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NBN theoretical speeds vs premium Ethernet speeds

With the National Broadband Network (NBN) on the doorstep, many businesses are starting to consider the move from their legacy Copper and Fibre based Ethernet services to NBN. With very attractive rates and “business” plans being offered, it seems like an easy decision, but does the NBN really stack up?

In this article I will discuss various factors that will affect the speed of your Internet connection through the NBN, and also look at service assurance metrics which businesses should consider when comparing NBN choices to the other connectivity options available.

Why are NBN speeds theoretical?

The advertised maximum speed of the NBN is 100Mb/40Mb, but in reality there are so many different external factors that influence this speed which is why you will never get that speed consistently.

The biggest factor is contention. There are 4 main points of contention throughout the network that make it nearly impossible to achieve the advertised speed.

  • First area of contention will be at the local Fibre Access Nodes (FAN) which is where all the hubs will connect back to. There are approximately 3200 services per FAN.

  • Next point of contention would be at the Point of Interconnect (POI) which is essentially an exchange. This will have 12 FANs connecting into it, for up to 38400 services.

  • Retail service providers (RSP) are required to purchase aggregation or CVC at each POI – essentially this is buying bandwidth resources on the NBN core switches.

  • The final point of contention is the backhaul the providers must purchase from the POI back to their network.

Another important factor that will influence the connection speed is the router or firewall hardware (also known as customer equipment or CE). For a service to achieve up to 100 Mbps, there will need to be a CE purchased that will support this throughput. This can be a significant expense for businesses. If less appropriate hardware is used, it will jeopardize the speed of the link and there you have yet another contention point.

Contention is nothing new; in fact it’s used by every service provider out there to a certain degree. But a network designed and built to service consumers has inherent risks to business, especially when you rely so heavily on the service for operating your business.

All of the above discussed arguments have a great impact on the speed which is why NBN’s advertised speeds are regarded as theoretical.

How about the price of the NBN technology?

The pricing as advertised makes this product very attractive; around $100 per month delivers you a 100Mb. But when you consider that the RSP must pay $20 per Mb per month (i.e. 100Mb of aggregation or CVC is $2000 per month), and in many cases the same for the backhaul, you can start to see that very high contentions are going to be inevitable.

With the above in mind, it has to be a volume play to make any money from supplying the service. It’s quite simple – the more people that subscribe, the more cost effective it becomes for that RSP. However, more users also mean higher contention and slower Internet connection for everyone.

NBN speeds compared to Ethernet

NBN will be an appropriate solution for consumers and small businesses, serving as a replacement for ADSL2+ connection. However, when it comes to medium and large organisations, the service simply won’t be able to deliver the consistent speeds and reliability that existing Ethernet solutions can. This is something most businesses still need to understand because it hasn’t been made clear by the NBN, for obvious reasons.

With most existing Ethernet solutions, you have a service level backed contention ratio of 1:1, and usually very low latency and jitter metrics. This has not been forth coming from the NBN, nor can RSPs honestly advertise that they can achieve these high metrics on the NBN.

Where existing carriers, such as AAPT, still have an advantage over the NBN today is they’re able to deliver 100Mb/100Mb un-contended services for under $1000 per month, backed by a real business Service Level Agreement (SLA). They’re able to achieve this price point realistically as their Fibre assets are mostly a sunken cost. They also benefit from having multiple carrier backhaul from the exchanges for diversity, something the NBN and RSPs will find hard to offer at current price points.

In summary

Businesses today are starting to rely on their Internet connection a whole lot more due to the evolution of “cloud” and virtual offices. Decision makers will have to weigh up the risk of doing business on the NBN, and if it’s really worth replacing existing Ethernet services, which may have much lower contention and higher service guarantees. When choosing connectivity options, make sure you’re informed on all the factors from trusted advisors, otherwise it may be to the detriment of your business.