NBN paradox: fibre-to-home customers buy slowest speeds

How a home is connected to the NBN makes almost no difference to what internet speed customers are willing to pay for.

NBN rollout.

Whether a home is connected to the National Broadband Network via super-fast and expensive all-fibre connections or cheaper fibre to the “node” makes almost no difference to what internet speed customers are willing to pay for.

NBN take-up figures show houses connected via the ALP’s gold-plated fibre-to-the-premises connections are in fact 25 per cent more likely to buy the cheapest and slowest internet package than those households with fibre-to-the-node connections, which include some copper wiring but cost taxpayers half as much to install.

The figures blow a hole in Labor’s repeated anti-FTTN claims, including opposition communications spokeswoman Michelle Rowland’s assertion last week that consumers were opposed to the federal government’s cheaper “mixed-technology” rollout and giving “copper a thumbs down”.

According to NBN Co, 37.7 per cent of customers with costly fibre-to-the-premises connections are buying 12 megabits-per-second packages — the slowest and cheapest available — compared to 29.8 per cent of homes with fibre-to-the-node connections.

Of those homes with FTTP connections, 84 per cent opted for either of the two slowest speed packages of 12Mbps and 25Mbps, while 89 per cent of homes with FTTN connections bought one of the two slowest ­connections.

 

Under the NBN, homes with fibre-to-the-node connections are guaranteed minimum available speeds of 25Mbps, while the average available FTTN speeds average about 60Mbps. Fibre-to-the-premises connections are faster, providing available speeds of 100Mbps or more. Regardless of the type of connection, the speed will be only as good as what the household is willing to pay for. The figures show the vast majority of consumers are willing to pay only for the lowest speeds, which can easily be attained by both FTTP and the slowest FTTN connections.

For most homes the slowest 12Mbps connection is more than sufficient. By far the biggest use of the NBN in homes is for entertainment, especially movie streaming. According to Netflix, streaming a movie in high-definition requires capacity of 5Mbps. That means that even on the slowest FTTN connection, one home could simultaneously stream five different movies on five different devices, all in high definition.

Many NBN users are suffering very slow speeds — slumping to as low as 1Mbps in peak times regardless of which package they have bought — but this is not because of the NBN infrastructure or whether they have FTTP or FTTN. It is because telcos are cutting costs and failing to buy enough “bandwidth” from the NBN.

NBN Co has built a super highway but has effectively placed speed inhibitors on those who are unwilling to pay for the highest speeds. It has been forced to do this because rolling out the network across large distances is very expensive and when the NBN Co was created it was required to make a profit.

Many people in the capital cities have found their services are slower under the NBN than those they had previously. People in capital cities are slightly more likely to pay for faster NBN packages, the NBN data suggests.

According to the Australian Competition & Consumer Commission, of all NBN users at the end of September, there were 1.17 million homes with FTTP connections, 1.22m with FTTN and 291,000 with HFC broadband.