NBN Co announces network will now deliver peak speed of 1GB per second – but will anyone pay for it?

The National Broadband Network Company will deliver speeds up to 10 times faster than originally promised with users now guaranteed a minimum of 100Mb per second and a lightning-fast peak of 1Gbps, the Government announced today.

But one industry expert says there is little reason why any users would sign up for such a service, and could possibly give more credence to the Liberals’ argument that the NBN is overkill.

“I suppose my initial reaction to this is that it will mean very little for customers,” Ovum research director David Kennedy says.

Quigley formally announced the upgrade this morning at an industry event in Sydney. Conroy, who is in Hobart with Prime Minister Julia Gillard to celebrate the NBN’s first commercial services, said the speeds will provide Australian users with even faster, more powerful broadband.

“The announcement by NBN Co to increase capacity on the network shows that fibre technology is truly about future-proofing the nation,” he told a press conference this morning.

“We are rapidly entering a new and dramatic phase of growth in demand. NBN Co will provide speeds… on its fibre product of one gigabit per second.”

Using a new type of technology, and at no extra cost according to Conroy, the NBN will deliver a minimum speed of 100Mbps and a maximum “peak speed” of 1Gpbs. This is 10 times the NBN’s original promise of a peak speed of 100Mbps and will cover 93% of the population.

Conroy says this will deliver an even more credible network, which will be more reliable and will give rural and remote areas access to the same fast broadband that will be available in the inner cities. Both businesses and individual users will benefit, he says.

Quigley adds this upgrade will put Australia alongside countries such as South Korea, Japan and Singapore, which already offer speeds of up to 1Gbps. Internet search giant Google is also researching how a 1Gbps network could be delivered in the United States.

The NBN Co. chief has also yet to comment on the suspicious nature of the announcement’s timing, given the Coalition released its broadband policy earlier this week which puts an emphasis on upgrading existing DSL and copper networks.

However, Quigley did dip his toe in the political waters this morning, telling the Australian Financial Review such an upgrade won’t be able to deliver the fast broadband speeds the NBN will be capable of providing.

“On fibre we can do one gigabit per second whereas on ADSL2+ you can only go 2.5km from the exchange and still get 12 megabits. We will get peak speeds of 1 gigabit out to 15 kilometres from the exchange.”

“It’s not for me to comment on the Opposition’s policy, we are obviously working for the government of the day and I just want to make sure that if people are talking about the NBN the facts are on the table,” he said.

The Coalition’s policy has been criticised by the telco industry for not being able to deliver such a comprehensive, future-proof solution as the NBN would provide. However, other analysts say take-up for ultra-fast broadband is low, at best, and the need for a $43 billion network is questionable.

Now, these analysts are saying the same about this morning’s announcement, pointing out that while fast internet is all well and good, it is unknown how many Australians actually want or will use such a service.

Kennedy says an upgrade to 1gb per second speeds is impressive, and can be done with commercially available technology, but he questions how many users would actually sign up for such plans.

“All they have to do here is just upgrade the active equipment on the network. 1GB services are already available in Hong Kong, and they are fibre based, so we’re talking about a commercially viable technology here.”

“But there are very few customers who actually have any use for 100Mbps speeds, let alone 1Gb. If you have both products in the market I would expect the 1Gb take-up to be very low.”

One of the main criticisms directed at the Government, and the NBN Co, is that take-up for super-fast broadband has been relatively low. This is why the Coalition wants the telco market to determine the speed at which these networks are rolled out, rather than constructing a $43 billion network.

“It certainly is a display of technical virtuosity, but it doesn’t follow that there will necessarily be demand. In some ways it just makes you question what the use for this is, because if you’re struggling to think of uses for 100Mbps, what are we going to use 1Gbps for?”

Communications analyst Paul Budde also told The Australian the demand for these types of services isn’t well-established.

“These speeds will no doubt excite all of the nerds and gamers out there but the reality is that only a small percentage actually needs it at the moment, but for businesses this is absolutely fantastic. It will allow businesses all over the country to use not only high definition video conferencing but applications we have not even begun to dream of,” he said.

The Coalition still plans to scrap the NBN if it comes to power, instead relying on its plan to back up existing private networks with backhaul links and wireless networks in rural and outer-metropolitan areas.

However, Quigley also attacked this plan, saying wireless in metropolitan areas isn’t viable because of the massive amounts of traffic.

“When people say, ‘wireless can do this all’, has anyone looked at current plans in the marketplace? You can get 60 gigabyte plans or 200 gigabyte plans on ADSL, but anything above four or so gigabytes per month on wireless is hideously expensive.”

Coalition leader Tony Abbott says those users in Tasmania already connected to the NBN will be able to keep their services, while the network will be sold off to private bidders.