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The Federal Government has released a $4.5 bn network investment package, involving a $3.5 bn upgrade of the National Broadband Network (NBN). By 2023, more than 700,000 businesses and 6 million homes will have the option to pay extra for faster broadband.
$3.5 bn will be allocated to network investments for homes and small businesses, rolling out fibre-to-the-node (FTTN), fibre-to-the-curb (FTTC) and hybrid-fibre-coaxial (HFC) networks across Australia.
Under this investment, an estimated 75 per cent of homes and businesses in the fixed-line footprint will have access to peak wholesale speeds of 500 megabits per second to 1 gigabit per second broadband. The current mandatory minimum is 25 megabits per second to all premises and 50 megabits per second to 90 per cent of fixed lined connections.
This upgrade arrives during a surge in demand for better broadband connection.
“With millions of people working and studying from home and thinking more about the download and upload speeds they need, demand for higher speed broadband services is growing. We are investing now and starting work immediately to meet this demand,” said NBN Co CEO Stephen Rue.
“Together, the initiatives outlined in this $4.5 billion network investment plan will have a real and positive impact on Australia’s retail and business telecommunications landscape and help lift the digital capability of the nation. With this plan we will support businesses, boost the competitiveness of regional areas, strengthen network performance and further enhance customer experience.”
How will this upgrade affect businesses?
The Government’s plan invests $700 mn in business innovation and growth. Over 700,000 businesses will be able to access the NBN’s “Enterprise Ethernet” with price reductions of up to 67 per cent.
This involves the creation of up to 240 NBN “Business Fibre Zones” nationally and invests a further $50 mn in identifying opportunities to extend the designated Business Fibre Zones. $300 mn is also being invested in delivering higher speed broadband to regional and remote Australia.
The upgrade is also expected to create 25,000 jobs in the next year across construction, engineering, transport and project management. It is estimated to add over $6.4 billion to the annual GDP by 2024.
Will consumers actually pay for this upgrade?
There are concerns that this upgrade may be too costly for Australian consumers.
The minimum cost for faster download speeds under this new upgrade is said to be $149 per month.
Moreover, these fibre extensions will only be extended to homes or businesses that demand it.
“If a customer doesn’t ask for it, we won’t roll the fibre to your home. If the customer demonstrates that he or she has got the demand, then we will roll the fibre [out],” said Communications Minister Paul Fletcher.
This high price may deter many consumers who were initially recorded as demanding higher internet speeds.
Mark Gregory, an Associate Professor in the School of Engineering at RMIT University, also warns that this could result in a “digital divide” in Australia.
“The Coalition’s new plan for premises to be upgraded using a demand-based approach, similar to that used in New Zealand and the UK, could entrench the digital divide in Australia,” writes Gregory at InnovationAus.
“One in five premises appears to have been put into the too hard basket and this means that many multi-dwelling buildings and homes in regional areas will be left with underperforming, unreliable copper-based technologies.
“Those that cannot afford the currently over-priced NBN plans will also be left with underperforming, unreliable copper-based connections to the NBN.”