The National Broadband Network in Australia
The Australian government set up the National Broadband Network (NBN) in 2009 to increase the connectivity and speed of broadband to all Australian households and businesses. The NBN was at the time the largest public sector investment in broadband and consisted of using fibre optic technology to replace the existing copper infrastructure in most parts of Australia.
It was implemented by a dedicated company, NBN Co, with close supervision and investment from the federal government, but the project endured several years of political debate and modification of its targets. This has reduced its effectiveness and made it a controversial example of infrastructure deployment. In implementation it has proved costly and slow to build.
In April 2009, the Australian government announced the establishment of a company that would invest up to AUD43 billion over eight years to build and operate a wholesale-only, open access National Broadband Network (NBN), intended to increase the connectivity and speed to every single Australian household and business, an unusually broad model globally.
Australia's NBN was, at the time, the largest public sector investment in broadband, and focused on replacing the existing copper infrastructure almost entirely with fibre optic. The government decided to build and operate a wholesale network to 100% of the population to encourage competition, serve and cross-subsidise the remote and rural regions, and achieve a faster infrastructure with higher quality and lower retail prices.
The rollout of a new network was intended to increase broadband speeds to a minimum of 12 Mbps, and the remaining 7 percent of Australians in remote Australia not covered by the fibre network would also have improved broadband services. The government estimated that the new NBN would deliver national economic benefits including:
- “Up to AUD30 billion in additional economic activity every year;
- “Making Australian small businesses more competitive;
- “Creating new markets for businesses and new jobs for Australians;
- “Extending media diversity.”
In the 2000s, Australia's businesses were battling against competitors in countries where superfast broadband was "cheap, reliable and widespread". Young Australians were growing up at a time when many other nations' schoolchildren enjoyed superfast broadband in every classroom. While around the world a new generation of service industries was multiplying around the instantaneous transfer of information across global communication networks, Australia risked being left behind.
Because of failures of the market to deliver widespread broadband technology, the country saw a particular threat to small businesses and educational establishments missing out on the opportunity to implement productive applications. The future productivity, competitiveness and wealth creation of the country were seen as dependent on introducing a world-class infrastructure. “In the global economy of the 21st century, no aspect of infrastructure is more crucial than advanced communications networks.”
For Australia to turn around its declining productivity, it was estimated that it would require a national broadband network to replace the existing telecommunications network, and increase broadband speeds to Australian households and businesses.
The public impact
Nearly a decade after it began, the project has still not completed. This has been partly because several modifications were made due to increasing costs and political difficulties.
A 2015 report by the Technology Policy Institute found that, since Australia started the NBN's implementation, coverage and adoption rates had fallen behind other countries. 
Other benefits are yet to be widely delivered: A report published in 2016 found that NBN had spent AUD7.3 billion, but had reached only 350,000 premises (which was less than 5 percent of Australia's 7.7 million households) and only approximately 260,000 premises were "serviceable" (meaning that they could actually order the broadband service). Uptake was also running below expectations, with only 78,000 fibre subscribers to NBN. Contrary to early expectations, “only 23 percent of NBN's fibre subscribers choose the company's 100Mbps/40 Mbps offering, with the remaining 77 percent choosing 25Mbps/5Mbps or slower services.”
From 2014 onwards a change of government, very slow rollout and dramatically escalating costs saw a major change in strategic direction. The NBN aimed to connect 93 percent of Australian households and businesses (13 million premises) to a wholesale fibre-to-the-premises (FTTP) but shifted to a mix of FTTP, FTTN and HFC (hybrid fibre/coaxial cable).
As of February 2017, the project had still not been completed. An NBN spokesman declared, however, that “one and a half million Australians can already access Gigabit technology on the NBN network today, and this will grow to nearly five million by the end of the rollout.”
Many stakeholders were involved in successive governments' attempts to stimulate broadband rollout prior to NBN. For example, in 2007, an expert task force was appointed to manage the assessment process for a limited, alternative, rollout and advise on relevant issues, including regulatory matters. A funding agreement for a limited broadband network in regional areas was first signed in 2007, but was cancelled after a change in government the following year declared that the provider was not able to provide sufficient coverage to ‘underserved' Australians. After several deliberations, the new government announced in 2009 the establishment of a company to operate a national network serving 100% of the population.
At its creation, the NBN established a stakeholder charter to guide its relationship with key stakeholders at a national level and also to guide its operations. These included:
- Government (local, state and federal)
- Retail and wholesale service providers
- Local communities
- Industry bodies
- Construction contractors.
According to this charter, the NBN was committed to discussing its future plans, engaging with local communities in which the NBN was being rolled out, working collaboratively with construction contractors and supporting their interactions with local communities, and mitigating any identified risks.
Overall, there was ongoing political support for the NBN as an infrastructure priority in Australia, although there were problems as a result of changes in government, delays in rollout, and increases in estimated costs of the original 2009 plan, which changed the project and affected its credibility.
Proposals for broadband had been developed many times, with a number of setbacks along the way before the government announced a commitment in April 2009 to establish a company that would build and operate an ‘NBN' across the whole country.
A report published in 2007, signed off by Steven Conroy - who became minister for broadband, communications and the digital economy that year - referred to broadband infrastructure as: “the foundation for productivity-enhancing information and communications technology (ICT) innovation throughout the Australian economy... As broadband facilitates ICT innovation across the Australian economy, this infrastructure has a multiplying effect on productivity.”
In 2013, after long delays in rollout, the defeat of the Labor Party and the formation of the Liberal/National coalition resulted in a change to the NBN's technology ambition in order to avoid escalating costs and allow for timely completion. “After initial reviews to fully downgrade from FTTP to FTTN, an alternative multi-technology mix with hybrid fibre coaxial connectivity in the last mile was adopted with estimated savings of AUD20 to 30 billion when compared to the full FTTP rollout." Savings of this magnitude were seen as necessary as the original AUD43 billion FTTP plan had blown out by at least AUD 30 billion in only its first few years of implementation, and the completion date moved out by seven years. 
Around the time of implementation commencing, polls showed that the majority of voters supported the project - although many rejected the Labor Party and supported the Coalition, whose leader and later Prime Minister Tony Abbott promised to drastically scale back the national network.
Over the years 2012-2013, a team from the University of Melbourne and Swinburne University of Technology conducting a national survey of more than 2,000 people to identify broad trends in public attitudes towards the idea of the NBN. Overall, respondents had a positive attitude, with 64 percent of respondents being positive or very positive, 20 percent negative or very negative, and 15 percent undecided. “Respondents with all types of internet service had a positive attitude to the NBN and, interestingly, the better the current type of internet service the more likely people were to have a positive attitude to the NBN.”
A 2014 study by the Victoria-based Institute for a Broadband-Enabled Society (IBES) also found that the public had a relatively favourable view of the NBN, despite the negative media coverage. “More than two-thirds of those surveyed had a positive attitude to the NBN, according to the paper. Respondents also believed the NBN would improve the digital economy and social equity, and did not think the network was too expensive or a waste of public money.”
Clarity of objectives
The general objectives of government's efforts on broadband appeared clear and measurable, but were modified several times over the course of the project as a result of political changes and debates. In hindsight, Australia's debates have revolved around maximum technical wholesale download speeds above all other KPIs, which has obscured the meeting of actual citizen and business needs.
In September 2007, the minister for broadband, communications and the digital economy first announced a funding agreement, signed with OPEL Networks, which promised ADSL and WiMax coverage up to 12 Mbps in rural and remote Australia.
Then, after the election in that year, the new government announced the intention to make available AUD4.7 billion for the construction of a national broadband network. Its scope was to: “deliver minimum download speeds of 12 Mbps to 98 percent of Australian homes and businesses, have the network rolled out and made operational progressively over five years using FTTN or FTTP technology, support high-quality voice, data and video services, including symmetric applications such as high definition videoconferencing, earn the Commonwealth a return on its investment, facilitate competition in the telecommunications sector... and enable uniform wholesale and affordable retail prices to consumers, no matter where they live”. Proposals closed in November 2008, and the process was terminated arguing that "none of the national proposals offered value for money".
An announcement was made in April 2009, which established as objectives for the a national broadband network to: “connect 90 percent of all Australian homes, schools and workplaces with broadband services with speeds up to 100 Mbps in towns with around 1,000 people or more, and connect all other premises in Australia (the remaining 10 percent) with next generation wireless and satellite technologies that will deliver broadband speeds of 12 Mbps.”
The eventual NBN company, which was established in August 2009 to build and operate the network, agreed through a study on the objective that “the fibre component of the NBN should be extended from 90 to 93 percent and cover the 1.3 million new premises expected to be built by 2017-18”. Cost estimates also increased, however, to AUD43 billion.
