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'Big Bang' Telecommunications Reform

'Big Bang' Telecommunications Reform

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Published by Core Research
by Joshua Gans and Stephen King
by Joshua Gans and Stephen King

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Published by: Core Research on Jun 11, 2010
Copyright:Attribution Non-commercial


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Melbourne Business School
200 Leicester St Carlton VIC 3053
(03) 9349 8173
‘Big Bang’ Telecommunications Reform
Joshua Gans and Stephen King
Date: 18
January, 2010
The Federal Government’s plan to build a National Broadband Network (NBN) is an example of a‘big bang’ reform. The government has established a company to develop the NBN as “the singlelargest nation building infrastructure project in Australia’s history.”
The company will invest up to$43 billion over 8 years to develop a fibre-to-the-premises (FTTP) network so that “90 percent of all Australian homes, schools and workplaces [will connect] to broadband services with speeds upto 100 megabits per second.” The network will be augmented with wireless and satellitetechnologies so that even premises in regional and remote locations will have broadband speeds of at least 12 megabits per second. Further, the broadband services will be “affordable.”The big bang development of the NBN is a stark contrast to the previous 25 years of incrementalreform in Australian telecommunications. However, history matters. The government is not building the NBN as a ‘greenfield’ project. Both fixed-line and wireless broadband networksalready exist in Australia. These networks are governed by a range of legislation and activelycompete, albeit in a highly regulated environment. The exact way that the government develops the NBN, its short-term and long-term ownership, and the eventual success of the NBN, will dependhow the government deals with the existing telecommunications players and the regulations that itestablishes for the new network.In this paper, we briefly analyse the current state of telecommunications in Australia and thegovernment’s broadband policy. We then consider the decisions that the government needs toconsider for the NBN to be a success – how to deal with existing telecommunications infrastructure;what rules to have in place for future competition; and what co-investments may be required bygovernment to ensure the success of the NBN.
In the 20
century, Australian telecommunications was dominated by the Federal Government andits statutory authorities; first the Postmaster-General (PMG) from federation until 1975, then theAustralian Telecommunications Commission (Telecom) and the Overseas TelecommunicationsCommission (OTC) until 1991.
Telecommunications Act 1991
, for the first time, allowed for limited network competition in both fixed-line and wireless phone services. Optus Communicationswas selected as a second general telecommunications carrier to compete against the government-
See Prime Minister, Treasurer, Minister for Finance, Minister for Broadband (2009)
New National Broadband Network 
, Joint Media Re-lease, April 7, Canberra.
OTC was established in 1946 and operated along side the PMG until 1975 when the PMG was broken up into the Australian Postal Com-mission and Telecom. See Raiche, H. (2004) “The policy context”, chapter 1 in
 Australian Telecommunications Regulation
ed), (AlasdairGrant, ed), UNSW Press, Sydney for a more detailed background on recent telecommunications reforms.

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