Rationale on National Broadband Network Project - Literature review Example

Rationale on National Broadband Network Project Name: Course: Instructor: Institution: Date of Submission: Rationale on National Broadband Network Project Introduction Broadband are the wide bandwidth characteristics of transmission medium and their ability of transporting multiple signals and many traffic types simultaneously. This implies that a single cable will hold many different data types at ago. A broadband Network is the one that relies on broadband connections on a Wide Area Network. Therefore, the National Broadband Network is the one at a national level. In this capacity, although under development, the Australian National Broadband Network is going to be on a national wholesale basis with open access to its data network (Australian Economic Review, 2010). According to the Australian Economic Review (2010), the National Broadband Network Company, which is government owned, has been tasked to design, build and operate the network. If the project becomes completed, it will see over 90% of Australian premises having access to quick internet in 2021. It is destined to replace the Teltra Company’s copper network as part of an agreement between the two companies. The whole network project will cost $37.4 billion in its early development and $44 billion at its peak Czernich, N. et al. (2011).These high costs have brought a lot of debates and controversies concerning the whole project. Therefore, this will form the topic of this discussion, to identify the rational for the government’s decision to put huge equity in the project. To achieve this objective, the paper will focus on two economic principles of equity and efficiency in public finance. Economic Equity in the Project Equity concept in economics refers to the government practicing fairness as regards to provision of national resources to its citizens. In equity therefore, it will be considerable that everybody has equal chances to the national resources and that the government gives an equal concern for people needs (Czernich et al., 2011). As noted on Whirlpool (2013), those opposing the project highlight the huge costs of building the National Broadband Network as big burden to taxpayers. For instance, there is a growing conviction that annual budget for it will parallel that of military at 26.9%. This averagely, will cost every person about 13c per day for a period of 40 years. However, according to the NBN executives, they assert that even if the project was funded from taxpayers’ money, it will not increase tax per person (Czernich, N. et al. 2011).They analyze that the current tax system already provides the government with $320bn of revenues per year. This implies, averagely, that the country will bag revenues of $3.2 trillion after ten years. The project only needs $26bn for ten years from now, which is even less than 10% of the expected revenue for ten years. The executives therefore note that if there will be tax hikes, it will be caused by other expenditures like Welfare Costs and so forth. Since the Australia’s taxation system is progressive one, there will be equity, which dictates that a citizen should contribute to the National revenue according to his level of income. On the other front, opposition to the project also wants the company to build a simpler system such as Fiber To The Node (FTTN) as stepping-stone to the Fiber To The Premise (FTTP). The former will not achieve the main objective of the government. The government would like to see its expenditure promoting equity, through its development projects, and in fact by the making special provisions for the marginalized societies. The FTTP project anticipates reaching 93% of all premises in Australia, which covers citizens of all classes, with lower economic one benefiting the most and hence promoting equity. On using new technologies like the DSL as other people propose, the technology will require conventional telephone lines, which will end up costing a lot of money. Others are proposing Wireless technologies to replace the current fiber network. However, the technology is not tenable in Australia to be a nationwide broadband network. Additionally it will not be capable of delivering a committed speed of 100Mbps to more than 90% of Australians. By settling on FTTP technology, the company has also confirmed that it will give priority all over the country (Whirlpool, 2013). Although some areas may receive priorities that does not mean that rural areas will not be touched (National Broadband Network Company, 2013). Therefore, the government has settled to FTTP technology to promote equity in its expenditures. How Will Efficiency be reached for Economic Growth Economic efficiency is the principle that states that the government should use public resources to maximize the production of services and goods. An economic system will be said to be more efficient than the other is, if it is capable of producing more goods and services to the society, but without employing more resources (Czernich et al., 2011). In this regard, opposition to the project wants the company to build a simpler system such as Fiber To The Node (FTTN) as stepping-stone to the Fiber To The Premise (FTTP). However, by seeking opinions from an expert, Mark Newton, an Internodes expert, the proposed FTTN cannot be upgraded to result in the FTTP. Apart from lack of an upgrade path of FTTN to FTTP, one should also be aware that no commercial technologies presently exist to upgrade FTTN to FTTP. Additionally, there are those who are concerned whether the fiber optics has shorter lifespan than copper or not. To answer this question, the NBN executives have established that old fibers that had been used twenty years ago are still surviving. Fibers have been improvised using glass technology, added with plastics and hermetically sealed with glass to prevent stress. Therefore choosing the FTTP technology is more economically efficient compared to other alternatives proposed by oppositions, as it will result in a maximum earning at the least cost (Whirlpool, 2013). It is important to note that this exercise will involve bringing internet closer and fast to all Australian premises. NBN plans to leverage from three types of technologies: fiber, satellite and fixed wireless. These, altogether, will deliver