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how it differs from Australia’s NBN, the ‘blunder down under’

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Via Yahoo Finance

UK Labour’s proposed full-fibre broadband policy is drawing a lot of comparisons to Australia’s national broadband network, but the differences are important and will decide whether the policy is viable.

Last week, Labour announced a policy to give full-fibre broadband across 29m homes in the UK by 2030 at a cost of £20bn.

As part of the plan, Labour has proposed re-nationalising the infrastructure part of BT – Openreach – to create a nationwide government-owned broadband network that would provide free broadband to every home. The party has said construction will be paid from its Green Transformation Fund, while ongoing costs will be met by taxes on internet giants.

Critics of the proposal have pointed to Australia’s national broadband network – which Bloomberg dubbed the “blunder down under” – and criticism over the network here as a reason why governments should not get involved in broadband, but the two proposals are radically different.

That’s even without factoring in Australia is 32 times the size of the UK, with slightly less than one-third of the population.

Related: How feasible is Labour’s free broadband plan and part-nationalisation of BT?

When the NBN was first launched by the Australian Labor government in 2009, it was supposed to be a full-fibre network to 93% of the approximately 12 million homes across Australia. The cost was set to be A$49bn.

Unlike the UK proposal, Australia didn’t re-nationalise its BT equivalent, Telstra – it just made a deal for the company to shut down its networks, and to lease the ducts and pipes.

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At the time, most households in Australia were on ADSL connections, with only urban areas having access to cable via Foxtel or Optus, and newer flats having access to fibre.

When the Coalition government was elected in 2013, modelled somewhat on what BT had done a few years earlier, the government then tasked the NBN to stop rolling out fibre-to-the-premises to the majority of homes, and instead switch to fibre-to-the-node, or fibre-to-the-cabinet as it is called in the UK. The justification being that it would be finished sooner (in 2016) and would be cheaper to build ($29.5bn), neither of which eventuated.

A new deal was negotiated with Telstra to get access to the copper lines for the scaled back NBN.

It is this version of the NBN – now nearing completion next year – that people have been comparing Labour’s proposal to, even though the network is closer to what the UK has already: mostly a mix of fibre-to-the-cabinet and cable.

According to Ofcom’s latest report, 94% of UK households have access to broadband speeds over 30 megabits per second, and a total of 1.8m homes already have full-fibre broadband. It means the starting point for the project is nowhere near the same as the NBN. It’s almost starting where the NBN is ending.

The other important difference is the announcement that people would get broadband for free.

The NBN has been built on the premise that it will pay for itself, the government making back money over time by the wholesale prices charged to retail companies providing internet services. But this has caused significant issues for the company, for retailers and for the public.

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The pricing model splits how much people pay into tiers from 12 megabits per second up to 100 megabits per second, with people expected to pay more for the higher speeds.

On top of that, there is also a capacity charge for internet providers, so the more bandwidth users need (ie how much they’re using the service for streaming videos and so on) the more they’ll pay.

There has been a constant battle between NBN Co and internet service providers over this fee, with some retailers warning that the margins are so high, retailers will have to pass the cost onto customers, making broadband unaffordable for some.

At the same time, due to the technology choice to scale back from full fibre, and if retailers skimp out on paying for more bandwidth, some people may find they’re ultimately paying more money for speeds that can’t be achieved on the NBN.

In removing the need for the network to make a return, the biggest bottleneck the NBN has is removed from the UK Labour proposal.

While there might be legal issues and other hurdles facing Labour’s policy should it win government, it will be nothing like Australia’s NBN policy.

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