Evidence to the Senate Committee on the National Broadband Network

Last week Dale Clapperton and myself gave evidence to the 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.

We noted that the NBN would be likely to significant increase internet access costs to users, and that what we should be focusing on at the moment is increasing download quotas and upstream speeds:

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.

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