As discussed above, rollout delays and further cost escalation lead to a new government to assess in late 2013 that the FTTP dominant model would now cost more than AUD70 billion and be delivered 7 years late in 2024-25. This prompted a change to a mixed model of FTTP, FTTN and HFC in the main parts of the country. While allowing download speeds at least four times faster than the 2007 and 2009 plans, not all citizens would be able to purchase the fastest 100 Mbps ‘all-fibre' technology straight away, though 90% would have access to 50 Mbps, at the top end of global ranges. 
Strength of evidence
Several international examples and internal pilot projects were used, both during the planning of the project and during the implementation of the initiative across Australia.
One of the NBN's proposal documents listed a number of international examples of countries investing in broadband infrastructure, including Singapore, Japan, South Korea and the US. The intervention models for broadband coverage, however, varied significantly across those countries, with mixed results. “Australia's wholesale, government-owned broadband is among the most interventionist, while other countries, such as the US, have opted for a more hands-off approach."
In 2013, as the government looked to change to model to lower cost and increase pace of rollout, NBN Co ran a three-month Fibre-to-the-Building (FTTB) pilot in the Melbourne suburbs of Carlton, Parkville and Brunswick, to which four participating telecommunications companies signed up: iiNet, M2, Optus and Telstra. "It is estimated that the pilot will run for three months, during which time NBN Co and its telco partners will evaluate all aspects of the construction, installation, operation, service performance and the overall customer experience... Preliminary tests of the technology by NBN Co in December 2013 produced download speeds of more than 100 Mbps and upload speeds of more than 40 Mbps."
In establishing NBN Co, there were advisory evaluations and supporting legislation implemented to build the right foundations for the project. Although the financial, legal and human constraints were considered before the implementation of the project, many estimates were inaccurate, which led to challenges later on during the implementation.
For example, the original funding arrangements with the NBN were outlined in a Statement of Expectations in December 2010: “The Government will enter into an equity agreement with NBN Co for the rollout period with equity funding based on the expected AUD27.5 billion funding requirement advised by NBN Co. This agreement will be reviewed annually. The Government envisages that this will provide NBN Co and the market with the certainty required to enter into the long term commercial contracts needed to deliver the Government's NBN policy objectives.” . Of this funding, the government expected to receive its capital back with interest.
A key feasibility problem with the NBN, though, was the initial underestimate of the necessary investment. "The AUD40.7 billion Labor Party estimate was revised in 2013 and increased to an expected investment of AUD44.9 billion, although the opposition argued that the plan could cost up to AUD94 billion” and later in government concluded it would be at least AUD73 billion. Counterintuitively, in the early years “despite the increasing estimates of total expenditures over the life of the project, actual expenditures had been less than expected due to slow network rollout."
The NBN Co was established as a Government Business Enterprise, subject to legislation covering its governance, reporting obligations and other matters. In addition, there were two items of legislation that were established to support its operations:
- “The NBN Companies Act 2011 [which] limits NBN Co to wholesale operations and establishes arrangements for its eventual privatisation and its subsequent reporting and other obligations.
- “The Telecommunications Legislation Amendment (National Broadband Network Measures-Access Arrangements) Act 2011 (the ‘NBN Access Act') [which] provides a regulatory framework for the NBN and includes amendments to the Competition and Consumer Act 2010 to provide that all NBN Co services are subject to ACCC oversight, and to standard access obligations, and to require NBN Co to supply its services on a non-discriminatory basis.”
Once the creation of NBN Co was completed, it was set up with a thorough range of guidelines and legislative and supervisory structures. However, there were several issues arising during the implementation of the project that affected its likelihood of success. Management, and management structures, were changed several times.
NBN Co is a government-owned entity, established by the Commonwealth to design, build and operate the network. The company sits in the Broadband, Communications and the Digital Economy portfolio, reporting to the minister for broadband, communications and the digital economy, along with the minister for finance and deregulation.
In addition, the government provided NBN Co with a Statement of Expectations, which guided the company in developing a detailed Corporate Plan setting out the company's approach to meeting its objectives. However, the first 2011-13 Corporate Plan is the only plan that explicitly sets coverage targets; subsequent plans have adjusted the targets with no explicit mention and are published as estimates only.
NBN Co was required to present detailed reporting during the implementation of the project, and metrics were reviewed by a range of stakeholders from the Australian government. Most recently it has launched a new programme to measure the network's performance from the consumer's perspective.
