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Wednesday April 26, 2017
NBN Watch: NBN, and subsequently, the Government, needs to own its network, now
by James Pinnell | Apr 12, 2017 | Comment Now
There's an easy fix for sorting out the messy connections and poor service.
NBN Watch: NBN, and subsequently, the Government, needs to own its network, now

While NBN spends countless amounts of money shaping its narrative – mainly by feeding stories about improvements to the mix (Did you hear FTTC is up to 1 million connections now?) and highlighting how technology is improving (2x Faster Speeds on Fixed Wireless!) – most of what you hear in the trenches and the media is about the carnage left in its wake. While countless NBN connections are likely being installed and set up without any problems, there are hundreds of thousands that are not.

While I won’t get into the Class-0 discussion, which has been covered in admirable and breathless articles by the ABC and Fairfax, (although I do feel that the NBN prioritising a faster rollout right over bogging down in crazy expensive quagmires is a better move) one thing that is not going away anytime soon are the issues around who is responsible for a connection. Until recently, very few networks operated on the level that NBN’s did – almost every major broadband network in the last 20 years has been owned by a private telecommunications company.

This is because most of them were vertical – Telstra owned both the retail and wholesale parts of the POTS (ADSL) copper network. It owned its cable network. Optus owned its cable network. TPG, iiNet, AAPT owned their ADSL infrastructure – and so forth. If you had a problem with your connection, ultimately, Telstra, Optus, TPG or iiNet were the ones that had to deal with it. If they didn’t, the TIO threatened them and suddenly your connection was working again.

The other benefit was that as these ISPs owned their networks, and as bandwidth use was relatively low in the pre-Netflix days, CVC was just not a problem. Telstra, who almost certainly had the largest customer base of all, wasn’t too focused on CVC pricing for wholesale (much of their battle was around line rental, which was far more lucrative) and most ISPs were worried about the significantly higher international transit costs. As competition improved, so did all the participants – in the end, as transit costs dropped and peering increased, your speed was more likely to be muted due to a poor last mile connection than anything else.

This was a very tiny golden edge to what was a very haphazard cluster of bad/good networks. As awful as the mix at providing all Australians with an equitable access to broadband, it will almost certainly be better for the clear majority of those stuck on 5-8mbit DSL. But what’s more troubling is how quickly the buck is being tossed by NBN the second it is the subject of a complaint. Each article I write has countless stories attached in the comments of poor connections stuck in purgatory due to an inability of either side to take the lead.

Let’s be clear here – as a wholesale Layer 2 network, the NBN does not send you out into cyberspace. It hooks you into your ISP’s network, which has its own massive cluster of routers and switches, transit and peering connections and CDNs hosting content from Steam, Netflix and so on. In many cases, NBN’s job is to make sure you get a serviceable last mile connection sync and leaves the rest to your ISP. The problem here for many end users is that when there is a dispute over connection quality – whether it’s (usually) peak speeds or sync speeds – it tells the customer to deal with its ISP, not NBN.

This is very common for wholesale networks. In many cases, they have skeleton support staff and most of them are flat-out dealing with calls from technicians servicing the network. Feeding network complaints through ISPs allows better filtering of obvious network faults, and was how things worked during the Telstra Wholesale ADSL years. But unlike Telstra, who was bound by the TIO in a matter that was genuinely threatening – its bottom line – NBN’s primary shareholder is the government itself.

Even though it doesn’t seem like it, getting installation issues fixed quickly is in NBN’s interest. They don’t want the string of constant complaints and bad PR any more than Telstra did, and in most cases getting broken equipment working when your maintenance budget is fixed and supplied by the taxpayer is a much simpler approval than it would have been when it was taking away from a shareholder dividend. The issue on sync speeds then becomes a policy/guideline issue – Turnbull said 25mbps minimum, so that’s all they must do. Think about that at the next election.

So, when things pass this point and escalate to peak speed complaints we swing back to the same old chestnut we focus on again and again, because it is ultimately what stifles profitability from ISPs. They aren’t required to purchase a specific amount (although under the new CVC pricing regime, the more they buy the cheaper it is) and as such, to make their businesses worthwhile they buy as little as humanly possible. The problem with this is that they’ve essentially built a two-lane highway in and out of a massive city and then plonked a toll on it.

There is no incentive for them to improve it. If their competitors are all in the same boat and doing the same thing, they won’t upgrade that highway. It makes sense for them to blame NBN Co, who isn’t going to say anything to the end user anyway, creating this stalemate neither side wants to move on. NBN Co won’t make CVC cheaper and the ISPs just flat out refuse to buy any more than their competitors. Both sides are aware they hold all the cards – its patently difficult to measure peak speeds across a range of RSPs, especially when many will turn around and blame the speed variations in the mix for “their” poor result.

As a result, it’s almost impossible for customers to make a valid choice, especially if they are staring down the line at a 2-year contract. Unlike most mobile phone providers, few RSPs are going to give you a money back guarantee on connection quality after 30 days. In many cases, it can be longer than that before those peak speeds start fluctuating.

So how do we fix this?

Straight up, NBN Co needs to place hard restrictions on the minimum amount of CVC that MUST be purchased per port. This amount needs to be enough that there is a clear level of throughput available to all customers during peak periods. If RSPs then point and say that this limit would make their models impossible, then NBN Co should play ball and reduce the costs in line with what the government feels are fair charges and create a competitive field of providers.

An independent authority must publish a monthly list of peak speeds from RSPs that consider their speed mixes so customers can make an informed choice and RSPs are shamed into improving their lot. A consistent set of low peak speeds across the industry may show that CVC costs are too high and carrots (or sticks) should be implemented to improve this. In the end, this comes back to the transparency element we continually raise week after week.

After all, this was the point of the National Broadband Network from the beginning – to remove Telstra’s vertical stranglehold and allow all players to compete. But thanks to high CVC and port costs, this isn’t happening. Sure, it might improve when the network is complete, but 3+ years is a long time to wait for people stuck on useless connections that were patently more usable at night when they were on a Telstra/TPG/Optus backed line.

CVC is gradually destroying the fabric of the NBN before it’s even built. It’s a massive structural flaw in ensuring that customers get the speeds they need. The June changes will simply exasperate the problems for smaller RSPs, as the discounts only relate to connection numbers – simply, the more customers you have the cheaper the CVC. This will be great for the big four, but significantly more difficult for the smaller guys to compete with on price.



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