Broadband Briefing: High fibre does not mean high take up

One of the arguments we often hear for the NBN is that by rolling out a high bandwidth fibre network to Australian households, the NBN will increase the percentage of households which take a broadband service.

Consider, for example, the media release issued in December 2010 by Broadband Minister Stephen Conroy, headed ‘Latest OECD Statistics Reinforce the Need for the NBN.’

Noting that Australia had now dropped to eighteenth place, Conroy said this showed we were “lagging behind world leaders in access to broadband” and was “further evidence that Australia has lacked vital investment in fixed-line broadband infrastructure.”

The OECD statistics measure the number of fixed line broadband services per 100 people in the country. 

In other words, Conroy was arguing that his strategy of investing in a fibre network would drive up the number of Australians taking a broadband service – and achieve an improvement on the June 2010 numbers he was quoting in his release. 

These numbers ranked Australia eighteenth with 23.4 fixed broadband subscriptions per 100 Australians.  The highest ranked country (the Netherlands) had 37.8 broadband subscriptions per 100.

But here’s an interesting thing: of the 37.8 services per 100 in the Netherlands, how many were fibre?  Only 0.9!  The majority (22 of the 37.8) were DSL, and the balance were cable.

(Incidentally, DSL and cable are the principal technologies used for fixed broadband in Australia today.)

What did these numbers show for another European country, Denmark, recently singled out in a submission by Conroy’s Department to a Parliamentary inquiry on the NBN:

Denmark is considered by the OECD to be among the best in Europe in terms of the sophistication in e-government services with 84 per cent of the 20 basic public services for citizens online. This is supported by Denmark’s performance as a leader in terms of broadband penetration and frequent internet users.

Denmark ranks second on the OECD’s penetration list.  But again, a closer examination shows that only a small share of its services are fibre:  4.4 per 100, compared to 22.3 DSL and the balance cable.

So ‘low fibre’ countries can have very high broadband penetration.

In fact, of the ten countries ranked highest for broadband penetration in the OECD survey, half have less than three per cent of their services delivered over fibre.

Interestingly, the highest fibre country, Japan, does not do particularly well on penetration.

Over 55% of Japan’s broadband services are fibre (of Japan’s 26.3 broadband services per 100, 14.3 are delivered over fibre)   - the highest percentage of all the countries in the OECD survey.

Yet Japan ranks only two places higher than Australia in the OECD broadband rankings – at sixteenth.

In short, building an expensive high fibre network is neither necessary nor sufficient to achieve a high penetration of broadband services.

If our policy objective is to have as many Australians as possible using broadband services, the data suggests that spending big on a national fibre network offers no certainty of meeting that objective.