A new report by the Organisation for Economic Co-operation and Development (OECD) has highlighted a number of questions concerning the nbn rollout.
Economic Survey of Australia 2017 found that across the OECD distribution, broadband prices are relatively high and penetration is low, most notably at higher speeds.
For example, according to OECD data Australia has among the lowest penetration of broadband speeds above 10 megabites per second.
There are also concerns that nbn is not lowering its prices as quickly as the market develops.
It notes one of the biggest challenges for Australia is ensuring competitive ICT services in urban rural areas and, in addition, there are large challenges in developing provision in rural and remote areas due to the large distances and sparseness of rural populations.
The report also highlights that the choice of technology for nbn’s infrastructure investment in urban areas has been contentious.
“Initially an entirely optical-fire system was envisaged for urban areas (which account for over 93 per cent of connections). However, cost concerns resulted in a mixed-technology system,” the report said.
“Rollout in many urban areas now comprises the fibre network ending at local nodes with the pre-existing copper or coaxial cable networks being used to cover the final stage to dwellings and businesses.
“Cost savings of this approach have become less clear over time. Optical-fibre installation costs have fallen and repair and renovation costs to pre-existing network facilities have proven greater than expected.”
Another problem the report found was the influence nbn had over fixed access markets as its not only the owner and maintainer of much of the access network, but it is also practically the only provider of wholesale products to retail providers.
“Indeed, some believe nbn’s wholesale pricing strategies focuses heavily on using its monopoly position to maximise revenue. This may be forcing consolidation (and discouraging entry) in the market for internet service providers,” the report said.
“nbn’s wholesale pricing strategy is also thought to be influencing how prices are structured at the retail level. Furthermore, it is believe nbn may be limiting innovation by offering products to retailers that are quite ‘high level’ in a technical sense, which limits retailer’s ability to develop their products.
“In a welcome move, nbn has embarked on a series of reviews of its wholesale pricing strategies. This will hopefully see greater recognition of the need for stronger retail competition to increase take-up and an environment more conducive to technical innovation among retailers.
“Australia’s fixed-line communications market would benefit substantially if the wholesaler (nbn) gave greater technical and pricing flexibility to retailers.”
