Last Friday, Dale Clapperton and Nicolas Suzor appeared on behalf of EFA to give evidence to the Commonwealth Senate Select Committee on the National Broadband Network. EFA had previously provided a written submission to the Senate, voicing concerns about the increased cost to users and the potential anti-competitive effects of the proposal.

The full text of the hearing is available on the Hansard Senate website (direct link to PDF).

EFA was asked to expand on its opposition to the National Broadband Network. We explained why we thought that the current proposal would result in increased costs to users and very little if any increase in performance:

Senator STERLE—You said that the rollout of the national broadband network is not a good one in your words. Not a good one for whom?

Mr Clapperton—Certainly not for the end users whose interests EFA represents. Neither would we submit it is a particularly good outcome for the internet service provider industry. They are currently labouring under a regulatory regime surrounding access to the local loop infrastructure, which was denounced by the previous speaker as fundamentally flawed and ineffective. Nonetheless, the other ISPs in this country who are engaging in infrastructure based competition with Telstra are struggling to do so. They are providing a good competitive constraint on Telstra’s pricing, product offerings and behaviour in the market to the extent that they are able to do so, but the introduction of the NBN would change all of the ground rules that they are operating under and would largely seem to exclude them from infrastructure based competition, so they would end up being resellers in some way, shape or form of a Telstra offering.

Senator STERLE—I will make it as simplistic as possible, because the whole purpose of the policy of the rolling out of the national broadband network is to reach 98 per cent of Australians. Are you saying your couple of hundred members plus upwards you represent would be disadvantaged if 98 per cent of Australia received high-speed broadband?

Mr Clapperton—We are saying that least some of that 98 per cent of Australians would be disadvantaged, not only our members. In the market people can already get internet services of approximately the same speed as would be available under the NBN and can get it so much cheaper. Certainly that proportion of the market would be worse off under the NBN because they would be in a position of either paying more for what they currently have or having less than they currently have because they cannot afford to pay more. I do not have any firm statistics on the number of people who currently have access to what you might call NBN-grade services, but it is certainly a non-trivial number. Those people would be disadvantaged. For the people who cannot currently get what you might call an NBN grade service the question is going to be: they might be able to get it under the new environment but can they afford it? There is really only so much that your average household might be willing to pay for internet access. I am currently paying $50 a month. Under the NBN environment the most recent pricing that I have seen, a suggestion by Telstra, is that their wholesale price for a service of comparative speed to a reseller would be more than I am paying retail at the moment, so my cost would certainly go up. I think a lot of people would be in the situation of saying, ‘Yes, fine. We can get a 12 megabit service under the NBN, but we just can’t afford it. Even if we could afford it, we could only use it for an hour or so a month at full speed and then we will have to put our hand in our pocket again to pay for it.’ There is unfortunately something of a fallacious public perception at the moment that the cost of a fast notionally unlimited internet connection is $50 or $60 a month, when that is quite simply not the case. That is only sustainable at a retail level because ISPs are really oversubscribing their services. That is why you see things such as download limits. The true cost of even a one megabit internet service that you can use at one megabit all month is not less than $100. It is probably over $1,000.

Mr Suzor—The reason we are critically concerned about download quotas and upstream capabilities is that the use of the internet is changing in Australia. It is not just about having a high-speed network to browse the occasional webpage. We are looking at connections that are always on. We are looking at cloud computing, where people are increasingly moving their applications away from their desktop and onto the internet via various servers around the world. All of this takes upstream processing. We are looking at people who are participating in various multimedia and content rich services, so people who are uploading and downloading videos and participating in a real global conversation. As these sorts of activities increase we have to be very careful about the very high costs that we currently pay in Australia for upload content and download quotas—cents per megabytes above a certain quota and upstream speeds—in order to participate in participatory communication. This is something we are very concerned about at the moment.

We suggested that the proposed $4.7bn investment would be better spent bringing access to rural areas and increasing infrastructure based competition:

Senator IAN MACDONALD—Thank you for your very lucid submissions on some very interesting points. You have covered nearly everything I wanted to ask. Would you think that the$4.7 billion taxpayer subsidy could just be used as a separate program to try to connect thosewho are not currently able to get 12 megabits to the system?

