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Enhancing NBN's Value Comparing NBN with Australia's Top 10 Trading Partners and OECD

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Enhancing NBN's Value Comparing NBN with Australia's Top 10 Trading Partners and OECD Journal of Telecommunications and the Digital Economy Enhancing NBN’s Value Comparing NBN with Australia’s Top 10 Trading Partners and OECD Richard Ferrers Monash University Abstract: The NBN, Australia’s National Broadband Network, is nearing its 2020 completion. The value of the NBN depends on what you compare it to. While Australia’s broadband has significantly improved over the last ten years, it is useful to compare Australia’s NBN with similar activity in the OECD and with Australia’s Top 10 Trading Partners to gain a richer understanding of NBN’s value. Australia’s broadband performance compares poorly with other OECD countries on download speed, especially over 100 Mbps download subscriptions and average download speed. However, imminent release in May 2020 of new NBN gigabit pricing could significantly improve Australia’s world ranking on this average download speed comparison. Recommendations for improving NBN’s value beyond speed are made, including encouraging affordable gigabit NBN services; ongoing NBN upgrades; encouraging NBN use; focussing NBN Corporate Reporting on customer satisfaction and ongoing international comparison. Keywords: NBN, Broadband, International comparison, Value, Australia. Introduction This paper is an expanded version of a presentation at TelSoc’s NBN Futures Forum – Learning from International Experience (TelSoc, 2020), 25 February 2020, and a submission to the Joint Standing Committee on the NBN, Inquiry into the business case for the NBN and the experiences of small businesses (Parliament of Australia, 2020). The data, presentation and Parliamentary submission are available at Figshare (Ferrers and OECD, 2019). The NBN, Australia’s National Broadband Network, is a $51 billion investment “to lift the digital capability of Australia” (NBN Co., 2019a, p.4), to “ensure all Australians have access to high- speed, resilient and secure broadband” (NBN Co., 2019a, p.12) and “to foster productivity and provide a platform for innovation in order to deliver economic and social benefits for all Journal of Telecommunications and the Digital Economy, ISSN 2203-1693, Volume 8 Number 2 June 2020 Copyright © 2020 http://doi.org/10.18080/jtde.v8n2.252 1 Journal of Telecommunications and the Digital Economy Australians” (NBN Co., 2016). The NBN is an important foundation infrastructure on which to build Australia’s innovation future. Value is a way of understanding a complex, dynamic innovation like NBN. But what is value? Value is how we work out what something is worth, individually and socially through valuing practices (Ferrers, 2013; 2018). Value is also the emotional attitude we have toward something, either positive or negative, strong or weak. Value is also a way of understanding the complexity of modern innovation, as a personal emotional response to fast-moving new products and services. NBN triggers emotional reactions from many people, which evidences their assessment of NBN’s value. One valuing practice is comparing. We assess a thing’s value by placing it next to something else. Therefore, I compare NBN with other countries’ overseas broadband experience and national broadband plans, and it helps to understand NBN better. I use data from OECD, and then narrow in to examining Australia’s Top 10 Trading Partners, based on Australia’s exports and imports (OEC, n.d.). Broadband is often thought about in terms of speed, upload and download. But it also has other important dimensions, such as price and reliability and technical aspects, such as latency. The Broadband Commission, which encourages nations to improve their broadband, sets seven goals for broadband in their 2025 Targets (ITU/UNESCO, n.d.). The major targets include: • A national broadband plan (or strategy or including broadband in the universal service definition) • Affordability in terms of a per cent of income • User penetration, i.e. that the network is used, aiming at 75% worldwide (and lower in developing countries). Other goals of the 2025 Targets include skills to use broadband, for instance amongst the elderly, the unemployed or other disadvantaged groups; digital financial services; use of broadband by SMEs (small and medium businesses); and lastly “gender equality across all targets”. The Broadband Commission also sees broadband more broadly: “The concept of ‘meaningful universal connectivity’… encompasses broadband adoption that is not just available, accessible, relevant and affordable, but also that is safe, trusted, empowering users and leading to positive impact.” (ITU/UNESCO, 2019, p. ix) This paper seeks to consider what is NBN’s value (more broadly), through comparing Australian consumer experience with other countries’ experience. I will look at: (1) Where have we come from?; (2) Where do we stand now?; and (3) Where are we going with the NBN? NBN Journal of Telecommunications and the Digital