This is why we think that Australia’s proposed National Broadband Network (NBN) is an important project. It is why we identified broadband policy as the major innovation-related issue in the recent federal election, and why we agreed substantially with the views expressed by Jonathan Coppel (Economic Counsellor to the OECD Secretary General) when he said back in September that:
Good infrastructure facilitates trade, bolsters market integration and competition, fosters the dissemination of ideas and innovation and enhances access to resources and public services. These benefits are particularly important for Australia because of its size, geographical dispersion of the population and production centres and distance from other major markets.
Australia cannot rely upon open competition to deliver universal access to quality broadband service, because there are vast areas of the continent where it is simply not profitable to deliver such a service at prices that are affordable to the local communities. Additionally, a population of 22 million people cannot reasonably afford to pay for duplication of expensive infrastructure in order to facilitate ‘competition’ in those geographic areas where there are substantial profits to be made.
THE NATIONAL BROADBAND NETWORK
The solution devised by the present government is to regulate the construction and operation of a single, primarily optical-fibre-based, network by an initially government-owned and taxpayer-funded company, NBNCo Limited. The network will be wholesale only, meaning that its capacity will be sold into a competitive market of retail service providers (e.g. telcos and ISPs). All of the retail providers will pay the same wholesale rates, throughout Australia, and will be able to compete for customers on the basis of retail pricing and service offerings.
(For the more technically-minded, the NBN will provide a layer-2 service, with the major access infrastructure being GPON fibre-to-the-premises.)
THE BUSINESS PLAN
With the release earlier this week of the full NBNCo business plan, we now have a better picture of how the network will be deployed and operated over the next 30 years, and where tens of billions of taxpayer dollars will be spent on the single largest nation building infrastructure project in Australian history.
Highlights of the business plan are:
- $35.9bn total capital expenditure
- 93 per cent of homes, schools and workplaces to be connected with speeds of up to one gigabit per second
- $27.5bn government investment
- $13.4bn capital raising from 2015
- Wholesale cost for 12 megabits per second (mbps) download, one mbps upload, including telephone – $24 a month
- Likely range of retail charges – $53-$58 a month
The network will be constructed over a nine-and-a-half year period, with key milestones including:
- April 2011 – start of mainland user trials
- June 2011 – satellite services to remote locations start
- September 2011 – first retail deals
- 2015 – long-term satellite services start
- 2021 – project completion