Google's Fiber channels NBN woes

NBN Co is still having trouble with poor take up rates and given Google's latest headache in Kansas maybe we need to reconsider whether homes and businesses truly recognise the benefits of fibre.

Despite the enthusiasm to be the first US city to have the high speed broadband offered by Google Fiber, it turns out interest in the Kansas City rollout is only running at half the rate expected.

This is consistent with the Australian NBN experience, with the takeup rate so far a dismal with less than 20 per cent of Tasmanian properties passed taking the opportunity to get connected – only 10 per cent of accessible premises are projected to sign up in 2012 according to NBN Co’s corporate plan.

Both the poor take up rates in the US and Australia raise the question “do we really want fibre broadband?”

The main difficulty are the incumbent players. In Kansas City reports are that Time Warner, the incumbent cable operator, is offering deals to lock their customers into existing plans.

A similar thing has happened in Australia with the major operators locking customers into existing ADSL and phone plans so subscribers face penalties if they churn across to an NBN service.

Most of those subscribers don’t need to churn right now, for most users the data plans they are currently on are fine and the NBN prices aren’t substantially different to the existing ADSL charges. In Kansas City, Google’s prices are lower, but the service is some way off and Time Warner can offer a connection now.

Another problem is demographics, neither Tasmania or Kansas City are major digital industry hubs and parts of both regions are economically distressed, which means they are less likely to take up the offer – or be able to make the investment – to get get connected.

That latter problem is the most concerning, as regional disadvantaged areas have the most to gain from being connected to broadband.

Just as towns lobbied in the 19th Century to get railways routed through their communities, in the 21st Century fast internet connectivity is seen as essential to a region’s development.

But if individuals won’t get connected then it makes the business case for setting these networks up difficult to justify for corporations like Google or governments like Australia. In future, it will make it harder to get incumbent network operators to replace aging copper infrastructure with modern and faster fibre.

As both projects mature, hopefully we’ll see a greater take up, in the Australian case greater acceptance should be inevitable as the incumbent Telstra copper network is shut down and subscribers migrated across to NBN infrastructure.

The question does remain though of just how useful homes and businesses see fibre internet connections to their homes, if they remain unconvinced about the value of a high speed data link then it maybe our communities miss out on the vital communications tool of the 21st Century.

Paul Wallbank is a business technology writer, broadcaster and blogger and author of eBusiness: Seven Steps to Online Success

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles