National broadband Network and the characteristic of such a network which are likely to
be consistent with the achievement of an effective and equitable outcome
Public Finance
The economy rationale for the government construction of a National broadband Network
and the characteristic of such a network which are likely to be consistent with the
achievement of an effective and equitable outcome
The previous Australian Government had proposed to build a National Broadband
Network (NBN) that involved connecting households to a fiber optic network (a so called
‘fibre to the node’ network). Identify and discuss the economic rationale for the
government construction of a NBN and the characteristics of such a network which are
likely to be consistent with the achievement of an efficient and equitable outcome.
In your answer you should clearly define what is meant buy a NBN. Your discussion should
consider the properties of a NBN that are consistent with the achievement of efficiency and
equity objectives. Your answer should represent a critical discussion of the NBN using
economic principles canvassed in Public Finance.
Starter references:
Despite being under review, the following website provides good background information
and an overview of the National Broadband Network.
there are also a series of articles in the following
journal that may provide some useful background information:
Australian Economic
Review volume 43(2), June 2010.
Finally, there are a number of perspectives that one may take when examining the
economic rationale for a broadband network and what role government should play in its
development. The following article provides one perspective though there are others which
can be identified with appropriate research:
Czernich, N. et al. (2011), “Broadband Infrastructure and Economic Growth”,
The Economic Journal 121(552), pp. 505-32.
National Broadband Network
National Broadband Network 2
Overview
The NBN (National broadband network) is an open access data system in Australia. Fibre
connections are sold to RSP (Retail service providers), that in turn sell internet services to
clients. NBN was a political as well as industry issue for several years, even before the actual
construction began. According to the Australian Economic Review (2010), at an average rate the
network is approximated at 37.4 billion dollars to develop for more than ten years, in addition to
30.4 billion from Australian government and a maximum funding of 44 billion. The development
cost has been a major issue of debate. The national broadband network company, a government
agency, was instituted to design, develop and manage NBN, and creation commenced in 2010
(Czernich, et al. 2011).
The FTTP (fibre to he premises) is intended to cover about 93% of properties within
Australia in 9 years. In 2012, development of the network had covered 24,000 clients. Basically,
the network will substitute the copper network powered by Telstra and widely used for data
services and telephony (Czernich, et al. 2011). As such, Telstra agreed to move its clients to
NBN, and also lease its access to help in the rollout. However in developed towns where
majority of Australian reside, the cost of substituting copper with fibre is at all times
considerable. The national broadband company corporate strategy indicates an investment of
roughly 2,800 dollars for every 12.2 million properties it intended to connect, or about 4,000
dollars for every property with active access. Simple economic sense indicates that if possible
high as well as irreversible costs can be prevented or differed (Czernich, et al. 2011).
National Broadband Network 3
Technological systems used
Whereas National Broadband Network’s deployment objective is to finish rollout by June
2021, the use of fixed wireless, satellite and fibre will help realize this dream. In most cases,
these technologies will be used in Australia and NBN has no option but to adopt them. To
minimize labor expenses, the fibre to the node (FTTP) national broadband network will be used
to expand fibre connections to various cabinets in user properties. In addition, FTTN (fibre to the
node) enhances bandwidth effectively through ensuring that the existing copper communications
for given meters before connecting to the users properties (Czernich, N. et al. 2011). In future,
FTTN should be in position to sustain downloads over 100mg/second for shorter span of copper
infrastructure. National broadband network company alleges that user demands like ceiling will
comprise download speeds of 4/5 of NBN clients. This shows that there is plenty of space for
legacy connections to provide bandwidths (Czernich, et al. 2011).
Obviously, fibre should function in premises, not unless this is not economically
practical. In certain places particularly high maintenance expenditures require replacing copper
infrastructure with fibre. Typically would extend to any place there enough demand to
substantiate it -such as learning institutions, hospitals, commercial and industrial parks,
(Australian Economic Review, 2010). These approaches will enhance efficiency of services
rendered by information and communication companies as well as customers using broadband
devices. Standalone wireless such as 2.3 gigahertz and 3.4 gigahertz broadcasting continuum will
offer a lasting evolution of fixed cordless that covers roughly 4% of the populace beyond the
fibre footprint. The satellite on the other hands will offer 80 gigabits per second in terms of
bandwidth (Australian Economic Review, 2010). However, owing to the restricted satellite
functionalities, this service is offered to clients that lack accessibility to surrogate metro
National Broadband Network 4
comparable services. With burgeoning GSM systems, wireless infrastructures, and fixed wireless
remains a workable solution for broadband connectivity. NBN service providers would be
required to rollout expansive fixed wireless masts to facilitate easy accessibility for broadband
interne as well as layer 2 systems running on a fixed wireless broadband (National Broadband
Network Co, 2010).
