On 7 April 2009 the Government announced plans to build a fibre
to the home (FTTH) broadband network which would
operate as an open access network, offering download speeds of up
to 100 Megabits per second to 90% of Australian homes and
businesses (where the remaining 10% would be serviced by wireless
and satellite technology with a minimum speed of 12 Megabits per
To put that speed into perspective, it is 50 to 100 times the
average speed in Australia today, and would deliver a movie
(compressed to 1GB) in approximately 1 minute 20 seconds. Fast
enough to not only change the way we use the internet, but also the
way we consume television.
Although delayed significantly from the original timeline, this
proposal vastly exceeded the specifications required under the
initial RFP. FTTH is a form of fibre optic communication delivery
in which the optical signal reaches the users home or office space.
It differs from the original fibre to the node (FTTN) proposal
originally sought in that it runs directly to the premises, and
does not rely on traditional last mile delivery methods such as
existing coaxial/twisted pair infrastructure.
The initial investment of $43 billion, would make this the
largest infrastructure investment in Australian history. It is
proposed that this investment will be funded through the Building
Australia Fund and the issuing of Aussie Infrastructure Bonds. The
intention is for the NBN to be built as a public private
partnership that will become progressively operational over the
next eight years.
The Government intends to hold a 51% share and will operate the
NBN for a period of five years before selling its stake. It is
anticipated the NBN may create 47,000 new jobs and support 25,000
jobs every year until completion.
Perhaps the greatest concern for Australians in such a grand
proposal is that it once again becomes a political football. Under
the Howard Government, the Optus Elders consortium (known as OPEL)
won the then government's Broadband Connect tender to deliver
broadband technology to remote and regional Australia. The election
of the Rudd Government saw that project cancelled in April 2008.
Under the new NBN model, it seems that there will not be any firm
projects underway until early 2010, just in time for the next
At the same time, and in response to ongoing industry
frustration with the current regulatory regime, the Government has
also released a regulatory reform discussion paper. Submissions
under it are due by 3 June 2009 to identify options for reforming
the existing regulatory regime to work more effectively during the
transition to the NBN.
Industry frustration with the operation of the current
regulatory environment is both understandable and justified.
However, expansion of the ACCC's powers, while an appropriate,
if not necessary response to the problems which currently exist
should not be done without a careful eye to the future.
The structural changes to the industry which form the basis of
the NBN proposal and, in particular, the wholesale-only, open
access nature of the network will almost certainly demand a
different regulatory scenario to that which has been required to
address the legacy of a previously government owned incumbent
monopolist. Getting this structure right, so that it allows market
dynamics to determine competition, should be the first priority. It
is against this background that the scope and extent of regulation
necessary to ensure that the market remains free of
anti-competitive conduct should be determined.
Very few could argue that proposals which facilitate
streamlining of access and which allow the ACCC to investigate and
promptly prevent or stop proven anti-competitive conduct should be
the focus of reform of the regulatory system. So too should
proposals which prevent "gaming" by participants who
manipulate or obstruct the regulatory processes to delay
However, proposals which increase the regulator's powers
with relatively few fetters (such as those allowing it to impose
binding rules of conduct) and those which allow it to act as a
quasimarket participant (such as those which allow it to set terms
of access), should be carefully scrutinised and should not be
implemented without adequate checks and balances. As with any form
of regulation, the devil will be in the detail and it is in the
detail that the success and longevity of the new regulatory regime
and with it, the new network, will be found.
The future of Broadband in Australia holds the promise of
leading edge broadband speeds with the potential to revolutionise
online business and media delivery. However there remains the risk
that this project is too ambitious and runs the risk of becoming a
political football before it ever becomes a reality.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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