Will Australia's broadband probe expose bottlenecks or just raise prices?

By on
Will Australia's broadband probe expose bottlenecks or just raise prices?

ACCC begins internet speed bake-off.

Australians are either about to find out exactly what holds their internet services back, or be softened up for broadband price hikes.

The Australian Competition and Consumer Commission (ACCC) yesterday renewed pressure on internet service providers and mobile telcos to disclose actual data speeds and packet prioritisation on their networks.

It's intended to help consumers make more informed broadband choices, and that goal has been well-received so far by many broadband users.

But the ACCC’s consultation is also about asking ISPs what stops them from publishing quantitative data on actual peak and off-peak speeds experienced by their customers.

The answer to that is likely to include the enormous variability of conditions and complexity of infrastructure that makes internet services work end-to-end.

ISPs lack control over the end-to-end service (ADSL, NBN). They are exposed to price punishment on newer high speed services (NBN, through its contentious connectivity virtual circuit (CVC) charges), and both of these things impact on the speed of services experienced by end users.

The great divide

The industry is already divided on how this ACCC consultation might play out.

One option is that this process turns into an end-to-end probe of Australia’s internet networks, exposing every part or component that isn’t optimised for speed.

That would light a fire under a lot more players than just the ISPs: NBN, Telstra Wholesale, transit providers and international link operators could all find themselves in the firing line.

The other option – and one those with ISP experience consider more likely – is that the fire is firmly lit under ISPs to buy more NBN CVC or backhaul in a bid to lower contention ratios and raise speed in the part of the network they are perceived to have some control over.

“In politics you never have an inquiry unless you know the likely outcome,” Lindsay Strategic Advisory managing director and former iiNet and Internode CTO John Lindsay said.

“This review is going to make it plain that RSPs [retail internet service providers] need to purchase more NBN CVC, but this is only affordable for them if retail ISP prices rise or if NBN Co reduce their charges.

“This inquiry is likely the first phase of a plan that will see a significant rise in the price of NBN-delivered ISP services in Australia.”

In addition to price rises, others believe that choice – particularly at the cheaper end of the broadband market – could fall away.

“Following this through to its ultimate conclusion, poor performing networks are identified, and attempt to lift their game. To do this they need to spend money, so they need to charge more money,” one industry source said.

“So instead of having a range of ISPs with a range of performances at a range of price points, you end up with a dozen perfectly performing ISPs all charging $150/month.

“How about an ISP that wants to offer a cheap and cheerful product at a low price point, or wants to excel at customer service, and chooses to offer a slightly wobbly performance during peak times because its budget is directed towards excellent call centre staff within Australia instead of network capacity?

“For many people this might represent better value for money, but management by metric won't allow cheap and cheerful services to exist, especially if there are thresholds that have to be hurdled to earn a certain speed or performance label.”

Communications Alliance CEO John Stanton cautioned the ACCC “against focusing primarily on broadband speeds".

“In consumer research recently carried out for Communications Alliance, consumers said the two factors that mattered most to them about their broadband service were the cost of the service and the size of the data allowance,” he said.

Breaking bottlenecks

The alternate outcome of the ACCC process is to identify problems upstream and downstream of the ISP that cause internet speed issues.

While the ACCC process is ostensibly focused on improving speeds in the last mile - between the ISP and end user - it could be challenging to consider this in isolation of the impact of other parts of the end-to-end network.

“While I have great sympathy for the ACCC's position that ISPs should be able to inform customers of what ‘speed’ their internet service will work at, even with an abundance of bandwidth in a private access network, the entire global internet is not under the ISP's control and the performance of individual services on the internet will vary massively,” Lindsay said.

“While this is not a reason for ISPs to not disclose their traffic management practices and utilisation it is certainly something that makes it a ‘wicked problem’.”

Other sources agreed the ACCC was opening a “can of worms”.

For example, any examination of why speed issues exist for NBN services will have to focus on NBN constructs.

ISPs have long criticised NBN’s CVC, the bandwidth charge for getting traffic from the NBN to the service provider’s network.

