More Wireless, Ill-Founded Fuel for the Opposition's Fire

Last Updated Sep 19, 2010 11:43 PM EDT

Expect to hear the Opposition quote extensively from today's report on Internet activity from the Australian Bureau of Statistics. It shows a continued rise in the proportion of people accessing broadband via wireless devices, and a slide in the proportion of those using DSL.
The Coalition has consistently argued that the government's $43 billion National Broadband Network solution is too costly and is out of kilter with the benefits it will provide. Their lower cost alternative relies more on wireless technology. Today's figures will help them to argue their case, with the number of people accessing broadband internet via a wireless device jumping 22 percent in the six months to June 2010, arriving at a total of 3.5 million subscribers.

Proportions can be confusing, of course. The latest figures show that, even though they're down in percentage terms, the total number of DSL connections has increased to 4.25 million (for June 2010), up slightly from 4.18 million six months earlier. But it is only 7.8 percent higher than two years ago so it's fair to say that, whether through supply or demand, the market for DSL access has plateaued.

The wireless figure has been driven, of course, by new smart phones and better data plans from mobile providers. And it's all to do with mobility --- fixed wireless is a niche play that seems to be dying out, accounting for 93,000 connections in December 2008, but about a third of that by June this year.

More Speed and Much More Data
The argument that mobile is the way to go because it's growing the fastest is fundamentally flawed, of course. It ignores the point that wireless devices are, by and large, complementary to fixed broadband. Your smart device gives you access on the go, but you need your DSL, cable or fibre for faster speeds and bigger downloads at home. Unfortunately I can't totally prove this because the ABS data isn't available to fully show whether or not wireless is substituting a fixed-line total (the cable data is missing). The figures do seem to hint that some subscribers are now relying on mobile only access to the Internet but who knows whether they are new to broadband, or perhaps people choosing wireless only because there's no fixed access available in their area.

What we do know is that wireless demand continues to grow despite an insatiable appetite for speed. Four years ago, 70 percent of home broadband subscribers (with broadband defined at 256kbps or above) were experiencing speeds less than 1.5Mbps. In these latest figures (July 2010) it's down to 22.6 percent. 40.5 percent are enjoying speeds between 1.5 and 8Mbps, and almost as many again at speeds beyond that.

There is, without doubt, a trade-off between price and speed, but an increasing proportion of Internet users are becoming accustomed to speeds exceeding 8Mbps. If wireless can't meet that demand at a comparable price, there will always be demand for a fixed solution --- and that fixed solution, of course, will be getting faster all the time.

The other factor, which the Opposition needs to be aware of as it pushes a wireless alternative, is the demand for data. The ABS statistics show that downloads from fixed broadband connections (based on all ISPs with more than 1000 customers) was almost 11 times the amount from wireless connections --- and it grew by 25 percent over the last six months. Data downloads from wireless broadband services over the same period actually fell 6 percent.

So faster speeds and much more data --- you have to ask whether wireless is a credible alternative if these trends continue. Perhaps it will be for the 800,000 subscribers who still struggle on with dial-up. Bless.