Investment Opportunities of Australian Government - Term Paper Example

?Finance and Accounting Table of Contents Introduction 3 ‘Fiber to the node’ network 3 Characteristics of NBN 4 Economic rationale for the government5 Efficiency and equity objectives 6 Conclusion 7 Reference List 9 Answer 1: Introduction In the year 2009, the Australian government had made an official announcement regarding the development of “a super-fast National Broadband Network” (Picot et al., 2010). For developing this network, the government allocated an amount of 43 billion Australian dollars. For this enterprise the government would establish a new company that would serve schools, offices and at least 90 percent of domestic households in Australia (Picot et al., 2010). The National Broadband Network (NBN) represents the future generation of infrastructure and mode of communication. In the 21st century, the world is advancing at a rapid pace and Australia is also taking part in these technological advancements. According to the Prime Minister of the country, a slow internet connection is one major hindrance in the path of growth. Economic activities are highly dependent on the flow of information. Different communication channels lead to the identification of investment opportunities. Hence, a speedy connection of broadband would boost up economic activities and enlighten the future of the economy. Therefore, the Government of Australia has taken the initiative to connect every individual via the broadband network. It is imperative to ensure that all citizens gain access to the NBN. The project has been started in the year 2010 and is due for completion by the year 2015 (NBNCO, 2013). ‘Fiber to the node’ network A fiber optic network is a network of multiple nodes. By implementing fiber optic, the system designer can create a passive medium of network consisting of several nodes. The presence of multiple nodes makes the distribution network system safe and reliable (Cobo, 2012). By using a single mode of operation, the speed of information transfer might be increased up to 1 gigabit per second. The error rate of high speed optical networks has been found to be quite less and acceptable (Cobo, 2012). When a good broadband infrastructure is combined with highly advanced information technologies, it becomes capable of affecting productivity of firms operating in the economy and boosting economic growth. Common households across the country would be able to connect with one another, which fosters national integration. Highly effective broadband infrastructure creates additional ways in which the economic growth of the country might be augmented. Advanced information technologies can change as well as improve the method of processing information that results in higher involvement of IT firms, which implies the creation of new employment opportunities. Fiber to the node network allows the companies to implement processes, such as e-procurement, customer services, e-billing as well as make recruitment online using the internet network connection. The IT division of the firms, thus, makes a noteworthy contribution in the (long-term as well as short-term) performance of the firm, through its interactions with the other functionaries of the firm (Zyskind and Srivastava, 2011). Characteristics of NBN Broadband internet connection enables exchange of information and data across the different agents in the economy located in multiple locations. Through implementation of a high speed internet broadband network, companies would be able to manage their functions and operations in a decentralized manner of information processing. In the Australian economic system economic agents use available information as input for generating new output. The NBN in Australia would facilitate this process of information management. In this process, the nationwide network of internet would allow the firms as well as individual users to weigh and evaluate information before taking actions on the basis of that information. It leads to multiplication of data that benefits all actors in the economy. The NBN is a cost reducing venture for the firms, though in the initial phase they would incur some additional cost for implementing the new process of information management. It is aimed at taking the telecommunications infrastructure in Australia to greater heights. It would improve cooperation among the firms, foster competition and enhance business opportunities as well as intensify market competition (NBNCO, 2013). Economic rationale for the government The crucial challenge faced by Australia is the disparity in broadband infrastructure across the nation. The people of the country do not have equal access to the broadband connection. This disparity is particularly visible between the rural and urban areas of the country. The lack of a fast and dependable network connection has been felt strongly in Australia in recent years. A fast broadband network that is easily accessible and reasonably priced would help the country in taking a big step forward to advancement. Flow of information is a major factor that helps in economic and commercial activities within the country. The NBN sets up a system of two way exchange of information and offers the Australian people the facility (to) send as well as receive information very fast. It also allows them to enroll in educational courses or even enjoy various entertainment facilities through the internet, such as online videos, songs, movies and games. A reliable broadband network allows the country to get connected to the rest of the world (Tucker, 2010). This is one of the most important motivators for the government to construct a fiber optic network across