[LINK] Demand 'still not there' for 1Gbps: NBN Co

[Paul Brooks]

Its not the retail pricing primarily, or international capacity holding it back - its
largely wholesale costs. Notice he's not saying that end-users aren't buying - he's
complaining that ISPs aren't even putting 1 Gbps on the menu to be available for
people to buy.

The issue is the large NBN and non-NBN costs to do so. Before any RSP can make 1 Gbps
services available on the menu to buy, the RSP has to provision at least 1.5 - 2 Gbps
of non-NBN backhaul to the POI, and at least 1.5 - 2 Gbps of NBN CVC at the POI, in
each and every one of up to 121 (right now 126) POIs. That requires serious $$$$
up-front, before any customer has ordered  service, on blind faith that someone will -
and the RSP needs to gather very quickly many tens of such 1 Gbps customers for that
to turn into a positive investment.

Intuitively, you wouldn't expect RSPs to be putting 1 Gbps services onto the menu
until they had sufficient scale - around 1.5 - 2 Gbps of backhaul and CVC provisioned
to each POI to service the business-as-usual rest of the customer-base, so that the
incremental cost of putting them on was small, but the customer could still pin the
dial when they do a speed test completely unrepresentative of any real activity to
post to Whorlpool.

As of Dec 2016 in the latest NBN wholesale report, dividing the total aggregate CVC
across the 127 active+interim POIs, and across the RSPs in proportion to their market
share, Only Telstra, TPG and Optus (barely) have more than 1.5 Gbps of CVC capacity on
average at POIs.  The majority of RSPs (outside the Big Four, lumped together as
'other Access Seekers') have roughly 888 Mbps of CVC total to each POI amongst all of
them - so it will be quite a long while before any of them put 1 Gbps services on
their menu.

Over time, as backhaul transmission rent and CVC charges come down, and the aggregate
backhaul capacity and CVC sizes grow up sustainably due to growth of the
100Mbps-and-lower bread-and-butter services, each RSP will come naturally to a point
where it has the scale to offer 1 Gbps services on the menu without killing the
business. And then people can buy them. But not at this transition time.

P.
 


On 10/02/2017 8:24 AM, David Boxall wrote:
> The pricing deliberately suppresses demand. That said, backhaul and international
> capacity would probably bottleneck retail services. It would be interesting to see
> what demand might actually be like if they were to offer services at an honest
> price-point.
>
> <https://www.itnews.com.au/news/demand-still-not-there-for-1gbps-nbn-co-450503>
>>
>>
>>     Despite ongoing trials.
>>
>> Roughly “a million and a half” homes could support a 1Gbps fixed line service on
>> the NBN, according to NBN Co, but RSPs are yet to launch commercial services.
>>
>> The network builder has offered a wholesale 1Gbps product since 2013. Several
>> retail service providers (RSPs) – Telstra, Optus, and TPG – have been trialling
>> 1Gbps services over the past year.
>>
>> The number of test services fluctuates each quarter, according to numbers reported
>> by the ACCC. In the last quarter ended December 31, there were 17 test services
>> operating, including two with a new unknown entrant.
>>
>> NBN Co CEO Bill Morrow today said he could only “presume” there still isn’t enough
>> demand among consumers to make a 1Gbps service commercially attractive.
>>
>> “We have roughly a million and a half homes that can have the technology to give a
>> 1Gbps capability today,” he said.
>>
>> “We have a product that we can offer the retailers should they want to sell it. A
>> couple of retailers have signed up to our trial base where they’re looking at what
>> a 1Gbps service might look like but they have chosen not to offer it consumers.
>>
>> “I presume there isn’t that big a demand out there for them to actually develop a
>> product to sell to those end users.”
>>
>> Morrow said NBN Co had “scoured the planet” to talk to other carriers that had
>> successfully launched 1Gbps products into the market, and that had secured end
>> customer sales.
>>
>> “We asked the question ‘has anyone actually used that amount of bandwidth?’ and the
>> answer was unanimously no,” Morrow said.
>>
>> “There aren’t that many applications that warrant much above the products that are
>> being sold at NBN today.
>>
>> “We know there are things on the horizon that are going to increase the need for
>> demand. All of these could drive up consumer need, but we haven’t seen it as yet.”
>>
>> Interest in gigabit services has been renewed in recent weeks after Telstra’s
>> announcement that it would boostpeak speeds in some CBD areas to 1Gbps
>> <https://www.itnews.com.au/news/telstra-to-boost-cbd-4g-speeds-to-1gbps-449349>.
>>
>> However actual speeds in the 4G cells would be significantly lower, leading to
>> questions over how realistic the service is as a fixed-line replacement, as Telstra
>> has touted it.
>>
>