The content on this page and other DCITA document archive pages is provided to assist research and may contain references to activities or policies that have no current application. See the full archive disclaimer.

Chapter 4 - Strategic Investment

4.1  Rationale for Strategic Investment

The key outcome from strategic investment will an effective national network that will be a platform for innovation and productivity gains. It is evident that some areas will not receive services through market forces and the following guiding principles should be used in relation to any strategic investment from governments:

• Market responsiveness: Actions should foster market responsive solutions to broadband issues to ensure  sustainable solutions that foster innovation and investment
• Non-distortion: Government action should not distort investment in the market by 'picking winners' in technology or by entrenching market dominance of existing service providers
• Leverage of private sector spending: Governments should work in partnership with the private sector to leverage their respective investments and strive for a coordinated approach to developing infrastructure and applications solutions.

4.2  Rural and Regional

Estens Regional Telecommunications Inquiry

The report of the Estens Regional Telecommunications Inquiry identified the need for certain additional actions to address the communications needs of people in regional, rural and remote areas. Of particular interest is the recommendation that:

'The Government should establish an incentive scheme for the provision of higher bandwidth services to regional, rural and remote areas, to enable all Australians to have access to services at prices comparable to those prevailing in metropolitan areas.'[1]

The report further recommends that 'the incentives should be targeted to those areas where services of a designated price and functionality, comparable to what is available in metropolitan areas, are not commercially available, and are not likely to be available in the immediate future'[2]. The implementation of such an incentive scheme is supported in principle.

If the Government were to implement such an incentive scheme, it is recommended that:

1. The process of identifying areas unlikely to receive services on a commercial basis within a reasonable timeframe at fair and reasonable prices (BAG Recommendation 5) become a key component to inform the implementation
2. The implementation of the incentive scheme should be built into the infrastructure planning mechanism developed by the National Broadband Strategy Implementation Group
3. The brokers discussed in section 5.1 and Appendix 4 of this report be given a clear role in working with communities, business and government services sectors to assist in coordinating demand aggregation in relation to the incentive scheme. These brokers will make information available to allow for informed decision-making and should be an extension of existing sectoral, regional and local organisations.

4.3  Strategic Use of Special Purpose Infrastructure

The National Broadband Strategy Implementation Group should give priority to building on existing special purpose infrastructure, which could then be used to bridge infrastructure gaps where private sector investment is lacking, particularly in regional areas. Possible special purpose infrastructure that could be used to supplement general telecommunications infrastructure includes state-owned railway fibre, utility infrastructure and the Australian Research Education Network (AREN). With regard to higher education infrastructure, for example, the network could extend long haul capacity from major cities to regional centres and act as a regional hub for regional telecommunications service providers of local access. This concept also underpins the NSW government's call for expressions of interest for supply of broadband solutions maximising the use of existing state-owned fibre and telecommunications infrastructure.

4.4  Market Development

Government initiatives should be directed at developing the broadband supply market in key sectors, where potential demand has been demonstrated and there is a clear public interest benefit from accelerated broadband take-up. This should involve initiatives to remove impediments and to promote take-up, to ensure that Australian industries and key sectors such as SMEs can access global markets and supply chains and achieve productivity gains.

The Government already has a $20.5 million Information Technology Online (ITOL) program involving co-funding between the Government and the private sector for e-commerce development for SMEs. This can be used for relevant SME projects involving broadband applications. Emphasis should be given to collaborative projects to develop and deploy e-business strategies and applications. The outcomes of these projects could be used to demonstrate the benefits of broadband applications, identify problems and to establish best practice models to apply generally throughout the SME sector.

There is a difference between policy-making for the current, second generation broadband marketplace, and policy-making for the emerging next-generation broadband marketplace. The current broadband marketplace is based on existing infrastructure that is vertically integrated with services. In contrast, the next generation marketplace presumes ongoing investment in a new kind of platform which will allow for services to be delivered by a wide range of providers with less vertical integration. It will be important that the Government achieves a balance in introducing initiatives to foster the current market as well as encouraging the emerging market.

4.5  Strategic Links

In the interest of national security, there is a public benefit in having particular infrastructure in metropolitan areas that may not be supplied by market forces. For instance, redundancy to increase network reliability for critical information infrastructure assurance or national security may not be adequately addressed by market forces alone.

4.6  Metropolitan Services

In certain metropolitan areas there are some problems with availability of particular broadband technologies. In relation to ADSL this is frequently caused by distance from the exchange, or other technical considerations such as RIMS. The Estens Inquiry considered that there needed to be an assessment of whether this was a problem of commercial viability, or simply a technology restriction that should be remedied by Telstra. The Government should only consider strategic investment in metropolitan areas that are identified as unlikely to receive a service on a commercial basis at fair and reasonable prices within a reasonable timeframe.

 

[1] D. Estens, Connecting Regional Australia, The Report of the Estens Regional Telecommunications Inquiry, p228.
[2] ibid p 229.

Document ID: 18508 | Last modified: 6 February 2008, 10:32am