Economy, ISSN 2203-1693, Volume 8 Number 2 June 2020 Copyright © 2020 http://doi.org/10.18080/jtde.v8n2.252 2 Journal of Telecommunications and the Digital Economy Co. also provided a view (AlphaBeta, 2019) of where it stands internationally after public pressure about falling in Speedtest rankings, which I will touch on later. Where have we come from? In 2020, the NBN rollout is nearly complete, but where were we ten years ago? In 2009, Australia, according to ABS (2009), had 10% of internet subscriptions still on dial-up services, using 100 MB per month. Faster DSL and cable services were averaging 6 GB per month. NBN Co., the builder of the NBN, reports average usage in late 2019 of 255 GB per month (NBN Co., 2019a, p.24). Thus, over ten years there was substantial progress in data activity. Similarly in speed, ten years ago only around 10% had a service faster than 25 Mbps, and a substantial proportion of users were on less than 2 Mbps (see Figure 1 below; which follows OECD’s best- at-leftside-of-graph convention). OECD collects data from 36 member countries (OECD, 2019), including about broadband in a Broadband Portal (OECD, 2018). Included for each country is the number of broadband subscriptions at various speeds. Australia is a member of OECD, but not all of its major trading partners are. OECD (2018) data reports Australia had only around ¼ of services at over 25 Mbps, with the rest under 25 Mbps. Later versions of this OECD (2018) data, since I downloaded the report (Ferrers and OECD, 2019), interestingly, no longer provide an Australia subscription speed breakdown, reporting only total users. Figure 1. Australia Broadband Download Speeds 2020, 2018, 2009 – Subscriptions per 100pp. ABS (2009) 8153.00, OECD (2018), Author estimate post-NBN usage. By the end of the initial NBN rollout (June 2020), everyone will have at least 25 Mbps services, per the NBN Statement of Expectations (NBN Co., 2016); 90% of fixed line services will have access to 50 Mbps service. Thus, over ten years, broadband has had substantial progress in Australia. Yet, despite the progress, much of the attitude towards the NBN is vocally negative. Journal of Telecommunications and the Digital Economy, ISSN 2203-1693, Volume 8 Number 2 June 2020 Copyright © 2020 http://doi.org/10.18080/jtde.v8n2.252 3 Journal of Telecommunications and the Digital Economy Perhaps this is because NBN users compare their current service with what might have been under a full fibre rollout, or what they experience in other countries. I turn to this next. Where are we now? The OECD provides broadband usage statistics every two years from 36 countries (OECD, 2019). The latest speed and usage data available were for the end of 2018 (OECD, 2018). The statistics include number of subscriptions and prices, but of interest in this value analysis is how many subscriptions are at various speeds: over 100 Mbps, under 25 Mbps, and 25-100 Mbps. This data provides useful insight into what customers are prepared to pay for. It signals the value to consumers of the various broadband speeds. Another data source on broadband usage is the Ookla Global Speed Index. In this section, we look at Australia’s ranking in both datasets. Figure 2. Australia Broadband Download speeds vs OECD (2018), plus China, Singapore (sorted by average speed). NB: * indicates one of Australia’s Top 10 Trading Partners. Source: Ferrers and OECD (2019). Firstly, ranking the OECD countries by average download speed, Australia in 2018 is placed near the bottom (see Figure 2, which again follows OECD’s best-at-left-side convention). But with expected speed increases (at least 25 Mbps for all, 90% with 50 Mbps), Australia jumps to mid-range in the average speed rankings. NBN Co. noted this increase in performance, particularly that Australia’s average speed would jump ahead of France, Germany and New Zealand, based on their 2018 reported broadband performance levels. However, the Speedtest Global Index, a monthly national broadband speed table (Ookla, 2019), reveals countries’ average speeds are increasing, often at 30%, and sometimes 100% in a single year. A graph of this data is provided below (Figure 3). So, comparing Australia’s performance in 2020 against Journal of Telecommunications and the Digital Economy, ISSN 2203-1693, Volume 8 Number 2 June 2020 Copyright © 2020 http://doi.org/10.18080/jtde.v8n2.252 4 Journal of Telecommunications and the Digital Economy other countries’ OECD 2018 broadband performance, as a proxy for their 2020 performance, is problematic due to the fast-changing nature of this data. A few points are obvious from the graph (showing the 36 OECD countries, plus Singapore and China): • Many countries (except Australia) report very fast services (at over 100 Mbps). Australia reports Nil in this category, but ACCC (n.d.) reports at the end of 2018 show around 400,000 NBN connections at 100 Mbps, similar to Austria. This level of very fast broadband, however, would only lift Australia one place in the ranking. The lack of very fast services puts our national average close to the bottom.
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