Jun 1, 2015

How can we fix the NBN?

There are fewer than 400,000 premises actually connected to the national broadband network. Where can the government go from here? Dr Rob Nicholls, research fellow at Swinburne University of Technology and the Centre for International Finance and Regulation, explains.

The policy rationale behind a national broadband network is two-pronged. The first is a broadband infrastructure that ensures that Australian homes and businesses have broadband at a level that does not limit the national competitiveness compared to its trading partners. The second is to ensure that this broadband service is universal.


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6 thoughts on “How can we fix the NBN?

  1. Graeski

    The NBN has been destroyed, which was the objective all along.

    This country is doomed.

  2. Norman Hanscombe

    Graeski, the Green/Labor fiasco meant the doom began much earlier, without as far as I recall, any strong efforts by you to try to stop it.

  3. Duncan Gilbey

    After reading this post I googled ‘Tony Abbott faster cheaper internet’

    The second link offered was to ‘’ which I assume is Liberal Party site.

    The link connects to a blank page…

    Says it all about the LNP and the internet… effing clueless.

  4. Cut Snake

    Best explanation I have seen of the mechanics of the concept.
    Unfortunately it seems it will always be highly politicised.
    It is always the crap upload and download speeds.
    I own a business located in the largest industrial area in nsw, but we still have 3rd world adsl internet connection, especially when it rains, or for lots of other reasons according to telstra.
    Would love to know when nbn might come our way.
    Business connected first would underwrite the domestic consumers in a flash.

  5. TheTruth

    What I don’t understand is how did the government come to the conclusion that FTTN (Fiber To The Node) works out cheaper than FTTH (Fiber To The Home) in the long run? Sure, NBNCo might be able to roll out FTTN faster and initially cheaper, but who maintains the copper still being used for the majority of users who will connect to NBNCo via FTTN? Then the costs of maintaining the hardware inside of the node box as well as the added strain on the electricity grid caused by these green boxes.

    The cost to remediate and maintain the copper to keep speeds at a minimum 25mbs is going to add up in the long run. What happens when someone veers onto the footpath in a four wheel drive and rips the box out of the ground? These boxes are going to be targets for damage. The only reason we are getting a FTTN network is because as usual, a new party gets into power and the first order of business is to chastise and do the exact opposite of the previous political party to seem fresh and as putting a better and new perspective on things.

    An all fibre network for 93% of the population would have been a big outlay initially, but it would have paid for itself both in reduced maintenance costs and being future proof as nothing currently supersedes fibre, it has been the standard for a long time now and will continue to be for quite a long time.

  6. umbria

    So-called cross subsidy, where 100% of users contribute 100% of the revenue, is in fact justified. The KPMG NBN Implementation Report of 2010 identified only a small portion of the fibre footprint costing much more than the average. Not all expensive premises are rural. City premises also benefit from having good communication links to all their customers and extended family in regional and rural areas. If each connection was provided “at-cost”, thousands of city addressses would be unable to afford the high cost, while their easier-to-connect neighbours got it cheaper.

    This is a national infrastructure project. Distributing the average connection cost across all customers means a very small margin on around 90% generates a substantial subsidy to deliver universal service. Remember that the 10% of city and rural premises that did cost more are also paying the same margin on top of the average.

    The effect of recovering the total build cost from all users is that it gets the entire nation connected. But note that the cost-recovery model maths only work if the monthly revenue per user is higher, and on fibre it is, because ARPU is $36 in FTTP areas, compared to Mr Turnbull’s pre-election estimate of $18 from FTTN. This is because households and businesses will pay more for a service that is capable of saving them in other areas of private expenditure, such as offsite backup and speedy restoration of computers and video entertainment. It doesn’t matter what the premises use the service for from an economic viewpoint, but it matters how many take it up and how much they are prepared to pay to recover the build cost.

    We must therefore build FTTP as planned in the urban footprint, and charge a universal rate. That maximises takeup and revenue per user, which is the basic risk identified in KPMG’s report.

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