Australia: The National Broadband Network And Regulatory Reforms

Last Updated: 10 August 2009
Article by Mark Feetham and Cameron Abbott


Key points

  • All Australians will have access to high speed broadband services via a National Broadband Network (NBN).
  • A reform of the telecommunications regulatory regime and industry structure will allow for better and fairer infrastructure access for service providers, greater retail competition, and improved services for families and businesses.
  • The scale of the project raises a host of issues about industry structure, competition and regulation and the co-existence of the network with existing telecommunications infrastructure.
  • The Government has considered a range of options for reforming the telecommunications industry framework in the transition period to a fully operational NBN.

On 7 April 2009, the Federal Government made two announcements that will have a major impact on competition in the Australian telecommunications industry:

  • a National Broadband Network (NBN) will be built so that all Australians will have access to high speed broadband services
  • the telecommunications regulatory regime and industry structure will be reviewed and reformed to allow for better and fairer infrastructure access for service providers, greater retail competition, and improved services for families and businesses.

The National Broadband Network

The NBN will be a mixture of fiber-to-the-premises (FTTP), wireless and satellite technology which according to Government documents will provide every house, school and business in Australia with access to affordable fast broadband. It will be built in partnership with the private sector and will be the largest infrastructure project in Australian history.

Over an expected eight year construction phase, up to A$43 billion will be invested to build an NBN that will:

  • connect 90 percent of all Australian homes, schools and workplaces to broadband services with speeds up to 100 mps
  • connect all other premises (in remote parts of Australia) to next generation wireless and satellite technologies that will deliver broadband speeds of 12 mps
  • directly support up to 25,000 local jobs each year over the life of the project
  • provide fibre optic links connecting cities, major regional centres and rural towns
  • offer the following advantages:
    • allow high quality video conferencing as an accessible alternative to travel
    • create the potential to improve health and aged care with telemedicine and by managing patients in their homes rather than hospital beds
    • support virtual classrooms, video and audio streaming and high definition video conferencing; helping students and teachers to work together
    • support smart grids to improve energy efficiency and reduce carbon emissions.

The NBN will be built and operated on a commercial basis by a company (NBN Company) established by the Government.

The NBN Company will be structurally separated, will provide wholesale services only and will offer them on an open access basis. It will not be permitted to offer retail services to consumers and businesses in order to ensure that customers are treated equally and that there is no incentive for the NBN Company to engage in anti-competitive conduct.

To ensure that the open access and equivalence arrangements are not compromised, the Government will establish ownership and control rules. In its discussion paper, Regulatory Reform for 21st Century Broadband1, it establishes a clear policy framework for the regulation of the NBN Company and its access regime.

The Government will be the majority shareholder of the NBN Company, but significant private sector investment is anticipated. Following the Government's initial investment in the NBN Company, it intends to sell down its interest within five years after the network is built and fully operational.

Regulatory reform

Not surprisingly, the scale of the NBN project raises a host of issues about industry structure, competition and regulation and the co-existence of the network with existing telecommunications infrastructure, in particular, Telstra's copper CAN.

The NBN project structure will promote competition. In contrast, the current structural problems in the telecommunications industry, in particular the historical incumbency and vertical integration of Telstra, have stifled the development of competition. Telstra's vertically integrated structure has allowed it to favour its own retail business over its wholesale customers when providing access to various services. Significant improvements to the existing telecommunications regime are required in order to aid the implementation of the NBN.

In its discussion paper, the Government considers a range of options for reforming the telecommunications industry framework in the transition period to a fully operational NBN. These include:

  • streamlining current regulatory processes by allowing the ACCC to set up-front access terms for companies wanting access to Telstra and other networks (this would replace the current negotiate-arbitrate model)
  • allowing the ACCC to impose binding rules of conduct when issuing competition notices (ie strengthening the ACCC's powers)
  • altering Telstra's vertically and horizontally integrated structure by requiring functional separation. This aims to improve Telstra's incentive to treat access seekers and its own downstream business units on equal terms in order to promote greater competition across the industry
  • imposing ring-fencing around certain business units within Telstra
  • addressing competition and investment issues arising from cross-ownership of fixed-line and cable networks, and telecommunications and media assets
  • improving universal access arrangements for telephony and payphones
  • introducing more effective rules, requiring telephone companies to make connections and repairs within set time-frames.

What will the Government do next?

To get the project started, the Government will:

  • engage in a consultative process on necessary changes to the existing telecommunications regulatory regime. The Government has established a Senate Select Committee to inquire into the NBN. The Committee has received and is considering written submissions from interested parties (submissions closed on 3 June 2009)
  • make an initial investment in the network of A$4.7 billion
  • commence an implementation study to determine the operating arrangements, detailed network design, ways to attract private sector investment for roll-out in early 2010 and ways to provide procurement opportunities for local businesses
  • fast-track negotiations with the Tasmanian Government, to begin the rollout of a FTTP network and next generation wireless services in Tasmania
  • invest up to A$250 million to immediately address backbone "black spots" throughout regional Australia
  • require Greenfields developments to use FTTP technology (instead of copper wires) from July 2010.


1. National Broadband Network: Regulatory Reform for 21st Century Broadband Discussion Paper, April 2009, available at

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