Emma Knezevic, Science,
Technology, Environment and Resources
The rollout of the National Broadband Network (NBN) will continue using a mix of technologies. While technology choices, cost and pace of the rollout attract the most attention, decisions about an important NBN policy setting are still to be made.
The policy of uniform wholesale prices is under review by the Government. The outcome of these considerations could lead to differences in retail prices between metropolitan, regional and remote locations.
Australia’s National Broadband Network (NBN) was announced
in 2009 by the Labor Government. The policy aimed to address Australia’s
broadband availability and performance and to facilitate the structural
separation of Telstra by providing an optic fibre alternative to its copper
The original NBN plan was to reach 93 per cent of
premises with an optic fibre connection. The remaining 7 per cent of premises
would be served by either a new satellite service or terrestrial fixed wireless
service (that is, a service to a fixed location, like a home, rather than a
The Coalition won Government in 2013 with a policy
it said would provide sufficient speeds for most users, be less costly and
faster to build, and have lower prices for customers.
The Coalition’s plan retains the same solution for
the 7 per cent but uses a mix
of technologies for the other 93 per cent of premises.
Important policy settings
separation of Telstra
Before the NBN (and in areas
where the fixed line NBN has not yet reached) internet access was provided
mainly over Telstra’s copper lines. Telstra’s competitors provide retail
services by gaining access to services provided by Telstra over those lines. Telstra
provides retail services in competition with those other providers and so has
the incentive and ability to favour its own retail arm over its competitors.
Structural separation is considered
the best solution to this policy problem and is the policy of all major parties.
The original plan was that, as
the fibre network was rolled out, customers would be migrated onto the fibre
connection and Telstra would cease to provide services over the copper access network,
consistent with the statutory formulation of structural
separation—that Telstra not
provide retail services over an access network that it controls. Telstra would then stand on the same footing as other retail
providers. Under the new NBN model, the process is similar.
The NBN is being built and run by
a government-owned enterprise, NBN Co (now
known as nbnTM). A fundamental policy setting is
that nbnTM provides only wholesale services
to retail service providers (RSPs), and does not serve end-users. This policy
is set out in legislation so any proposed change would need to be brought before
A cornerstone of the original NBN policy was that
nbnTM would charge uniform wholesale prices to RSPs. That meant
wholesale prices would be uniform for a given service within a technology
footprint (for example, all 25 megabit per second services within a fixed
wireless area would have the same wholesale price). Further, for at least the
basic service, the wholesale price would be identical across all technology
The policy recognised the historical disparities in
broadband availability and price between commercially attractive metropolitan
areas and often commercially unviable regional and remote areas. Uniform
wholesale prices were intended to promote uniform retail prices across the
In 2013, the Abbott Government initiated several reviews of
the NBN, including three by Dr Michael Vertigan. The Market
and Regulation Report recommended that the system of uniform wholesale
pricing be replaced with a pricing structure involving price caps on all
NBN-type services. It stated that the caps need not necessarily be uniform
across the country and that an industry levy could be used to subsidise the
cost of the provision of services to less profitable areas.
response in December 2014 stated:
The Bureau of Communications Research will
undertake an assessment of the costs of NBN Co’s fixed wireless and satellite
services, which serve many non‐commercial parts of Australia, and provide options to Government for
replacing the current opaque NBN Co cross‐subsidy
embedded in its wholesale access prices with more transparent funding
This assessment is ongoing. During the course of
the new Parliament, the Government will decide how to implement the Vertigan
recommendation about uniform wholesale prices.
The original uniform wholesale price policy was not
established in legislation, but in a Statement
of Expectations, a non-legislative direction given by shareholder Ministers
to NBN Co in 2010. It is likely that the government would give
effect to any changes in this policy area in the same manner.
Australia’s broadband performance
The Australian Bureau of Statistics’ (ABS) website states that the
number of households with access to the internet at home increased to 7.7
million in 2014–15, representing 86 per cent of all households (up from 83 per
cent in 2012–13).
According to the authoritative Akamai report State
of the Internet: 1st Quarter 2016, Australia’s average peak
connection speed is 43.8 Mbps, with a global ranking of 56th (down from
a global ranking of 30th in the 3rd
quarter of 2013).
Department of Communication and the Arts, National broadband network
NBN Co Limited nbnTM
Government’s initial response
to Vertigan Report, 2014
Back to Parliamentary Library Briefing Book
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.