The End of Australia’s National Broadband Network?

Australia’s National Broadband Network (NBN) is the largest public sector investment in broadband to replace existing copper infrastructure with fiber. Government decided to build and operate a wholesale network to encourage competition on that retail fixed broadband and achieve faster infrastructure buildout with higher quality and lower retail prices. The NBN aimed to connect 93 percent of Australian households and businesses (13 million premises) to a wholesale fiber-to-the-premises (FTTP) but downgraded to fiber-to-the-node (FTTN) as a result of escalating costs and political change. In further attempts to bring down the cost and adopt a more deliverable strategy, the current administration is considering a gradual sell-off of the NBN network. Six years after its start the overall outcome has not been positive.

This report finds that since NBN implementation coverage and adoption rates have slowed for fixed broadband and mobile broadband growth has remained relatively constant despite increased investment. Australians continue to experience low quality services due to low speeds, higher prices relative to other countries and a slowing rate of price decrease for internet services in the past eight years. Fixed retail market concentration has not changed significantly since the NBN began operation and has slightly increased in the mobile market. Finally, this research suggests that faster mobile connection speeds are changing consumer patters to perceive mobile as a substitute for fixed broadband. The Australian case reveals how state owned broadband might not be the best answer to meet full coverage and competition objectives. The NBN is an example of an intrusive policy subject to political pressures that has resulted in inefficiencies that distort consumer patterns and investment decisions without changing the competitive landscape.