Adoption Rates Slowed, Market Concentration Unchanged
Contact: Amy Smorodin
July 26, 2016 – Australia’s investment in a national wholesale fiber broadband network failed to achieve its goals of near ubiquitous buildout and lower prices, explain Technology Policy Institute summer fellows Lucia Gamboa Sorensen and Andrew Medina in their new study, “The End of Australia’s National Broadband Network?” Instead, the project, which faced rising costs and political pressures, may have distorted consumer usage patterns and investment decisions without changing the competitive landscape.
The authors find:
- Since buildout of Australia’s National Broadband Network began, coverage and adoption rates have slowed for fixed broadband. Compared to other OECD countries, coverage and adoption rates in Australia have actually worsened under the NBN.
- Australians continue to experience low speeds and high prices relative to other countries. As of Q1 2016, a comparison study found only 9 of 84 countries had higher entry level prices than Australia. While prices have continued to decrease, the rate of decrease has slowed in the past eight years.
- Although the open access infrastructure was intended to encourage retail competition, fixed retail market concentration has not changed significantly since the NBN began operation. The retail share of Australia’s largest fixed provider has remained constant, despite falling in the years prior to implementing the NBN.
- Research also implies consumers increasingly view mobile broadband as a substitute for fixed broadband due to faster mobile connection speeds. This outcome is consistent with the hypothesis that the NBN has redirected private investment into the mobile sector.
“Government’s role and its continuous attempt to ‘catch up’ in a sector characterized by its dynamism should be re-evaluated,” the authors conclude. “The Australian case reveals how state owned broadband might not be the best answer to meet full coverage and competition objectives.”
“The End of Australia’s National Broadband Network?” is available on the TPI website.
The Technology Policy Institute
The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at http://www.techpolicyinstitute.org/.