After much speculation and uncertainty surrounding the government's revised NBN Co rollout, yesterday's deal will allow the network to be built much quicker and cheaper… at the expense of quality.
Under definitive agreements with the previous Labor government, the National Broadband Network (NBN) would deliver superfast fibre optic cable straight to households and businesses. However with just 309,000 premises currently connected to the network, it's fair to say the rollout was a disaster, however promising it was.
According to The Fairfax Media, Labor's 'fibre to the premises' (FTTP) network would cost around $35.3 billion. This compares to $24.9 billion for the multi-technology mix (MTM), or fibre to the node (FTTN) network set to be deployed by the current government.
In a recent short and sharp 'explainer' video, Malcolm Turnbull justifies the current network rollout as more economical for Australians because many of us won't see the added benefits of using a superfast network and would be unwilling to pay the extra amount for a connection.
For comparison, the government's FTTN network could generate speeds up to 100 megabits per second, depending on any further investments to the network and proximity to cabinets or 'nodes'. The previous FTTP network would deliver speeds up to 1,000 megabits per second.
In a survey on public perceptions and media representations of the NBN, researchers at The University of Melbourne found 58% of respondents believed the NBN would bring personal benefit to them versus 28% who said it wouldn't. Whilst 64% had a positive attitude to the NBN, 49% said they were unlikely to connect to it when it reached their area.
"The qualitative work suggests that this apparent inconsistency between general benefits, personal benefits and likelihood to connect may be accounted for by perceptions of cost or the relevancy of increased bandwidth," the researchers stated.
Clearly the outcome of a cost-benefit analysis depends on whether, or not, Australians will require and/or desire a much more sophisticated fixed-internet connection in the future. This is easier said than done.
It becomes even harder when we consider the increasing penetration of ultra fast mobile networks. Coupled with the prominence of handheld devices, will Australians, in 10 or 20 years, even need a fixed internet connection at all?
For example Telstra Corporation Ltd (ASX: TLS) recently switched on its 4GX mobile network in Melbourne, which claims to offer speeds between 2 megabits per second and 100 megabits per second.
The real winner of the NBN rollout
Under the revised definitive agreements between Telstra and NBN Co yesterday, it appears our biggest telco will continue to be a net beneficiary. Whilst changes in the migration of customers as well as NBN Co access to copper and HFC assets were key takeaways from the revised deal, the financial benefits for both Telstra and Singapore Telecommunications Ltd's (CHESS) (ASX: SGT) Optus remain largely untouched.
Foolish takeaway
Under the revised deal the NBN Co expects to have 3.3 million premises connected to its MTM network by mid-2016. This will use a mash up of HFC, copper and fibre cabling as well as wireless in some areas. By 2020, it intends to have 8 million premises connected.
In this (capital 'F') Fool's opinion, whilst debate surrounds the future usage and utility of superfast internet, chances are, by the time 2020 rolls around Australians won't be willing to pay for a FTTN connection.
If there's debate over its utility now, imagine what we'll think of the FTTN network when wireless internet connections become much more sophisticated and pervasive throughout the country.
Perhaps the government should just buy back Telstra instead?
