Will the Coalition’s NBN deliver?

Where will the NBN end up and will it be fast enough?

a woman

Australia’s top telcos are growing increasingly worried about the rollout of the NBN and individuals are left wondering what the Coalition’s slower broadband package will deliver for everyday Australians.

Under the Labor government’s NBN package, 93% of households were to be connected to the fibre network directly by 2021. Under the new government’s plan, it will be rolled out two years earlier, but will result in slower average speeds, a new contract with Telstra (ASX: TLS) and possible shortfalls.

Under the coalition’s plan (which supposedly costs $20.4 billion), the government will have to negotiate with Telstra for the right to use its existing copper network to connect to existing households, whereas newer households will be able to connect directly to fibre – possibly creating two different speeds in the same neighbourhood.

Internet Service Providers such as iiNet (ASX: IIN), AAPT (owned by M2 Telecommunications (ASX: MTU)) and Optus have said Telstra will use its dominance to increase its market share in the period between now and when households are connected to the NBN. A quicker connection time under the Coalition’s plan will reduce the likelihood of that being possible but many are calling for the NBN to continue to be rolled out whilst discussions are ongoing between the Telco giant and the new government.

Dr Michael de Percy of the University of Canberra told the ABC, “As far as the implementation goes, my understanding is that Malcolm Turnball intends to conduct an audit of NBN Co and see where it’s at, what it’s committed to at this stage”.

This could be good thing for consumers and ISPs because it will promote competition in the industry. “I think you’ll find that there’ll be a great deal of structural separation… it will remain as a wholesale network, but there’ll be much more competition,” Dr de Percy said.

According to Dr de Percy, most users will not notice the difference between the speeds offered by the Coalition and those offered in the former Labor government’s plan because many households and businesses won’t have technology capable of utilising its full potential. “It’s a bit like having a superfast freeway where you have a car that’s not fast enough to drive on it”.

What if your business or household does have the power to utilise the network? Would it mean your superfast Lamborghini-like supercomputer will suddenly hit a 100-year-old copper road before entering your house?

Professor Rod Tucker from the University of Melbourne says the divide will become much more noticeable in time. “Appetite for bandwidth in Australia is growing at about 40 per cent per annum, which means that in five or ten years we’ll be needing something like… a few hundred megabits to a gigabit to each home”, more than the copper fibre network can provide.

Foolish takeaway

Australians deserve a fast network that will allow us to save money by working remotely or possibly from home. A superfast NBN will enable us to do just that and provide telecommunications companies with the ability to compete with Telstra on price, making it cheaper for consumers.

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.

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