National Broadband Network in Australia - Example

Name: Tutor: Course: Date: National Broadband Network in Australia: Introduction Since the introduction of internet, there have been knowledge explosions and business opportunities and growth that could never have been imagined as noted by Qiang, (2010). In a bid to increase the experiences of using internet in the mid-1990s, information and technology companies sought to develop technologies, which could facilitate internet access at greater speeds and among the technologies developed is the broadband (Kolko, 2010). Atif, Endres and Macdonald, (2012) define broadband networksas internet technologies that allow transfer and use of data at high speed. Recent studies indicate that with suitable policies in place, broadband networks are transformative platform, which impact positively on all sectors of the economy and facilitate innovation and development not only in the ICT sector but also, generates productivity gains throughout the economyas noted by Qiang, (2010). Australia is developing a broadband infrastructure referred to as National Broadband Network that is expected to connect all Australian households to a fiber optic network (NBN Co, 2013). This forms the basis of this report, which seeks to identify and discuss the economic rationale for the government construction of a NBN and the characteristics of such a network which are likely to be consistent with the achievement of an efficient and equitable outcome. Economic Rationale for the Government Construction of A NBN The National Broadband Network in Australia is an open access communication broadband network and it is expected to cost the Australian government a staggering amount of over 43 Australian billion dollars upon its completion (NBN Co, 2013). The varied economic benefits triggered and expanded by the deployment of this broadband infrastructure significantly outweigh the cost of establishing it (NBN Co, 2013). According to the Department of Communications in Australia, the National Broadband Network (NBN) expects to produce broadband speeds of over 100M bit/ second to not less than 90% of the population and 12 Mbit/second for marginalized areas by through fiber network and wireless networks respectively. The effects of such internet speeds on Australian economy are immense and they are the main reasons behind construction of NBN. Rationale 1: Increased Economic Outcomes across Australian Industries One of the economic rationales for the Australian government construction of the National Broadband Network is that Australia will register improved economic outcomes of an average of 0.43% in all Australian industries and consequently, improve the country’s gross domestic product (Simes, Hutley, Havyatt and McKibbin, 2010). As highlighted in a 2010 study on the impact of National Broadband Network by year 2020 carried out by Simes, Hutley, Havyatt and McKibbin (2010), the estimated economic growth in the top six industries include 0.54%, in the transport and water sector, 0.53% in electricity, 0.51% in government services, 0.49% in construction and in finance and insurance sectors and gains of 0.48% and 0.46% in gas and communications sectors. In 540 businesses researched across the seventeen sector groups, 57% of them expected National Broadband Network to alter how they communicate with their external environment such as suppliers and customers and over 55% were sure that NBN will increase their online capabilities (Simes, Hutley, Havyatt and McKibbin, 2010). Rationale 2: Effective and Efficient Service Delivery to the People The main role of the government is service delivery to the people and majority of the problems faced by populations such as illiteracy, hunger, ill health, poverty and diseases are as a result of the inability of governments to effectively and efficiently deliver the needed essential services. Broadband networks provide an avenue for the government to ensure that services meant for the people, do reach the right people, in the right standards of quality, at the right cost and at the right time as suggested by NBN Co, (2013). Primarily, a broadband network such as NBN provides a framework for the government and other stakeholders to deliver various essential services to the population such as telephony, high speed access to internet, variants of telephony such as VoIP and PSTN among others and multimedia services including tele-working, video streams and virtual games (Czernich, Falck and Kretschner, et al., 2011). The speedy internet connections facilitated by use of broadband networks guarantee delivery of more services to the people, circulation of more information and reduction in transaction and information search times (NBN Co, 2013). In so doing,broadband networks stimulate activities that boost the economy such as e-commerce and e-marketing enhance service delivery in private and public service institutions such as schools and hospitals among others where people can access any service they want by the click of a button (NBN Co, 2013). Broadband networks increase the capabilities of the workforce in regards to storage and retrieval of information, and it helps in creating and distributing decentralized ideas and information in knowledge economies (Czernich, Falck and Kretschner, et al., 2011). This is crucial in enhancing the strengths of an economy, identifying gaps in the economy that can be capitalized and mitigating threats that may arise in the economy now and in the future (Kolko, 2010). It is benefits such as these that may justify the construction of NBN in Australia. Rationale 3: Microeconomic and Macroeconomic Growth Given the expected overall benefits the National Broadband Network has on the economy of Australia, it is safe to view it as a public infrastructure investment. As a public infrastructure investment, completion of the construction of NBN is expected to boost Australia’s macro and micro economic growth. As noted by Czernich, Falck, Kretschmer and Woessmann (2009), there are various ways in which a broadband network such as NBN can achieve this including: Job creation; in regards to Australians being employed to conduct work and drilling, repair