The NBN has an adoption problem

Australia’s National Broadband Network is scheduled for completion next year. Currently the number of homes and businesses labelled ‘Ready to Connect’ is about to pass 10 Million.

The last NBN Co Weekly Progress Report was published on the 4th of July which as you’ll note, is more than a week ago, which means they’re late in publishing.

In the most recent report, the number of properties ‘Ready to Connect’ is 9.974 million, up from 9.93 million the week before. This rate of increase in the premises that are able to connect means the next time the report is updated, it’ll show we’ve now passed the 10 Million mark.

That figure is made up of properties that are Ready to connect in Brownfield and greenfield estates (new developments) via FTTP, FTTN, FTTC and HFC, as well as those on Satellite and Fixed Wireless.

While passing 10 million is an important milestone, NBN have an adoption problem. Only 5.56 million of those 10 million (or just 56%) have signed up to the NBN.

After publishing the post, NBN’s Executive Manager Corporate Media and Corporate Affairs, Greg Spears reached out to clarify some points.

  • FY19 has been the nbn’s biggest build year to date with an additional 3 million premises made Ready to Connect (RTC) over the last 12 months.
  • A year ago, FY18 RTC was 7.036 million and we had 4.035 million active customers – so the nbn has added 1.5 million more active customers in last 12 months alone.
  • From a quarterly viewpoint, at NBN Co’s Q319 results released 6 May, we had 8.8 million premises declared RTC, and 5.1 million active customers.
  • So in Q419 – in one quarter alone – we made approximately 1.2 million additional premises RTC, and activated an additional 400,000 premises.
  • This gives nbn a run rate of approximately 30,000 – 40,000 new customers per week. I’m not aware of any other company in Australia that is adding approximately 30,000 – 40,000 new customers every week – so I’d argue against your assertion that there ‘an adoption problem’.
  • Once premises are declared RTC, there is an 18-month connection timeframe (before premises are disconnected from legacy networks), which accounts for the delta between RTC and active customers.
  • And, as part of our ‘Focus on 50’ campaign and associated bundled discounts offered to RSPs, approximately 63 per cent of customers are now subscribed to wholesale speed tiers of 50 Mbps or above, compared to around 17 per cent of customers on wholesale speed tiers of 50 Mbps or above at the end of 2017 (before we introduced discount bundles).
  • Also, in addition to our new connection run rate, approximately 30,000 – 40,000 per week are upgrading from wholesale speed tiers of 12/1 and 25/5 to wholesale speed tiers of 50 Mbps or above. Once again, with respect, I’d question the voracity of your assertion that ‘NBN has an adoption problem’. 

NBN Co’s Corporate Plan 2019-22 does actually indicate their adoption take-up rate on page 45. This states that by the financial year 2022, nbn Co expects that between 73 and 75% of premises would have taken-up NBN services.

In a blog post from August 2017 – – NBN explain they actually don’t expect all Australian premesis to connect to the NBN for the following reasons:

  • Not every premises in Australia is expected to want access to the nbn network, e.g. holiday homes.
  • Some premises with lower data needs are expected to choose to use mobile-only products.
  • Some premises may use fibre alternatives / nbn network wholesale competitors

In response to my question around 56% adoption (10 million RTC versus 5.5 million active), the project is accelerating with 3 million premises made Ready to Connect) RTC in the last 12 months. This was always my point, the capital expenditure has been spent, without those customers actually connecting (arguably the more important metric).

NBN say that a percentage ‘would have connected relatively immediately’, but the balance will still have at least 6 months to connect. Based on the fact that 1.5 million have been made RTC in the last 3 months alone, due to the release and activation of footprint in metro areas, it could be up to 15-18 months before we see all of those customers come on board.

When they do connect, based on circa 75% adoption rate, it is estimated we’ll see around 8 million active customers (from a total pool of 10 million RTC).  

NBN is also working to pick up a portion of that 25% segment of the market that is underserved by the NBN, and that is a strong focus of our current Wholesale Pricing Consultation Paper – and engagement with RSPs.

There are many reasons why the adoption rate is this low, but one of the primary reasons can be attributed to the negative perception around migrating to the NBN, a result of substandard migration experiences.

There’s plenty of horror stories of bad connection experiences around the actual changeover, but also plenty of instances of people going backwards in their speed.

NBN Co publish detailed metrics like in May 2019, 89% of homes and businesses had their NBN equipment installed right the first time – compared with 91% in May 2018. The idea of these metrics was to show progress, but this is one that hasn’t improved in the last year, instead, things have gone backwards.

The NBN for many (like myself) have provided faster and cheaper internet and where that has happened, NBN Co needs to do a far better job (read: advertising campaign) to let Australians know these highly publicised issues are largely behind them.

The longer this continues, the more likely homes are to consider 4G/5G connectivity options and once a households find that works for them, it’s unlikely they’ll ever become an NBN customer.

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Jason Cartwright
Jason Cartwright
Creator of techAU, Jason has spent the dozen+ years covering technology in Australia and around the world. Bringing a background in multimedia and passion for technology to the job, Cartwright delivers detailed product reviews, event coverage and industry news on a daily basis. Disclaimer: Tesla Shareholder from 20/01/2021

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