In today's edition of The Australian is an article written by James Massola called Fast broadband best served by market: UN report.  Massola quotes from the report by the UN’s Broadband Commission for Digital Development. The report recommends:

"a market-led approach facilitated by an enabling policy environment" as the best way to promote the deployment of and use of broadband networks.

And it has called for a "technology neutral" mix of fibre, wireless and other technologies to get there.

Massola goes on to quote Malcolm Turnbull's response to the the report.

The report found that "it is unlikely that any single technology will be able to provide all the answers".

And while it described optical fibre as "desirable at the core of the Internet and for the majority of backhaul traffic", it found that "at the edges of the network and in particular in the hands of end-users, it is most likely that mobile devices will deliver many applications and services".

Please click here to read the full article and the full commentary from Turnbull.

In the comments below, please let us know what you think about the statement that "Fast Broadband will be best served by the Market". Would the free market delivering a hybrid of technologies be the best broadband network for the country? Or does a single technology such as Fibre to the vast majority of the nation provide a better result?

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21 comments

  1. The market has done a great job of providing fast broadband thus far, but is coming up against some hard limits that require major new expenditure in infrastructure that there show no signs of happening outside the NBN. I live smack-bang in the middle of Sydney, but am still far enough from the exchange that my theoretically 24Mbit ADSL connection rarely connects at higher than 1Mbit. Wireless is even worse and I have direct line-of-sight from my window to the CBD!

    My current choices for a faster connection are to either (a) go with the monopoly cable provider and its shoddy unreliable service, or (b) wait for someone to rip up all the copper cable between me and Chatswood and replace it with fibre. And the chance of the "market" offering me the second option within the next decade is laughable.

    Comment by Charles Miller on 20 September 2010 at 16:55
  2. Did 'the market' launch the communications satellite that subsequently 'launched' Optus?

    Comment by Tony on 20 September 2010 at 17:00
  3. The comments made by Charles Miller are an accurate and sad state of affairs. The market can provide for some things, but when it comes to basic infrastructure and services in a small, geographically-diverse country the state needs to take the initiative and make things happen. Can you image what our telephone system would have been like if the market and not PMG/Telecom built it? There would only be 'phone lines down the east coast and maybe a cable to Tasmania if they were lucky. Rural folk would be left with carrier pigeons or the pony express. A new, wholesale only infrastructure corporation owned by the Federal Goverment that focuses on the installation and service of a top-notch broadband network is vital - it can then set a wholesale price and allow any and all private resellers access to the network. It is going to cost a lot to install, but the benefits for health, education, improved communications and obvious advantages for any business will make it worthwhile over the long term. Plus it will show the outside world that Australia is serious about technology and the future, which will attract more foreign technology investment.

    Comment by John Boxall on 20 September 2010 at 17:01
  4. The market can do what is needed provided the regulations and incentives are in place. The current environment doesn't encourage investment from anyone. Optus had a go with their HFC rollout and then Telstra practically followed them down every street to stop people taking up Optus's product.

    I believe that if you give a company a guaranteed monopoly for 3 years as well as provide subsidies for rural areas, they then have the incentive to lay the cables because they know they will get a return. After that period we need a tough regulatory framework to ensure that all telcos have access at a reasonable rate to that infrastructure.

    We need wholesale competition as well as retail competition.

    Comment by @grumpymojo on 20 September 2010 at 17:16
  5. The reason Telstra is stuffed right now is due to government intervention and over regulation in the market. Whenever governments get involved and create monopolies we see dead weight losses in terms of efficiency.
    We don't even know how much the NBN going to cost end consumers as yet. We do know it will cost $5000 per Australian household to roll out the core infrastructure before we start.
    The free market will always be cheaper and more efficient.

    Comment by Cam on 20 September 2010 at 17:24
  6. The market has never delivered major infrastructure systems in Australia - it has always been Government in the first instance: rail, road, power, sewerage, and the list goes on. This is just more of the Coalition's campaign to destabilise Labor with the NBN as a convenient proxy - mis-using out of context reports and commentary. The campaign is driven via the Liberal Party's takeover by those obessed with the anti-Government loons and ideologues of the far right of the US Republican Party (Bernardi, Minchin, Cormann etc etc). If the market was going to deliver it in Australia, companies would be lining up to say to Government "get out of the way, we'll do it" - and they are not there.

    Comment by Mike in Brisbane on 20 September 2010 at 17:29
    • Mike, the reason why the market is not lining up to tell the government to "get out of the way" is because the demand is not there - people don't really want it that badly that they want to pay for it. Thing is, we will be paying for it, most likely in the form of higher national debt, higher taxes and redirection of spending in more critical areas of the federal budget.