and maintenance Speeding distribution of goods, processes and services Exchange of information, concepts and innovations within and across industries And stimulating enhanced development of and competition for new business processes, products and models as indicated by Czernich, Falck, Kretschmer and Woessmann (2009). Rationale 4: A Possible Boost ToAustralia’s Gross Domestic Product As it produces economic outcomes in various industries across the economy of Australia that are associated with ease in access to information, which enhances productivity and efficiency of these industries, NBN is expected and to some extent guaranteed to produce wide ranging impact on the country’s gross domestic product. According to Qiang and Rossotto, (2009), there are numerous ways through which broadband networks can impact on gross domestic product of a nation and it is in the background of this that NBN is under construction. These ways include Enhancement in the role of human capital as it get easier for the human resource to acquire and exchange technical abilities and knowledge respectively Improvement in the productivity of businesses and their efficiency in the delivering goods and services to the consumer that sufficiently meet their needs and expectations as indicated by Qiang and Rossotto, (2009). In addition, ignition and adoption of new products,concepts applications and innovative processes And enhancement in the competitiveness of the country to appeal and retain knowledge-based enterprises (Qiang and Rossotto, 2009). Recent studies carried out to determine the impact of broadband networks on the growth of a country’s gross domestic product found out that broadband networks have significantly higher effect on the growth of GDP compared to other types of Information Communication Technologies (ICTs) such as the internet, wire and mobile telephony (Qiang and Rossotto, 2009). This is in spite of the rapid penetration of mobile telephony globally (Qiang and Rossotto, 2009). According to Buttkereit, Enriquez, and Grijpink, et al., (2009), an increase of 10% in penetration of broadband in households produces about 0.1%- 1.4% boost to the GDP of a country. Keeping this in mind, the construction of NBN is an efficient and effective way for the Australian government to boost the country’s GDP and in so doing, narrowing the gap between the haves and the have not’s. Characteristics of NBN That Are Consistent With the Achievement Of An Efficient And Equitable Outcome To ensure that the National Broadband Network is effective and efficient in delivering the expected economic benefits and gains in Australian economy such as increased economic outcomes across Australian industries, boost to Australia’s gross domestic product, microeconomic and macroeconomic growth and effective and efficient service delivery to the people, NBN must have characteristics that are consistent with achievement of an efficient and equitable outcome. Some of the characteristics include: 1. Performance Any broadband network is as good as its performance and the institution charged with rolling out NBN namely NBN Co has streamlined plans to provide at least 4 traffic classes over the broadband to support various applications, which will be running across the network (NBN Co, 2013). According to NBN Co, (2013), the traffic classes will provide Service Providers with choice in service configuration including IPTV and superfast broadband among others. Variety of choices will go a long way in ensuring that the information needs and expectations of the labor force, companies and industries are effectively met and in so doing, enhancing productivity and efficiency, which have positive impact on Australian economy (NBN Co, 2013). 2. Speeds As highlighted earlier, majority of the economic benefits produced or stimulated by use of broadband networks such as NBN are as a result of the economic activities that are made more efficient by high-internet speeds associated with broadband networks (Qiang, 2010). Upon the completion of the construction of NBN, NBN is expected to produce superfast internet and communication speeds including upload and download speeds that will best suit the informational and communication needs of enterprises (NBN Co, 2013). In so doing, increasing efficiency and productivity of enterprises, which will help increase the economic gains and growth of Australian economy (NBN Co, 2013). Works Cited Atif, S. M., Endres, J, & Macdonald, J. Broadband Infrastructure and Economic Growth: A Panel Data Analysis of OECD Countries. London: Leibniz Information Centre for Economics, 2012. Accessed on 13th Oct 2013 from http://www.econstor.eu/bitstream/10419/65419/1/Broad%20Infrastructure%20and%20Economic%20Growth.pdf Buttkereit, S., Enriquez, L., Grijpink, F., Moraje, S., Torfs, W. &Vaheri-Delmulle, T. Mobile Broadband for the Masses: Regulatory Levers to Make It Happen. Sidney: McKinsey & Company, 2009. Accessed on 13th Oct 2013 from http://www.mckinsey.com/clientser Czernich, N., Falck, O., Kretschmer, T. & Woessmann, L. Broadband Infrastructure and Economic Growth.CESifo Working Paper, Series No. 2861, 2009. Accessed on 13th Oct 2013 from http://ssrn.com/abstract=1516232 Department of Communications. .National Broadband Network—Overview. Sidney: Department of Communications, 2010. Accessed on 13th Oct 2013 from http://www.nbn.gov.au/sites/all/files/pdf/National-Broadband-Network-Overview-fact-sheet.pdf Kolko, J. Does Broadband Boost Local Economic Development? Public Policy Institute of California, 2010:1-28. Accessed on 13th Oct 2013 from http://www.ppic.org/content/pubs/report/r_110jkr.PDF NBN Co. National Broadband Network. NBN Co Limited, 2013. Accessed on 13th Oct 2013 from http://www.nbnco.com.au/nbn-for-home.html Qiang, C. Z. Broadband Infrastructure Investment in Stimulus Packages: Relevance for Developing Countries.Info, Vol. 12 No. 2, 2010: 43. Qiang, C. Z., & Rossotto, C. M. IC4D: Extending Reach and Increasing Impact, Chapter 3: Economic Impacts of Broadband. New York: World Bank, 2009. Simes, R., Hutley, N., HavyattS. & McKibbin, R. Australian Business Expectations for the National Broadband Network. Access Economics, 2010. Read More