The government's budget dedicated sufficient funds for the regulation and oversight of the NBN
- The Australian Competition and Consumer Commission (ACCC) was responsible for monitoring competition outcomes arising from the structural change delivered by the NBN.
- The Australian Communications and Media Authority (ACMA) had the task of developing and monitoring implementation of appropriate network standards and codes to facilitate the rollout.
- The Department of Finance and Deregulation also had funds dedicated for ongoing shareholder governance and policy advice to the government and NBN Co.
NBN Co publishes ongoing reports on its performance. At the time of its rollout, operational milestones were reported on a weekly basis to the shareholder ministers and are publicly available on NBN Co's website. Some of the key performance indicators by which progress has been assessed include Premises Passed/Covered, Premises Serviceable, Premises Activated, and Premises Activated as Percentage of Serviceable. All measured in terms of Fibre Access Network, Fibre in Greenfields, Fixed Wireless and Interim Satellite.
In April 2017, the government launched a programme to monitor the performance of people's home broadband to give customers greater ability to compare fixed-line internet service providers. Led by the ACCC, the Broadband Performance Monitoring and Reporting programme aims to give Australians an easier way to understand and compare speeds and see whether they are getting the level of performance promised by retailers, and thus ensure that there is effective competition and service quality.
Stakeholders such as the government, partners such as Telstra, and agencies like the ACMA and ACCC participated actively in the project and executed their roles effectively, but the many renegotiations and revisions gave the project significant uncertainty.
The Labor Government was committed to the project and, at the time of implementation, a wide range of government agencies collaborated with each other to ensure that the legal infrastructure was set up to make the project successful. Some of the other actions immediately taken by the government to move the project forward included:
- “Establish a company to build and operate the network and make an initial investment of AUD4.7 billion in the network;
- “Commence an implementation study to determine the company's operating arrangements, detailed network design and ways to attract private sector investment;
- “Fast-track negotiations with the Tasmanian Government, as suggested by the Panel of Experts, to respond to its NBN proposal and begin the rollout of the FTTP network in Tasmania;
- “Implement measures to address regional backbone 'blackspots' through the timely rollout of fibre-optic transmission links connecting cities, major regional centres and rural towns - delivering improvements to telecommunication services in the short term;
- “Develop legislative changes that will govern NBN Co and facilitate the rollout of FTTP networks, including the use of fibre-optic technology in future greenfield developments;
- “Commence a consultative process on necessary changes to the existing telecommunications regulatory regime.”
There was also considered to be a significant alignment of interests between Telstra Corporation and the federal government regarding the objectives of the NBN, once a substantial financial agreement had been entered into between the government and Telstra.
ACCC to find out how fast the NBN really is, and why your speeds may be sluggish, 7 April 2017, Nick Whigham, News.com.au
Australia, what do you think of the NBN? 3 September 2013, The Conversation
National Broadband Network funding, implementation and regulation, 2011-12, Parliament of Australia
National Broadband Network (NBN), Matthew L. James, Budget Review 2013-14 Index, Parliament of Australia
NBN Co Limited Half-Year Report, For the six months ended 31 December 2013, NBN Co
NBN Co Stakeholder Charter, NBN Co
NBN refutes Telstra Gigabit LTE network speed comparisons, Chris Griffith, 1 February 2017, The Australian Business Review
New Directions for Communications A Broadband Future for Australia - Building a National Broadband Network, March 2007, Government of Australia
Public perception of NBN very positive: study, Juha Saarinen, 7 February 2014, itnews
Shareholder risks associated with the National Broadband Network, October 2008, ACTU Corporate Research Unit
Strategic Review Report, December 2013, NBN Co
Telcos and consumers sign up for FTTB pilot, 12 March 2014, NBN
The End of Australia's National Broadband Network? Lucia Gamboa Sorensen and Andrew Medina, June 2016, Technology Policy Institute
The Rise and Fall of Australia's $44 Billion Broadband Project, Rodney S. Tucker, 26 November 2013, IEEE Spectrum
Toward universal broadband access in Australia - The National Broadband Network, July 2012, International Telecommunications Union
The Public Impact Fundamentals - A framework for successful policy
This case study has been assessed using the Public Impact Fundamentals, a simple framework and practical tool to help you assess your public policies and ensure the three fundamentals - Legitimacy, Policy and Action are embedded in them.
Learn more about the Fundamentals and how you can use them to access your own policies and initiatives.