Morrow, in a blog on the NBN Co website today, says that NBN cannot deliver 1Gbps broadband at a comparable price to that on offer in Singapore and other countries where 1Gbps superfast broadband costs less than $50 a month.
He says that if NBN Co was in a position to deliver 1Gbps for $49/month, as they do in Singapore, “then we would do it – but we are simply not in that position from an economic point of view".
“The fact is that Singapore is a city state, comprising of high density apartment buildings – and Australia is over 10,000 times larger than Singapore.
“The NBN network is costing around $49 billion to build — and we need to recoup that cost — given that our business model is split between driving revenues from access and consumption charges, we simply cannot match the kind of 1Gbps pricing on offer in markets like Singapore and Hong Kong.
Bill Morrow: 'Even if 1Gbps products were affordable, Australians wouldn’t be interested in using them.'
“We spend a lot of time researching overseas markets about Gigabit speeds, and the trends are not what you might think.
“We have met with global operators offering 1Gbps services and they willingly concede that their end-users are simply not using speeds anywhere near 1Gbps — in fact, they would be lucky to actually ever use a fraction of that speed — so, at present, the Gigabit game is really about marketing, not actual utility.”
And despite all this, Morrow still maintains that even if 1Gbps products were affordable, Australians wouldn’t be interested in using them.
“There are no retail 1Gbps speed plans on offer from retailers. This is because there is still minimal consumer demand for these ultra-fast speeds, especially at the prices retailers would have to charge for them,” he says.
Morrow claims that the current network build is designed to meet current demands — not demands that might materialise in 10 years — and that Australians have to be realistic about what the market is actually telling NBN Co about demand for ultra-fast services.
“NBN already offers a wholesale 1Gbps product to retail service providers which RSPs can make available to more than 1.5 million homes, and has been on sale for around four years.
“Current plans for FttP and DOCSIS 3.1 HFC suggest they will be able to deliver such speeds to around five million premises on the NBN network by 2020 and the other parts of our network, with the exception of satellite, have upgrade paths to offer the same ultra-fast speeds when demand comes around.
“Rather than build for a demand that may materialise in 10 years, we are constructing a national network capable of continuous upgrading to meet market needs as and when they arise.
“There is little point in adding to the already high $49 billion cost of the NBN network to provide a capability that end users do not yet require and RSPs are not selling.”
According to Morrow, even in a heavy usage household right now “it’s likely you’d struggle to generate the need for anything close to a 1Gbps — if you had five 4K TVs streaming 4K movies simultaneously then that’s only around 100Mbps being consumed — leaving 900Mbps idle.
“Given that the vast majority of current online video viewing is in SD or HD — requiring only 2Mbps-5Mbps then a 1Gbps pipe would be enough to stream 200 HD streams simultaneously — way, way beyond the requirements of a normal household.”
Just last week it was revealed that the build of the NBN has already caused a massive loss blowout of $1.83 billion for the first half of 2016, a whopping increase of 47% over the corresponding half of the previous year.
The loss was recorded against revenues of $403 million, which are substantially up on the previous half, but still a long way short of the $5 billion annual revenue target that NBN Co has set its sights on over the next three years.
To read in full what Morrow has to say in his blog, click here.