The NBN says Netflix has put pressure on its fixed wireless service, but the growth in streaming has been anticipated for years

Need for speed: is the 'Netflix effect' to blame for the NBN's failures?

Politicians, tech experts and even the NBN itself talked up the arrival of Netflix and other streaming video services years before the government-owned company blamed it for speed issues on the wireless network. But just how responsible is Netflix?

On ABC’s 7.30 program on Monday night, NBN’s head of stakeholder relations, Sam Dimarco, attributed people not being able to get fast download speeds on the 4G fixed wireless network, a part of the NBN, to the “Netflix effect”.

“What happened in that moment there though was the usage behaviour within the internet in general was on the increase,” he said. “We spoke about the ‘Netflix effect’ and people spending more time streaming content. That put a lot of pressure on our networks, fixed wireless in particular.”

Who does this affect?

There are about 11m homes and businesses that will be able to connect to the NBN by next year. Of those 600,000 can connect by fixed wireless.

Some 285,000 homes are using a fixed wireless service on the NBN.

What’s the problem?

People should be able to get speeds of up to 50Mbps on their wireless service but, as the ABC report highlighted, some customers in peak hour can only get as low as 3Mbps. Not enough to stream Netflix, or do much else.

Is Netflix to blame?

To blame Netflix or other streaming services suggests the NBN was somehow not prepared for people to use these services once connected.

For years it was often trumpeted as one of the great uses for the network. “The lack of comparable IPTV products and services in the local market has meant that Australia is yet to experience the full data impact from this segment, however, given the rate of new product releases, it is expected that this is only a matter of time,” NBN said in its 2012 corporate plan.

“Netflix now makes up 33% of peak downstream fixed access network traffic in the US. HBO has developed a range of streaming movie options to either internet connected TVs, game consoles or via web browsers.”

In 2011 the then Internode regulatory manager, John Lindsay, told a parliamentary committee that Netflix had just become “the largest single piece of traffic on the internet” in the United States.

But others sought to downplay its pending impact. The then shadow communications minister, Malcolm Turnbull, said in 2013 that even Netflix demonstrated that people did not need much higher speeds on the NBN.

“Netflix know a bit more about this than any of us here, and their own publications say you need four megabits per second,” he said. “So if you had, for example, a 25 megabit per second connection to the internet, you could stream simultaneously four, or more than four – five or six – high-definition video streams.

“And so you could, as a household, be watching much more video, consuming much more data – hundreds and hundreds of gigabytes a month – but nonetheless not require that larger pipe.”

So why did we not prepare?

While individually speeds of up to 1Gbps aren’t needed to stream Netflix, it is the collective use of the network that is driving the speeds down and causing all the problems.

In November the NBN reported that the average household connected to any type of its technology was consuming 213GB of data every month, representing a 30% jump in just one year.

When Turnbull began as communications minister in 2013, much of the fixed network construction plan was changed, but he initially left the fixed wireless rollout untouched.

But, as the project went on, the NBN expanded the number of homes in the wireless footprint, adding tens of thousands of new homes that were previously slated to be connected to the NBN via fibre-to-the-node.

To reduce the cost per premises for the wireless network, NBN said in its 2018 corporate plan that the average number of homes covered by each tower had gone up.

At the same time the company told the parliament that of the 1,972 towers active at that stage, 549 towers had a take-up rate of more than 50%, and, of those, eight had a take-up rate of more than 80%.

As of June last year, less than one in five NBN towers being used to deliver wireless services was connected back to the rest of the network by fibre. The company otherwise uses microwave, which has its own capacity constraints, unlike fibre.

A spokesperson for NBN told Guardian Australia the company had accurately predicted the rise in demand over the past few years.

“Overall, we’ve tracked data consumption on the NBN access network virtually doubling every three to four years,” the spokesperson said.

“We work to ensure there is sufficient capacity to meet customers’ data needs for everyday use across all technologies.”

But the company acknowledged there was some congestion during the busiest hours of the day.

What is NBN doing about it?

All of these factors have the potential to add to capacity issues but NBN has said its $800m investment to upgrade cell towers should ease some problems. The upgrades are set to be completed later this year.

In 2018 NBN said it upgraded 3,855 cells on 452 towers in total.

As those upgrades are being made, NBN is keeping track of capacity issues. According to the company’s latest tracking report, just over half of those connected to fixed wireless get above 25Mbps at the busiest time of day. A total of 15.31% of users get between six and 12Mbps in that hour, and less than 3% get below that.

The company also put off plans to offer the 100Mbps service, similar to what it offers homes on the fixed network, in order not to make the problem worse for everyone on wireless. The company has said it would cost billions more to accomodate the higher speeds on fixed wireless.

The NBN spokesperson said the company was giving network updates weekly to internet providers to pass on to customers about what speeds they could expect to get on the network.

What does it mean for the government’s NBN policy?

At the same time as the company is making all these changes, NBN needs customers to sign on and use the network in greater numbers in order to ultimately pay off the government investment of $29.5bn and, even sooner, an additional $19.5bn commercial loan from the government to complete the network.

If customers are driven away from using the network due to speed issues, the company can’t pay back the money.

The incoming brief prepared by the communications department for its new minister, Paul Fletcher, revealed NBN has already spent just over $10bn of the loan.

The company has also flagged getting an additional $2bn in private debt to complete the network, taking the total cost to build the network to more than $51bn.

Fletcher told Nine newspapers he did not see the NBN being privatised any time soon and ruled out selling the network to Telstra.