‘Many people are going to be worse off’: How the NBN is ‘cheating’ home owners
Australia’s plagued National Broadband Network is scheduled to be finished next year, but experts have warned the “hotchpotch” network has created a “lottery” where some homes receive vastly inferior connections to others.
Millions of homes across the country are connected to the network, but they’re not all receiving the same quality of connection – there are seven different ways a property can be hooked up to the network.
And customers have no way of choosing which connection they receive, despite the fact the rollout was funded by taxpayers.
In some cases, experts fear the lower-scale connections could be denting the property market, with renters or buyers overlooking premises in favour of those with better connections.
How the NBN ‘lottery’ works
The NBN is a “mixed-technology network” with 4.7 million homes and businesses using the service via seven different methods of varying quality:
- Fibre to the Premises: FTTP delivers optimal speeds via fibre-optic cable connected directly to homes, and covers an estimated 19 per of the network.
- Fibre to the Curb: Considered the second best option, FTTC covers an estimated 12 per cent of the network.
- Fibre to the Building: FTTB delivers similar speeds to FTTC, and is mostly used in apartment developments and housing estates.
- HFC Cable: HFC relies on existing pay-TV infrastructure in metropolitan areas and is considered inferior to FTTP, FTTC and FTTB. The initial rollout was plagued by issues with NBN Co forced to upgrade many of the original connections. Experts have raised concerns about the speeds delivered by HFC, which covers an estimated 23 per cent of the network.
- Fibre to the Node: Considered inferior to FTTP, FTTC, FTTB and HFC by infrastructure experts, FTTN speeds can vary greatly based on the quality of copper wires, which can be decades old. FTTN and FTTB cover an estimated 40 per cent of the network.
- Fixed Wireless: Covers an estimated 4 per cent of the network.
- Satellite/Sky Muster: Covers an estimated 1.5 per cent of the network, mostly in remote areas.
Home owners don’t have a choice when it comes to the type of connection their property receives – the available NBN service at a specific address can be checked using the NBN rollout map – but experts told The New Daily the difference between a high-quality FTTP connection and an inferior FTTN or HFC connection is significant, and could affect the future value of a property.
“The connection you get all depends on your address, and the technology that serves it,” WhistleOut spokesman Kenny McGilvary said.
“It’s a bit of a lottery.”
Australia currently ranks 55th in the world for fixed broadband on the Ookla Speed Test Global Index, with an average download speed of 25.88 Mbps.
NBN users experience an average 40 minutes of “bandwidth congestion” per week, NBN Co’s latest monthly progress report revealed.
‘Many people are going to be worse off’
The NBN’s patchwork of technologies means that some taxpayers that helped to fund the network will receive an inferior service to their neighbours, University of Sydney urban infrastructure expert Tooran Alizadeh said.
“We are really ending up with a hotchpotch. There are going to be streets and neighbourhoods in very close proximity where one house has the best option – FTTP – and another house has FTTN,” Dr Alizadeh told The New Daily.
“A very large number of properties, larger than the NBN is going to admit, will be connected with old cables (HFC).
“The problem is that many people are going to be worse off not just in comparison to neighbours and friends who are getting a better deal, but worse off than their [existing] ADSL connection.
Basically it’s a question around inequity and inequality, as this is something that only became possible because of public funds.”
NBN Co’s decision to use existing HFC technology in some metropolitan areas rather than rolling out new FTTP or FTTC is “cheating”, Dr Alizadeh said.
“They are rolling this out in areas with professional families, working couples and average Australian families that can’t even imagine their lives without internet,” Dr Alizadeh said.
The reality is that this type of NBN is not going to be able to cope with what the average family needs in 21st century Australia, particularly in cities.’’
With the housing boom in Sydney and Melbourne over, “people have started to think rationally about what they will pay” for a home, and that includes the quality of internet available, Dr Alizadeh said.
“We can’t say that it has the same [pricing] power as being close to a great school, but it definitely is something that is raising eyebrows,” she said.
“[An inferior NBN connection] is going to be annoying for everyone, but for certain people it might be a matter of a threat to their health or livelihood.”
Independent telecommunications analyst Paul Budde told The New Daily that homes with FTTP have won the NBN lottery, receiving an internet connection that’s “by far superior”.
“You already see this in some real estate advertisements. It’s stated in the ad that a house is connected through fibre-to-the-home,” he said.
“All the other technologies would not create that extra value as they are not as reliable.”
Mr Budde described the system as blatantly unfair.
“You can be lucky and get a good connection, and your next-door neighbour could have a better or worse connection. There is no consistency in the situation,” he said.
A broadband network that isn’t up to speed will stymie innovation and hurt Australia’s economy, Mr Budde said.
“Lots and lots of people will be working from home in the future – not in factories or offices – so the home becomes the workplace,” he said.
“[High-speed internet] has become critical infrastructure.”
An NBN Co spokseman told The New Daily that the firm is “on track to finish the network by 2020 with all premises able to access 25Mbps wholesale download speeds and 90 per cent of the fixed-broadband footprint able to access speeds of 50Mbps wholesale download speeds”.
“Approximately 56 per cent of end users on the nbn access network are currently on a 50mbps (download) wholesale speed or higher. Some end-users will be migrating from ADSL services, which deliver maximum speeds of 24Mbps downstream and less than 1Mbps upstream,” the spokesman said.
He also flagged NBN co’s “longstanding commitment to continually upgrading and innovating on the nbn access network”, citing a slew of past and future upgrades to the network.
‘You may lose a buyer’
Wakelin Property Advisory director Jarrod McCabe believes the effect of the NBN on home prices has been minimal.
However, issues could arise in certain circumstances, such as when similar properties for sale in the same area are hooked up to the NBN via different methods.
“The risk of not having the higher-quality NBN is that you may lose a buyer,” Mr McCabe said.
When you’re reaching a weaker market like at the moment, losing a buyer – particularly for an auction – means that things can change.’’
For the average buyer, though, super-fast internet isn’t “make or break”.
“It’s on the mind of some people, such as those who work from home, but I don’t think it will cause a measurable 5 to 10 per cent drop in home values,” Mr McCabe said.
Does fast internet boost rental yields?
Renters aren’t necessarily looking for the same features as home buyers, and for some tenants the availability of fast internet can be a key factor in choosing a rental home.
Greg Bader, chief executive of rental website Rent.com.au, said his firm has collected “extensive data” on availability of the NBN in rental properties.
“What we’ve seen is that the NBN is not having a consistently measurable impact on rental yields,” Mr Bader said.
While current data doesn’t suggest that a strong NBN connection lifts rents, Mr Bader said that fast internet is “certainly a key selection criteria for some customers”, particularly younger renters.
“In the vast majority of situations, the location and cost of the property is the biggest factor for renters in making their final decision. I put the NBN in the ‘nice to have’ category,” he said.