      Comment by Toby in Brisbane on 20 September 2010 at 21:09
  7. It's very simple - just compare what you pay and what you get for your money. $5000 of MY money so that I can download stuff faster? Well, in one word - NO. And I WORK over the internet, it's not just entertainment for me as it is for most people. No, don't start telling me how there are exceptions - they are just that, exceptions. If anyone finds the thing useful, they can bloody well pay for it. I don't. And I don't want "my" government to tell me what's best for me, at MY expense.

    Comment by Pavel on 20 September 2010 at 17:37
    • Your kids are may or may not be my expense and I am not telling you not to have them. Enough said.

      Comment by blah on 21 September 2010 at 08:10
      • [email protected] said... have a kid and the government gives you over $5k in baby bonuses and other hand outs. Talk about a waste of taxes just so folks can splurge on crap.

        Comment by Homer on 21 September 2010 at 08:19
      • My kids are YOUR future as well as mine, they will be paying for all the future crap like this scheme that someone (you included) will come up with.

        Comment by Pavel on 21 September 2010 at 10:59
    • Hey, I'd spend $10,000 of my tax dollars on ensuring Australia has a solid national communications network with proper competition.

      Comment by Dane on 21 September 2010 at 09:17
  8. The profit motive is insufficient to deliver results in instances where parts of the network will never be profitable. Why would a company be interested in taking on those liabilities if all things where equal?

    The government should be responsible for this national infrastructure project. It is simply too important to leave in private hands.

    Comment by Stuart on 20 September 2010 at 18:22
  9. Working in the telecoms industry, as a private infrastructure construction contractor, I don't see a NEED for FTTH.
    I believe that a mix of FTTN and further investment of DSL technology (shorten the copper & run DSL @ 100m/bit+) will provide for every average internet user in the country.

    My experience tells me that the main people the government tells us will benifit most from the fibre roll out (education & healthcare) already have fibre!

    The government made a mistake by selling off the majority of Telstra. They should have sold off the retail side, and kept the Wholesale side as a gov. owned infrastructure service.

    I wonder if anyone has looked into how much it would cost to buy the infrastructure back from Telstra?
    Straight away they would complete the majority of the critical roll out, and would have everything in place to complete FTTN (which has been in Telstra's pipeline for a number of years now)

    With a FTTN network, the speeds increase, and people who WANT FTTH have the option of having fibre installed to their property under a similar program to the way phone lines are connected now (fixed price, regardless of distance, customer provides trench, etc.)

    Comment by @zachflem on 20 September 2010 at 19:54
  10. We need a NBN like we need a hole in the head.

    We need a free market.

    We don't have a free market at the moment, because Telstra control more infrastructure than any natural free market could have ever created. Telstra controls all the copper cables and exchanges because Telstra is a former government department. Telstra's wholesale and retail businesses should be split and this will other companies to invest with confidence.

    I'm not against fibre. People who want fibre should be able to pay for it. Cross-subsidy will create distortions in the market.... it will be a giant money hole. Giving control of a nationwide network to one entity (the NBN co.) will mean we will have a new Telstra, a new dominant player that will cripple future investment.

    >The government should be responsible for this national infrastructure project. It is simply too important to leave in private hands.

    Telecommunication is important.. what about food? Should the government take over all the farms and factories and produce all our food? Should a loaf of bread cost the same in every store in Australia?

    >The profit motive is insufficient to deliver results in instances where parts of the network will never be profitable. Why would a company be interested in taking on those liabilities if all things where equal?

    The profit motive is sufficient. It means people in the bush will have to pay more for their internet connection, this will mean that the service provider will be able to make a profit. The fact is, it costs more to provide the service to the bush, so the customer in the bush should pay more. People in the bush have other advantages... lifestyle, housing costs, etc. If someone living in a rural area wants to become a web developer or something, let him move to the city.

    >The market has never delivered major infrastructure systems in Australia - it has always been Government in the first instance: rail, road, power, sewerage, and the list goes on...

    Rail was created by private companies, then taken over by government, and they've run it into the ground ever since. With electricity there were a number of small privately run power plants, then the governments got involved and built giant plants like in the Latrobe valley in Victoria, putting the private companies out of business. Now those giant coal power stations are showing to be a bit of a double edged sword, making it very difficult to switch to renewable energy.... when if we'd had a collection of small private plants we could have gradually moved to renewable energy as the small plants gradually switched over or shut down due to competition from cleaner plants.