Economic Growth
Broadband deployment will come with a booming economic aspect. In places that are
under-served for instance, broadband connectivity will bring present instant and comparatively
high economic advantages. The Australian authority’s study indicates that the most immediate
benefits will be felt in remote areas an aspect that will enable remote folks to compete with those
in urban settings. Moreover, considering the mainstream coverage and feature limitations of
broadband in Australia, it is evident to note that prospects for an economic boomerang will be
visible in areas with under-deployed connectivity (Australian Economic Review, 2010). In
addition, comparatively high social advantages will be attained in such under-deployed regional
markets. The issue of equity and efficacy will be attained, in terms of enhanced government
capacity to accelerate improved services to households and business in such locations (Australian
Economic Review, 2010).
National Broadband Network will alter the way Australian business is conducted in terms
of communication and operation. With high speeds accessible through the NBN, business will
take a new turn in terms of productivity, ushering people into new markets while leveraging
expenses on business phones, internet as well as inter-office communication (Australian
Economic Review, 2010). The network will be instrumental when it comes to working
proficiently online, an aspect that will enhance business growth and more connectivity. Business
National Broadband Network 5
entities and individuals will be able to share information the easy way, because business entities
using cloud computing will have easy integration of several sites. Mobile office will stay
connected to physical offices, employees, customers, stakeholders and even systems from
various locations (National Broadband Network Co, 2010).
These networks will help various organizations to stream business operations through
NBN’s enhance networking. With high speed internet accessible to everyone, many people and
firms will exploit HD video conferencing technology at its optimal capacity with downlink and
uplink speeds of o 95Mbps/36Mbps respectively. This makes the transfer of large files and
downloads a microsecond reality. This technology also supports telephone infrastructure which
is powered by the VOIP technology, which lowers the costs and enhances the quality of voice,
hence effective communication (National Broadband Network Co, 2010). Moreover, NBN will
usher a new era of developed e-commerce plans for effective business operations. Real-time
support systems such as live chars and video calls will enhance how companies interact with
their clients cost effectively and on the other hand increase revenue collection. NBN system will
equally enhance a 24 hour business operation schedule; facilitate the easy and effective way to
transfer huge files and effective video conferencing dealings that cuts down traveling costs. In
the end, skilled workers will effectively conduct their duties from anywhere by way of
telecommuting (National Broadband Network Co, 2010).
Government’s role
The Australian government believes that the national broadband network has the ability
to present substantial benefits, however for any policy measure to accomplish there is need for a
well implement approach that is economically prudent, suitable public policy and a strategy that
enhance proficient use of broadband . The Australian government on its part notes that
National Broadband Network 6
appropriate implementation plan by the Commonwealth government NBN is important to the
suggested benefits being achieved (Australian Economic Review, 2010). Additionally, the
capacity of national broadband network to maintain long term benefits is likely to be comprised
by inappropriate preconditions of market forces as well as social aspects. Policy on broadband
access should be centered on effectively satisfying the needs of the community, rather than
advocating for a specific technology. Upgrading of networks should be carried out in cost-
effective manner using best technology. Nevertheless, this will differ based on the locality.
Existing infrastructural facilities play a very important role (Czernich, et al. 2011).
On the hand, for the Australian government to support an efficient use of broadband, it
would require to facilitate the creation of new programs for service dissemination. The
government will also be required to invest heavily in software, hardware and ICT systems as
well as human resource development through on job training on technicalities that comes with
new technology (Australian Economic Review, 2010). It is also incumbent upon the Australian
government to prepare its citizens in terms of business development, behavioral as well corporate
transformations in readiness for the broadband deployment. This will also lead to the creation of
the right environment for change, adoption of new services as well as service delivery
representations. Policy framework forms the basis of Australian government initiative, through
policy legislation; the Australia government will be able to control the security, privacy,
connectivity, and ethical issues that come with broadband networks (Czernich, N. et al. 2011).
References
National Broadband Network 7
Czernich, N. et al. (2011), ‘Broadband Infrastructure and Economic Growth: The Economic
Journal 121(552), pp. 505-32.
Australian Economic Review (2010). The University of Melbourne, Melbourne Institute of
Applied Economic and Social Research, Volume 43, Issue 2 Pages 103–224
National Broadband Network Co (2010), Corporate Plan 2011–2013, NBN Co, p. 11-12,
retrieved 22 October, 2011