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Price war blamed for poor fibre broadband speeds in Australia

The Australian Communications and Media Authority has ordered a review into the problem of broadband speeds, which one ISP says is compounded by NBN’s pricing model

A price war that has erupted among Australia’s internet service providers (ISPs) is being blamed for the worsening reputation of Australia’s National Broadband Network (NBN).

Just a fortnight away from releasing its full year financial report, NBN CEO Bill Morrow has acknowledged that the quality of the broadband network is not matching customer expectations.

He pinned the blame on ISPs, which NBN terms “retail service providers”, noting that if they “don’t open enough lanes to cross from their network to our network, it will slow people down”.

Morrow flatly denied that a fibre-to-the-premises (FTTP) network, as originally conceived when NBN was first mooted, would deliver any better outcome than the hybrid solution now being deployed. Instead, he said it was ISPs’ networks that were causing the hiccups.

“This is where competition can be at its worse,” Morrow said. “There is a price war to a certain degree taking effect. People may not be so forward, telling you about the quality you are going to get for that price.”

Paul Budde, a leading Australian telecoms market analyst, said: “Politics has got in the way – as it has in so many other current national projects – and as a result, we are now ending up with a second-rate, cobbled-together network.”

He said had the original FTTP network been rolled out, there would be no blame game between NBN and ISPs, adding: “All of this is totally counterproductive to the original plan to use the NBN to maximise the economic and social benefits delivered by a high quality broadband infrastructure.”

The network is now available to 5.7 million homes and businesses, with new premises being added to the connection envelope at a rate of 100,000 a week. However, NBN said around three-quarters of NBN users do not know their connection speeds, while 35% aren’t aware there is a choice of speeds available.

To inject some additional clarity, communications minister Mitch Fifield has announced a review of consumers’ experience before, during and after their migration to a new NBN service.

The Australian Communications and Media Authority will conduct the review, and will use its powers under the Telecommunications Act to collect data. Some 21 industry participants, including NBN, will need to reveal data on fault handling, connection timeframes and appointment keeping.

Read more about the Australian National Broadband Network

Although the review has been welcomed by industry group Communications Alliance, one service provider, MyRepublic, has said that part of the problem is the concentration of the telecoms market, particularly among the four largest retailers which it claims are stymying full competition. It also said NBN’s current pricing model has compounded the problem.

MyRepublic is not alone in its calls for NBN to reduce access prices for ISPs to allow more consumers to afford higher speed options. NBN’s Morrow has ruled that out, saying that he needed to maintain pricing to make a return to the government for its investment in the network.

Budde, however, said: “Once political sense finally returns to the NBN, the writing-off of at least 50% of the investment will be unavoidable, as that is the only way to provide the economic platform necessary to finally allow for the proper build-out of the NBN as it was originally intended.”

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