The NBN business model should be based on our national interest

I have mentioned this article over the last two weeks, but here it is. It actually fits in well with the articles from the last two weeks on the NBN and many of the previous NBN discussion we had here in the Australian Independent.

The NBN has long been a story of over-investment in potential and under-delivery in practice. Billions were spent to roll out higher-speed capabilities, only for Australians to be priced out of these advancements. As a result, many consumers have settled for lower speed tiers, with over 25% of NBN services still sitting at 25Mbps or less.

Recent announcements signal a shift, with adjustments planned for higher speed tiers that could finally unlock the NBN’s potential. But to truly transform Australia’s digital landscape, more ambitious changes are needed.

A history of missed opportunities

In 2021, 4.1 million premises were connected to the NBN via fibre-to-the-node (FTTN) technology, with 3.1 million activations. Based on government commitments—$2.9 billion in 2020, $2.4 billion in 2022, and another $3.8 billion in 2025—these FTTN connections are slated to be upgraded to fibre-to-the-premises (FTTP) by 2030. This will mark the eventual phasing out of copper infrastructure and make high-speed broadband accessible to all Australians.

When the corporate plan was released in August 2018, there was a clear goal to elevate Australia in the global internet speed rankings. “We can already see the impact the network is having on Australia when it is halfway complete and can be confident it is delivering on its original policy aims, including quickly lifting Australia up the global internet speed rankings,” it stated.

However, this goal seems to have fallen by the wayside. Nearly 15 years into the NBN project, Australia’s download speeds remain embarrassingly low compared to international standards—and worse, they continue to decline in relative rankings. In 2020, Ookla ranked Australia 62nd globally with an average speed of 52Mbps. Today, we languish at 79th place with 78Mbps, sandwiched between Belarus and Egypt. This isn’t a reflection of technological limitations but rather the direct result of a flawed business model that charges excessively for speed, pushing customers towards cheaper, slower options.

The technology is there, but the business model is broken

As of December, NBN Co claims that “82% of homes and businesses within NBN’s fixed-line footprint can access our highest residential wholesale speed tiers of close to 1Gbps via NBN’s full fibre and HFC technology.” Yet, these capabilities remain largely untapped because ISPs and consumers are making rational choices in an irrational pricing environment.

The upcoming price adjustments in September 2025 aim to make these higher speeds more affordable, but even this is a half-measure. If we want to genuinely climb the global rankings and deliver the benefits of high-speed internet to all Australians, we need to rethink the NBN’s entire pricing structure.

From the outset, I have argued that the NBN should have delivered the best speeds possible within the technological limits. My proposed business model would have made broadband affordable while tying revenue to data growth—the true driver of the digital economy. Instead of the convoluted Connectivity Virtual Circuit (CVC) pricing model, which acts as a proxy for volume pricing and has caused endless complications, the NBN should have adopted a simpler, more transparent structure. A dual AVC system with a high per-gigabyte fee for entry-level plans and a lower fee for standard plans would have aligned costs with usage, encouraging higher adoption of faster speeds.

A focus on public benefit, not profit

The current minister frames the NBN’s success in terms of “the benefits that accrue to citizens and businesses, the way in which it adds to GDP and quality of life. That’s how we measure it.” However, offering marginal price reductions for significantly higher speeds suggests a renewed but still cautious interest in improving Australia’s global standing.

To truly maximise the NBN’s potential, we need to go further. Offering much higher speeds at the same or even lower prices across the board would require abandoning the unrealistic expectation of continually rising NBN prices. It would also mean accepting that some of the money spent on the NBN will never be recovered—a sunk cost in the pursuit of national digital advancement.

As I have consistently argued, it is not the technology but the business model that will drive usage and the resulting societal benefits. It’s time to shift our focus from recouping costs to fostering widespread adoption of the high-speed capabilities already available. Only then will the NBN deliver on its promise to transform Australia’s digital future.

This article draws on the valuable insights from my colleagues John de Ridder and Robert (Bob) James, who have been independent consultants on the NBN since 2008. Their article was published in CommsDay. Their perspectives, combined with my previous analyses, highlight the persistent issues and the urgent need for a more effective strategy moving forward.

Paul Budde

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