    >If the market was going to deliver it in Australia, companies would be lining up to say to Government "get out of the way, we'll do it" - and they are not there.

    How can they? The NBN will blow any private attempt out of the water. If the NBN could be cancelled, and Telstra's wholesale and retail split up, then we would see private companies willing to step up and take the risk of investing.

    >The market can do what is needed provided the regulations and incentives are in place.

    If there is a service that people want, then there will be somebody willing to provide that service... that's how the market works.... no need for regulations or artificial incentives.

    >The market can provide for some things, but when it comes to basic infrastructure and services in a small, geographically-diverse country the state needs to take the initiative and make things happen.

    When the government controls infrastructure, it leads to malinvestment in infrastructure, anti-competitive behaviour and basically, endless problems. The government created Telstra -- Telstra are basically a government department that was spun off. Now, this leads to underinvestment in infrastructure because Telstra have too much dominance with their income stream from their copper network.

    >Can you image what our telephone system would have been like if the market and not PMG/Telecom built it?

    'Rural folk' would have had telephones... they would have had to pay more. This is fair, because it costs more to provide them the service.

    >it can then set a wholesale price and allow any and all private resellers access to the network.

    The resellers won't be able to do much to differentiate... they won't be taking on any investment risk... they'll basically be co-opted as an extension of the NBN. Go back to the 1990s with Telstra being the only ADSL provider and everyone else being a reseller of ADSL. Telstra set the speeds across the board, you could get 128Kb 256Kb or 512Kb. But the maximum speed of ADSL is 8Mb! Telstra artificially limited the speed! There was very little price differentiation at this time also. It was only after private companies were able to install their own ADSL2+ DSLAMs into the exchanges that we saw differentiation in the level of service.

    >It is going to cost a lot to install, but the benefits for health, education, improved communications and obvious advantages for any business will make it worthwhile over the long term.

    THe free market can already provide fibre to these business, health, education institutions.... those individual institutions may have to pay a lot, but overall it is more cost effective for the users to pay rather than for every single house in the country to get fibre when most people do not need it. We are talking about billions of dollars of waste here... imagine what those health and education institution could do if they had a few extra billions dollars PROPERLY invested.

    >Plus it will show the outside world that Australia is serious about technology and the future, which will attract more foreign technology investment.

    No, it will cripple investment. Nobody will be able to compete with the NBN, afterall, it has NO BUSINESS plan. It will be built with free money... a tax payer blank cheque... and it will have no risk associated with it because it never needs to make a profit. No private firm can compete with that. As for showing the outside world that Australia is serious. Give me a break. You want to spend tens of billions of dollars just for braging rights?

    >Did 'the market' launch the communications satellite that subsequently 'launched' Optus?

    If there had been no government satellites, then private companies would have entered the scene and provided their own.

    >I live smack-bang in the middle of Sydney, but am still far enough from the exchange that my theoretically 24Mbit ADSL connection rarely connects at higher than 1Mbit. Wireless is even worse and I have direct line-of-sight from my window to the CBD!

    ADSL2+ and wireless..... both technologies that have been provided privately... you may be in a disadvantaged location currently, but if it weren't for private investment you'd be worse off.

    >My current choices for a faster connection are to either (a) go with the monopoly cable provider and its shoddy unreliable service, or (b) wait for someone to rip up all the copper cable between me and Chatswood and replace it with fibre. And the chance of the "market" offering me the second option within the next decade is laughable.

    a) Monopolies aren't free market entities.... with the NBN you will have another monopoly.... two wrongs don't make a right.

    b) Why should the copper be ripped up? It still provides decent level of connection for many people. This is one of the failings of the NBN.... it doesn't see that the copper lines will be able to provide low cost connections of decent speeds for a long time into the future. If fibre is brought in by the free market, you will have premium fibre connections available, and low cost ADSL2+ connections available.... the free market will ensure that everyone can get the service that they want!

    Comment by Alex on 20 September 2010 at 20:35
  11. Given the Australian telco's record of focus on their bottom line and no interest in their customers, I can't see leaving such an important part of nation building to them is the right thing to do. The terms available for landline, cell and internet/data services belong in the 1990's (e.g. 24 month contracts, charging a full minute for a 10 second call with a 22c connection fee on top). They are extortionists and having them control a critical part of infrastructure will hold Australia back.