Mr Suzor—That is a suggestion worth investigating. Rural users and users currently outside the zone of ADSL2 services could certainly benefit from that level of investment.

Mr Clapperton—For that matter, on a political level, some of the changes to the existing
regulatory regime that had been mooted might also be effective in ensuring that more people can get access to those types of services by promoting the level of infrastructure based competition in what you might call fringe regional areas. Certainly $4.7 billion could do a lot to help internet access in rural and remote areas that genuinely do need it. Perhaps it could be targeted at them rather than a one-size-fits-all approach. Pulling the pin on the OPEL project was perhaps a mistake in that respect.

9 comments

  1. I want to see the government taking a smaller role in my country, have them being less intrusive in our lives also. They dont spend my taxe money well at all. Look now they want to censor the internet who are they to decide what i should see? Governemnts since the begining of time has proven to be opressive. even today we can look around the world and see most of the problems today are caused by opressive controlling bodies mostly identified as government. government best serves its people when they interfer in there lives the least. i dont want there help no longer.

    Comment by Michael on 26 November 2008 at 02:50
  2. I agree with you 100% Michael. I think we all could do with less interference from Governments. I would actually like to see the Government have no role in peoples lives apart from being paperwork maintainers. Laws should all be decided by the people on a majority vote. They want to propose internet censorship? Let the people vote on it, if people are against, it doesn't happen, period. Same goes for all major changes to our lives. We should also have the right to decide on their wages, after all it's our money and they work for us. It's high time we all stood up for more control over the Government, like the way a Democracy is suppose to work.

    Comment by James on 26 November 2008 at 04:19
  3. Bite the bullet and separate Telstra's retail business from their infrastructure.

    If you're worried about Telstra executive remuneration, it's pointless to regulate the CEOs. The issue is how can Telstra rake in so much money? It's because of their unfair advantage of being essentially a government department that has been spun-off. They have retained all the majesty of government and they are almost completely preponderant over the industry.

    Comment by Alex on 26 November 2008 at 04:46
  4. We the people have lost control over our government it takes massive organisation and effort to get our voices heard they are a Government unleashed. If only more of us could see how dangerous this really is to our freedom.

    Comment by Michael on 26 November 2008 at 05:34
  5. Alex I totally agree, Ive stated since the selling off of Tel$tra that the infrastructure should not had been sold. The Duplication, Triplication ,Quadruplication etc of equipment does not help anyone, It just wastes money and electricity.

    Imagine if All the Hardware that was installed by all the communications Companies ATM was Bought by the Government and The Government wholesaled it to ISP's as Retailers, we your have Cheap, FAST, Truly Unlimited Internet like the rest of the western world.

    Just look at all the mobile Phone Towers all over the place. here is Just No need for it. Imagine if there was separate roads for Motorbikes, one for cars, one for Trucks, and another for Buses, Its just unworkable.

    Conroy is a Moron he really has NO IDEA,
    - my gripes as follows
    iinet get falsely sued, censorship on the net & will slow data to a crawl, NBN gets more expensive & confusing, Excess Data rates is a scam, i can go on............

    Comment by ljraggy on 26 November 2008 at 13:16
  6. So is the NBN going to replace the current exchange/dslam services OR compete with it?

    Why can't existing ADSL users keep using thier DSLAM provided services? This article seem to be implying that people will be disadvantaged by being forced from an ADSL based connection to an NBN service.

    Comment by Ping'a'lin on 26 November 2008 at 16:48
  7. G'day,

    Just finished reading the Senate Submission. I didn't like the bit where they tried to write off the EFA membership as Computer Geeks or Nerds.

    I AM NOT A GEEK OR A NERD!! I don't even work in the IT industry Whatsoever. For Mr Mcdonalds information i'm about as ordinary a person as you can get, I think I get the big picture and it is that Freedom isn't Free. i'm happy to be a member of EFA to defend my fellow Australians Liberties.

    Comment by Daniel on 28 November 2008 at 05:05
  8. Did someone change the year in this country to sometime around 1984 or something?

    Comment by David on 28 November 2008 at 22:14
  9. Does anybody know whether or not most of the ISP's are planning to participate in the early volunteer stage comming
    up
    in December
    to start censoring and what the general consensus is there

    Comment by Adam on 4 December 2008 at 23:23