NBN business model depends on trans-sector participation
With the NBN implementation plan nearing completion it becomes clear that even a very basic NBN such as one NBN Co wants to build would present a cost structure that, if it were commercially based, would quite possibly be unaffordable for most Australians, and therefore political suicide.
So far we have heard wholesale figures varying from $70 to $200 per household for fast broadband access based on the FttH plan. In fact a wholesale price nearer the $25 mark will be required to make it an affordable service. Even if some form of entertainment is thrown in less than 25% of the population will be able to afford services above the $100 per month. This can be verified by checking similar rollouts elsewhere in the world. However, to balance this information both the Minister and Michael Quigley have indicated that these higher mentioned prices are not what they are planning to introduce.
However, if we want truly affordable low access prices for end users, the government either has to make a decision to subsidise fast broadband access or it should start looking at other revenue streams to support the costing model.
BuddeComm would argue that subsidies at such levels will be very hard to achieve, especially in the current political environment. The only solution – one that we have been advocating for the past few years – is to apply the trans-sector approach. Get other sectors (healthcare, education, public safety, energy, environment, etc) to participate. They will share in the infrastructure costs and this will reduce the wholesale price to nearer the $25 figure.
A very promising development is taking place at the five mainland pilot sites that NBN Co has announced. Here NBN Co is engaging the utilities in trying to find a cooperative way to roll out the NBN in conjunction with smart grids. If this is done on a national level close to $2 billion could be saved.
An e-health implementation plan could see $10 billion being diverted to the NBN over a ten-year period – imagine what such an injection would do for the business model of the NBN!
Unless the government can magically pull some rabbits out of a hat they will have to become more serious about their trans-sector approach. They certainly subscribe to the model. The Prime Minister and several of his Ministers (including Minister Tanner of Finance, Minister Gillard from Education and Minister Conroy from Broadband) have all spoken of it. However they will now have to commit to a massive reallocation of infrastructure funds within some of the other sectors, towards the NBN infrastructure. This can only be led from the top by the Prime Minister, and some urgent action is required here to avoid more political backlash.
NBN Co wants to roll out as basic an NBN as possible, as quickly as possible. In principle we have no argument with that, but to ensure the viability of the business model of these other sectors (as well as that of the NBN) it would be necessary for them to be able to use the infrastructure, both technically and commercially, in the most efficient and effective way. Certainly good progress has been made by NBN Co in this direction but firm plans need to be made available to judge if the NBN both technically and commercially will be able to support this trans-sector approach.
This can only be done through the active participation of these sectors in the design and architecture of the NBN.
NBN Co and Smart Grid Australia (SGA) have been able to form a working relationship that will see SGA becoming proactively involved in providing input on what is required in the design of the NBN, from a smart grid perspective.
Similar approaches are also needed in relation to the other sectors, such as healthcare and education. Interestingly, in the USA it will be the public safety sector that will be the first trans-sector based initiative within their National Broadband Plan. To date we haven’t heard this sector mentioned at all in relation to the NBN in Australia.
If we depend on these other sectors for the financial viability of the NBN we also have to accept that changes might be required in order to facilitate this. The earlier these sectors become involved the better. We are talking here mainly about government sectors, and so the same government who brought us the NBN will now also have to ensure that the business model stacks up; and their urgent action is needed to push the trans-sector approach along further.
Paul Budde
- Australia – National Broadband Network – Changing the media model
- Australia – National Broadband Network – Overview & Analysis
- Australia – National Broadband Network – Critical Considerations
- Australia – National Broadband Network – Competition and Regulations
- Australia – National Broadband Network – Deployment Strategies
- Australia – National Broadband Network – Early Projects
- Australia – National Broadband Network – Industry at crossroads
- Australia – National Broadband Network – NBN Co and Infrastructure
- Australia – National Broadband Network – Overview & Analysis
- Australia – National Broadband Network – Telstra
- Australia – National Broadband Network based on Trans-sector model
- Australia – National Broadband Network Trans-sector projects
- Australia – National Broadband Network – Government’s Trans-Sector Conference
Tagged in: Australia, Broadband, National Broadband Network, NBN
