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nbnNational Broadband Network (NBN)

The National Broadband Network (NBN) is the largest infrastructure project in Australian history. This $43 billion grid of fibre optic cables spans the country, linking 93 per cent of homes and businesses. The remaining seven per cent of premises not covered by fibre optics will be linked to the NBN via a combination of wireless and satellite links.

Faster broadband service

Initially, the NBN will connect homes to the Internet at broadband speeds of up to 100 megabits a second; almost 20-times faster than the average broadband speed in Australia today. It has the capacity to be upgraded to one gigabit per second (10 x faster than 100 megabits).

The NBN is a Fibre To The Premise (FTTP) network. This means that fibre optic cables extend all the way to a house or business. Fibre optic cables carry information as light-waves along their length when lasers are shone down the fibre.

Light transmission enables significantly higher data rates than conventional wire and coaxial cable. The glass does not corrode like copper but is more fragile.

NBN Co

The Australian Government established a publicly owned company, NBN Co Limited (NBN Co), to design to build and operate the NBN. The government intends to sell down its interest in the company within five years of the network being built.

Australia is the only country in the world in which government, and not private enterprise, is solely funding a national optical fibre network. As space on the network will be offered wholesale to retail service providers it is difficult to determine pricing compared to similar networks elsewhere.

Geographically, Australia has some unique challenges that prevent a fibre-optic network being privately built. Its large land mass, with low population density, and 22 million residents is very different to countries like Singapore, with a centralised population of five million, that has a privately built network.

It is highly likely that a privately run network in Australia would not provide the same level of service in remote rural areas as it would in cities.

Cost of the program

According to the government’s NBN implementation study, the rollout is anticipated at $43 billion. The Australian Government’s contribution will be $27.5 billion, with projected costs to the taxpayer of roughly $4000 per household.

Higher set up costs in regional areas will be subsidised by city users paying higher subscription fees than they otherwise would. The price will be uniform across the country.

Construction companies claim that the $43 billion projection is unrealistic, and costs will go far beyond that.

Positive aspects of the NBN

  • The NBN will potentially open up rural areas to business opportunities and further decentralise industry, easing population pressure on cities and boosting regional economies.
  • It will increase productivity across the national economy, which is a major issue for Australia. The rate of productivity growth is currently around a quarter that of South Korea.
  • Educational opportunities will increase for children in remote areas.
  • It will increase the efficiency of medical, educational and other industries, such as animation and web design, which transfer large files.
  • The NBN will future-proof the Australian telecommunications system. Critics say there is over-investment, but Federal Communications Minister, Stephen Conroy, has said, “It’s like saying in 1927, you should only build the Sydney Harbour Bridge with one lane.”

Negative aspects of the NBN

  • Potential for large cost blowouts.
  • Critics say that the project is vulnerable to spiralling wage demands by unions.
  • The government is creating a monopoly. Users have little choice but to subscribe to the government network. Conroy’s retort to this is that the market has so far failed to provide Australian’s with a sufficiently fast broadband network.
  • The government contends that a monopoly is also required to achieve full coverage in rural areas, subsidised by city users, as a privately run network would neglect users in the bush. It also claims that natural government monopolies, such as rail systems, have generally been successful in the past.
  • Opponents say there is over-investment in the NBN, and Australia can manage with Internet speeds lower than 100 megabits a second.