an upload speed of 40 times faster than the one being experienced now. This will mean that businesses will be going to the market quickly and consumers will be having quicker access to information. On the other hand, education sectors would obtain online learning very easily, without any hustles of waiting for extended period or buffering to download learning and teaching materials (Pringle, 2013). According to Pringle (2013), currently, most Australian organizations, both profit and non-profit, are not digitally competitive as compared to other international firms. According to the recent ABS data, it was revealed that only 41.5 percent of Australian businesses had web presence while 27.1 of them took orders via the Internet. With the growing percentage of businesses taking their residence on the internet, and the increasing demand of customer purchasing online, it is justifiable that the project should go on to facilitate the change in online consumerism. This will increase the businesses turnovers that have always lagged behind those of other first world countries such as United Kingdom, France and South Korea. Efficiency will also result from the time saved from the current slow digital infrastructure. As analysts notes there will be greater storage capacity of emails and other data in various sites, which will mean that USB sticks and CD will be a farewell. This will also increase security as one tries to access his accounts within a matter of time. For those doing businesses too, there will be telecommunicating that will enable various participants to save time. High definition conferencing will mean that Australian businesses would have offices anywhere in the world. At the same time, smart technology at the work place would mean that there will be smart metering of utilities such as gas, water and electricity and therefore payment would be quite easy in business and other premises. On the same note, businesspersons will have highly enhanced remote controlling devices (Whirlpool, 2013). In education, internet learning could be efficient. As expected, there will be no wasting of time when downloading heavy files. Additionally, online teaching using videos will be very important, as there will be no buffering since the speed will be forty times than the current one. Instead of learners being physically in class, e learning will enable them learn at a distance. On the same note, desktop sharing will allow remote access and collaborations between a teacher and a student. This will be possible because of remote logins and real time collaborations. Remote log-ins will allow users to be logged online while away from their computers. The real time option will allow those with bigger desktop areas to share it. When this is used with other multimedia components such as video and audio, it will create a virtual space that a teacher and a learner can meet, saving time and money (Pringle, 2013), On security issues, Cochrane reports that the NBN is going to replace the copper connection with a digital internet connection. The analogue tones will be converted into a digital format so that they can be transmitted to a monitoring centre. To make this a reality, the NBN has planned to revolutionize a million security alarm systems that will alert security departments during home invasion, fire, break-ins and medical emergencies ( 2010). When the superfast broadband becomes operational, health care expenditure will be reduced. It is notable that the current health care costs account for 10 percent of GDP. There are those convinced that ten percent of those in hospitals are just there to be monitored. When there is a reliable internet connection, it possible to monitor some patients at home. This will reduce costs, freeing up many beds and saving $10 per day, which translates to a national aggregate saving of $1.5bn per year. It will be made easier taking in mind that medical equipments are now becoming cheaper and cheaper every day. Important on this point will also be online patient records, where the medical staff will be allowed to access a person’s records for a clear decision. Physiotherapists can make consultation online, delivering their services through video link. Nevertheless, teleopthamologists would diagnose eyes in remote communities. On magnetic Resonance Imaging, secure internet connection that are fast will enable improvement of quality services in Australian hospitals by allowing sending and receiving of final reports on medical images Czernich, N. et al. (2011). As already discussed, the government’s decision to invest Tax payers’ money in the FTTP telecommunication infrastructure is rational and justifiable. From the discussion, it has scored well in the principles of economic equity and efficiency (Cochrane, 2010). Ross reports that Deloitte Access Economics has estimated that the person who will be aged 75 years old would save as much as $ 7,000 each year due to improved access to timely online services. He would have reduced expenses incurred during visits to the doctor, keeping his age care at home. Averagely by 2020, households will benefit from a $3,800 saving in money and travel. On national aggregates, the NBN will also give the Australian government a boost of $ 16 billion per year as from 2020 (2013). Reference List Australian Economic Review, 43(2), June 2010 Czernich, N. et al. (2011). Broadband Infrastructure and Economic Growth. The Economic Journal 121(552), pp. 505-32. Cochrane, N. (2010). NBN obsoletes a million security systems: ASIAL. IT News. Retrieved on 17 October 2013 from http://www.itnews.com.au/News/231568,nbn-obsoletes-a- million-security-systems-asial.aspx National Broadband Network Company. (2013). Retrieved on 17 October 2013, from http://www.nbnco.com.au/about-us.html. Pringle, C. (2013).How will the National Broadband Network benefit your business efficiency?, tickbox. Retrieved on 28 October 2013 from http://www.tickbox.com.au/our-blog/how-will-the-national-broadband-network-benefit-your-business-efficiency Ross, M. (2013). Households will be $3,800 richer by 2020 thanks to speedy broadband like NBN: report. ABC.net. Retrieved on 17 October 2013 from http://www.abc.net.au/news/2013-09-04/report-shows-households-will-be-3800-better-off-under-nbn/4932976 Whirlpool. (2013). National Broadband Network (NBN) 2007 – 2013. Read More