the country. The presence of this network implies that Australia would become more efficient and faster than before in terms of generating knowledge, creating new opportunities and accessing quality information. This would make the market presence of the country more distinct than before. Australia’s performance in the world market would also improve. The government has recognized a critical link between the infrastructure of the country and the adoption of modern smart technologies in the production units. Broadband acts as an important platform on which the different economic agents in the country might set up an exclusive network between the sellers of technologies and the planners of infrastructural facilities and the decision makers in the production units within the country. The project of development of the broadband network has been funded by the investment fund named Building Australia Fund. The government considers that this project is not the only project but marks the beginning of building of a better Australia. Communications is the key word for future development and advancement and the rural as well as the urban areas have to be connected with one another with highly effective communications infrastructure. The rural areas would be incorporated into the urban planning and would be converted into highly economically active zones. With respect to this need, the government of Australia considers a fast and accessible broadband connection imperative for the future of Australia. Efficiency and equity objectives Research shows that there is a causal effect of broadband infrastructure on economic growth of a country. Various levels of association have been identified between broadband infrastructure of a country and the pattern of economic growth enjoyed by the country. Different factors might affect the level of actual penetration of the broadband facilities into the common households of the country. The level of economic growth in the regions in which the technology has been implemented acts as one of the most dominant causes (NBNCO, 2013). If the households, especially in the rural areas are incapable of accessing the broadband network, it violates the efficiency criterion. The objective of the government remains unfulfilled, if all the households cannot be brought under the effect of NBN. The rural areas would then not be converted into economic hubs. The central objectives of the Australian Government’s behind the development of NBN are improving the quality of broadband service “to all Australians” (NBNCO, n.d.), to address the deficiency of high speed internet facilities and deliver significantly high speed broadband service and particularly ensure that people residing outside the metropolitan areas might access these facilities equally as the urban residents. This would enable the government to reshape the telecommunications sector in the country. The equity objectives of the government have been derived from the realization that access to high speed and affordable broadband is urgent for the Australians to communicate amongst one another as well as the rest of the world and expand their business. The government aims at driving productivity, improving education and achieving delivery of better health services by fulfilling its objective of establishing a well spread network of broadband service (Czernich et al., 2011). Conclusion The modern business world is highly interlinked. The world is gradually closing in with rapid advancement of communications technologies. At this juncture, Australia is facing differences in development between their rural and urban areas. The Australian government has recognized the need for the establishment of a nationwide network of telecommunications. Hence, the NBN has become an important project for the future growth of the country. The NBN has been found to be capable of reducing cost to firms in the long run, improve better decentralized management of knowledge and useful information and allow households to stay more informed about the economic activities going in the country. Online educational facilities are one of the most important cause and desired effect for the establishment of NBN by the government. The fiber node network enables the development of a passive network that would be highly reliable and as well as user friendly. Therefore, it is a wise decision on part of the government to boost the development activities of national broadband. This network would lead to greater levels of efficiency and satisfy the equity objectives. Reference List Cobo, L., 2012. Low Cost Fiber-To-The-Node Access Network Design. [online] Available at: < http://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=6381672&url=http%3A%2F%2Fieeexplore.ieee.org%2Fxpls%2Fabs_all.jsp%3Farnumber%3D6381672 > [Accessed 15 Oct 2013]. Czernich, N., Falck, O., Kretschmer, T. and Woessmann, L., 2011. Broadband infrastructure and economic growth. The Economic Journal, 121 (552), pp. 505-32. NBNCO, 2013. About Us. [pdf] Available at: < http://www.nbnco.com.au/about-us.html > [Accessed 15 Oct 2013]. NBNCO, n.d. Statement of Expectations. [pdf] Available at: < http://www.nbnco.com.au/assets/documents/statement-of-expectations.pdf > [Accessed 15 Oct 2013]. Picot, A., Rechwald, R., Egon, F. and Moslein, K., 2010. Strategies for Rural Broadband: An economic and legal feasibility analysis. Berlin: Springer . Tucker, R. S., 2010. Broadband facts, fiction and urban myths. [pdf] Available at: < http://people.eng.unimelb.edu.au/rtucker/publications/files/tja10043.pdf > [Accessed 15 Oct 2013]. Zyskind, J. and Srivastava, A., 2011. Optically amplified WDM networks: Principles and practices. California: Academic Press. Read More