    Comment by Mark on 20 September 2010 at 20:40
  12. Infrastructure is a natural monopoly, hence it cannot be served by a free market. Spectrum is limited, running separate lines of fibre is unnecessary and wasteful duplication. However, infrastructure can be utilised by a free market, provided that the ACCC prevents anti-competitive behaviour.

    "No single technology" will provide broadband because it is not economical to run fibre to every premise in the country. Hell, terrestrial mobile phone networks cover 90-something-percent of the -population-, which leaves most of the -area- of this country uncovered.

    I just wish the economic neo-liberals would take their lack of understanding of market economics and go home. We don't have free market electricity grids, sewers, gas lines, water infrastructure or roads. The duplication of cable television (and later internet) infrastructure was only possible for the two companies that could afford to jump the huge barriers of entry. Hence not a free market, but a duopoly. The only reason we got where we are was because Telstra was forced to let other providers into their exchanges, which was how we got ADSL2+.

    Telstra should not have ever been sold off. At least not the wholesale part of it.

    Comment by Jay on 20 September 2010 at 21:55
  13. The key to upgrading our infrastructure is to encourage more companies to set-up their data centres over here and the only viable way to do this is to abolish the regime of censorship that our nanny-state of a country has embraced for so long. (We don’t even have R18 for games.) Nobody is going to place servers in Australia if they think there is even the slightest change of being ordered to shut it down. I am not just talking about the proposed ISP level censor here but also the existing censorship that comes from ACMA in the form of take-down notices and $11,000 per day fines. This type of censorship has been around for many years but fortunately the Internet has help liberate the Australian people by giving them a means to speak out. The Internet has given the people a voice and freedom of speech like never before and the Australian Labor party wishes to silence it by implementing mandatory service provider level censorship. This combined with the plan to monitor the Internet usage of all Australian Citizens is destroying our digital economy and moving us towards George Orwell's Nineteen Eighty Four.

    Labor will chase any would be investors away with even more draconian Censorship. In order to move forward we need to become a safe haven for freedom of speech and freedom of information. That combined with our own investments into the infrastructure will provide an incentive for overseas and Australian companies to run servers in Australian data centres which ultimately means they will be investing in Australia’s communication infrastructure and economy.

    The Internet is not compatible with Government policy.

    Comment by Dan Buzzzard on 21 September 2010 at 08:37
  14. This is a debate about economic ideology rather than just technological choice.

    Extremist right wing neo-liberal ideologes such as those that own and edit the australian push the childlike concept that markets are always efficient and good and governments are always inefficient and bad. The obvious truth is you can have both good and bad management and allocational efficiencies from both sectors.

    Neo-Libs try this on because small poor and ineffective government results in more control of our lives being handed to the rich, The alternative is control being maintained by a democratically elected government beholden to the public rather than just the profit motive

    The NBN is another clear cut case where all Australians no matter where they live can benefit from a mixed economy.

    Comment by dubrow on 21 September 2010 at 09:45
  15. I have to laugh at people who say it will "cost $5000 of my money to install" considering the government is only putting around 50% in this is them saying they are stupid enough to put the other half in personally by investing in something they think is a bad idea. Wake up.

    Comment by Charlie on 21 September 2010 at 14:02
  16. The objective of the market is to maximise profits. The market can deliver services if, and only if, that is profitable. If it is profitable, the market will most likely find the most efficient way to implement the services.

    The objective of the Government is to deliver services. For this objective, the Government has two options:
    a) Deliver the services itself. Advantage: It will happen. Disadvantage: It will probably not be the most efficient implementation.
    b) Create an economical situation so that it is profitable for the Market to deliver the services. Advantage: It will be efficient. Disadvantage: It is not always easy to create such a situation.

    I think the two major policy issues at the moment reflect this:

    Reducing Carbon Emissions: By placing a price on carbon emissions (carbon price or ETS), profits get maximised when emissions get reduced. (Yes, there's more to that, I'm simplifying here, but I think you get the point.)

    Broadband into rural areas: Currently the infrastructure needed to deliver the services to the remote communities will be too expensive to be viable. Profits get maximised by focussing on the big cities. A company that wanted to deliver to remote areas would have to either finance this through raising prices for city users (which will probably result in a loss of customers), or make make the few rural users pay even higher prices (which will make internet too expensive for them). At the moment, I don't see a viable policy that would result in a situation where profits get maximised by delivering broadband internet to remote communities for similar prices as to city users.

    I think for the National Broadband, it is necessary for the Government to do it itself. After all, it's not uncommon for the Government to deliver infrastructure projects.

    Comment by Skywolf on 14 October 2010 at 15:27