Piracy, porn and Australia’s national broadband network: Kohler

Porn. Much of the rest is pornography. If the speed of the network were faster, the amount of piracy would rise because it would be quicker and easier to swap full-length action movies. And that is the secret joke about Australia’s great national broadban

Telstra’s furious response to the regulatory submissions made to the Government on the national broadband network (yes, all of them) is a fair sign that it is in trouble.

Not that fury from Telstra is terribly unusual these days, but every submission calls for the proposed fibre-to-the-node network (FTTN) to be built and owned by a specialist network provider and not an integrated telco.

And one of the submissions quietly throws a spanner in the works entirely – the one from the chief of the small Adelaide-based carrier, Internode, Simon Hackett. In my view his submission is a thread that, if pulled, could unravel the whole jumper. He fundamentally undermines the FTTN project, but more on that below.

On the whole, the submissions don’t, as Telstra claims, call for its dismembering – merely for any new network to be separately owned.

The head of public policy at Telstra, Phil Burgess, says the release of the submissions “has lifted the veil on the competitors to reveal a real agenda of Telstra slashing”.

Actually they are customers. It is a devastating indictment of Telstra’s ability to both compete with and supply its wholesale customers that they all want an end to it. No wholesale customer of Telstra is happy.

In the absence of any signs from Communications Minister Stephen Conroy, it is beginning to look like Telstra will need to put in two tenders for the NBN if it wants to stay in the race; one where the new network is integrated into its business as the copper network is now, and another where it is in a separately owned and managed company – that is, structurally separated.

If the plan, as chairman Donald McGauchie said recently, is for access-seekers to a Telstra-owned FTTN network to be dealt with at arm’s length, so that Telstra Retail gets no advantage over the rest, then it shouldn’t make any difference.

But if Terria – the consortium of eight competitor/customers – puts in a credible NBN bid that is a separate company, and it is only up against a fully integrated bid from Telstra, it will win. That is why Telstra is getting furious.

Conroy would have to have a very good reason indeed to accept an integrated Telstra bid over a separated Terria bid.

Telstra’s access price would have to be half what it has previously talked about ($85 a month) and/or its build speed and network technology would have to be blindingly superior.

So in my view, Terria just has to show up to win the $4.7 billion jackpot. Maybe it won’t show up because it can’t get the rest of the funding, but if it does, then to be able to announce a new, independent wholesale fibre network, Conroy would only have to agree to put a condition on Telstra’s carrier licence prohibiting it from installing communication nodes (thus preventing an overbuild).

Telstra would feverishly oppose this, but that battle would be a small price for the Minister to pay for a public policy triumph that would be feted around the world. It would be the dawning of a new era for Australian telecommunications. Conroy would be a hero.

But Simon Hackett is the boy in the crowd saying that the emperor has no clothes on. His submission, if followed to its logical conclusion, puts the whole project in doubt, in my view.

His idea is reasonable and logical – he says there is no technical reason to shut down the current ADSL services that companies like his currently operate over Telstra’s copper; they can coexist with an FTTN.

Telstra promptly called the notion “absurd” and said it was evidence that Terria was split (Internode is one of the eight).

But actually it’s not absurd. All discussion about an FTTN has so far assumed that there would have to be 100% switchover of the copper at the nodes to the new fibre for technical reasons, so that the equipment in the exchanges that a host of carriers have installed to offer ADSL over that copper would suddenly be worthless and ADSL services would end.

Hackett is just pointing out that it is not technically necessary at all, and I’ve checked – he’s right.

In fact you could get little switches inside the nodes that allow you to switch backwards and forwards between copper-based ADSL and the new fibre-to-the-node network.

FTTN would then have to compete day-to-day against ADSL.

This, in my view, opens up a whole new Pandora’s can of worms. Whoever built the FTTN network, its business case and funding would collapse if it had to compete with ADSL.

ADSL 2+ is currently running at up to 14 megabits per second and covers, for example, about 50% of Sydney.

Conroy’s required speed for FTTN is 12Mbps. The estimates of the cost for this range up to $25 billion. To recover that cost, the access price would have to be much higher than it currently is for ADSL.

Why would anyone pay more for slower broadband? They wouldn’t of course. In an environment where FTTN – whoever owned it – had to compete against existing ADSL, FTTN would only succeed if it was much faster or because you couldn’t get ADSL 2+ (or cable for that matter).

But do we actually need anything faster than 12Mbps per second? As I understand it, that speed was chosen because it would deliver two high definition TV channels at once (they need 6Mbps each).

Speaking personally, I have trouble watching more than one TV channel at a time, and anyway I do it on TV, not the computer, and the TV channels that are coming through the air, or through the Foxtel cable, are perfectly fine. I sometimes watch YouTube videos on the computer, but they seem to do fine at 1.5Mbps.

I know everyone’s different, and maybe there are people who are dying to watch two HD TV channels at once on their computers, but – and this is just a guess – I don’t reckon there are enough of them to justify spending $25 billion with $4.7 billion of taxpayers money. They’d probably all fit in my lounge room.

And if it was a choice between paying $50 per month (say) for 14Mbps ADSL2+ and $100 a month for 12Mbps FTTN, even those people would do it with ADSL instead.

But, yes, fibre is the future. It will probably be much faster than 12Mbps. Maybe even 100Mbps.

And you know what that would mostly enable? More piracy and porn. It is estimated that about 60% of the bit traffic on the internet now is piracy – that is, file swapping of music and videos. Much of the rest is pornography.

If the speed of the network were faster, the amount of piracy would rise because it would be quicker and easier to swap full-length action movies.

And that is the secret joke about Australia’s great national broadband network project; it will be paid for by copyright piracy.

This first appeared in Business Spectator

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