’

While the NBN was not perfect, Prof Tucker said there had been some improvement in speeds and benefits to those living in rural and regional areas in particular.

He also defended claims that Australia had essentially spent $51 billion on a “video entertainment system” as suggested by Mr Abbott in 2010.

“In some sense Netflix has been somewhat of a saviour as it encourages people to use the NBN and pay for it,” he said.

“This has helped pay for the completion of the entire network … which provides benefits and services for the whole community.”

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