Until recently it has been a flat $17.50 per Mbps per month. That punished ISPs for offering high quota plans because the more internet capacity was used, the higher the cost to the ISP – completely the opposite of any other type of bandwidth they consume, where high usage leads to volume discounts.

That led ISPs to under-provision CVC to stay price-competitive, with a flow-on effect to users through lower internet speeds in peak times.

NBN in June kicked off a two-year trial of tiered discounts for CVC to encourage ISPs to buy more. The price now ranges from $11.50 to $17.50 dependent on volume purchased, but the ACCC’s sudden focus on internet speed could pressure NBN to hasten its trials and deepen discounts.

Two other potential bottlenecks to internet speed exist in the NBN.

The company’s 121 Points of Interconnect (PoI) are a long-term source of conjecture, imposing high costs on ISPs wanting to connect to as many users in the NBN footprint as possible.

Lack of visibility is also an issue for ISPs, according to Lindsay.

“NBN Co refused visibility to the utilisation of their passive optic network or their ‘transit network’ but insisted that RSPs didn't need to see that because they would manage it to suitable SLAs,” Lindsay said.

“You may remember iiNet and Internode publishing line sync heat maps of Sydney and both organisations published network traffic graphs for much of their lives showing how hard the network was being used.

“Ironically those heat maps became one of the reasons the NBN came into existence, and with the NBN there is no transparency to access network performance at all.”

ISPs similarly lack visibility over parts of the copper network infrastructure used to serve ADSL users, meaning that many causes of speed constraints are beyond their control and – given the transition to NBN – unlikely to be fixed.

“Operators of legacy DSLAMs have some mixed incentives,” Lindsay said.

“Their entire network has been declared obsolete by the very existence of the NBN.

“There is little incentive to make capital expenditure on improving the backhaul capacity of those networks for the (hopefully) months of operation left before FTTN migration starts and relieves the demand.”

Speed issues may also be present in the transit network. Performance depends on the route traffic takes (for example, it may need to route around a problem at a particular internet exchange or a cut cable, adding latency and affecting response times), and how the source of the traffic manages it.

In-home setup and usage could be a factor in speed issues experienced by all users in that home. That is likely to be a major focus of the ACCC consultation.

The ACCC itself could also be a bottleneck.

Communications Alliance’s John Stanton believes the ACCC’s own guidance on broadband speed claims in advertising leads ISPs to be cautious when making them.

“The ACCC guidance requires ISPs to take account of a wide range of factors when they wish to make any statement about the data transfer rates available to consumers using their services,” Stanton said.

“Some of these factors – including the need to consider the numbers of users of a broadband service within a customer’s premises, as well as the nature of the modem-device connection (e.g. cable or wi-fi) - are unrealistic for ISPs to identify on a customer-specific basis, thus making it difficult or impossible to make any claim about data transfer rates.”

Ready to engage

Though the process is likely to be contentious, the internet industry says it is ready to engage.

“Communications Alliance welcomes the desire expressed by the ACCC for consumers to have access to better information about broadband speeds,” Stanton said.

“The industry is looking at potential options to improve information to consumers and looks forward to engaging with the ACCC and other stakeholders.”

“We indicated some time ago that we’d like to work with the ACCC to ensure a common industry-wide understanding of speed measures,” an Optus spokesperson said.

The industry – through the Communications Alliance – indicated it could pre-empt part of the ACCC consultation.

“Communications Alliance members are currently preparing an education package for consumers about the different types of broadband access technologies, the factors that can affect their performance and the overall consumer experience,” Stanton said.

“[We have] already flagged that [we] will consult with consumer groups in the preparation of this package. 

“The education material will be in addition to that which is already offered by many service providers on their websites and elsewhere. It will include information about the tools already available to consumers – such as online speed meters – that provide independent real-time information about upload and download speeds.”

Got a news tip for our journalists? Share it with us anonymously here.
Copyright © iTnews.com.au . All rights reserved.

Most Read Articles

Log In

  |  Forgot your password?