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Sample - Business Economics Assignment

   

Added on  2021-06-17

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Running head: ECONOMICS FOR BUSINESSEconomics for businessName of the universityName of the studentAuthor Note

1ECONOMICS FOR BUSINESSIntroduction:The national Broadband Network (NBN) is a project of Australian government, basedon the national wholesale open-access data network. This project contains components ofradio and wired communication, introduced and operated by NBN Co. Limited (Valle deSouza, Dollery and Kortt 2018). Retail service providers (RSPs), mainly Internet serviceproviders, contract with NBN for accessing the network and consequently can sell fixedinternet access to their end customers. The specified project regarding nationaltelecommunications infrastructure has several objectives among which replacing the existingtelephony network of copper cable has become an important issue, required to overcomerapidly due to increasing demand for internet access. Initially, it has been proposed that wiredconnection has the capacity to provide up to 1000 Mbit/s. However, in 2013, this speed hasdecreased to a minimum of 25 Mbit/s after the election of Abbott government (Alizadeh andShearer 2017). NBN has experienced significant political disagreement as it has remained thelargest infrastructural project of Australia and this in turn has become an issue in federalelections. The NBN proposal has risen first by the Rudd Labour opposition though theHoward government has dismissed it through considering it as unnecessary (Wilken et al.2015). After that, various political parties have delivered their own opinion regarding thisproject. Initially, the Coalition has also exposed NBN as a dangerous vision. On the otherside, senator of national party has said that NBN has represented a proposal with the help oftheir think tank, where they have delivered an outcome of strategic infrastructure. Moreover,according to the Senator, it is also essential for this project to spot failed markets of Australia.However, the chief reason of debates regarding NBN has occurred on the size of investmentdone by this Australian government. In addition to this, the Economist Intelligence Unit hascriticised this project due to its higher cost to the public sector. Hence, this report hasintended to describe NBN policy of Australian government and its issue precisely.

2ECONOMICS FOR BUSINESSBackground of NBN:In 2009, the Labour Government of Australia has proposed this NBN plan not only todevelop broadband performance of this country based on its availability and performance, butalso the plan has made a structural separation with Telstra (Freeman, Fisher, Baum and Friel2018). This structural separation can help the government to prevent broadband services frombeing retail one. The Budget Review 2013-14 of the Parliamentary Library has providedbackground on NBN policy commitments of major parties prior to the election. Both planshave stated about the using a mix of technologies for accessing all premises. The NBN planof Labour party has stated to connect 93% of premises with optical fibre while for remaining7% of premises the plan has suggested to use a mixture of fixed wireless and satellite (Park etal. 2015,). The Coalition Government has provided almost same solution regarding thisspecified plan for the 7% of premises though for remaining 93% premises the governmenthas suggested to use a mixed of technologies and moreover these premises have required toconnect with optic fibre (Aph.gov.au. 2018). The technical mix has three chief components,which are, fibre to the node (FTTN), fibre to the premises (FFTP) and hybrid fibre coaxialcable (HFC). Structural separation:To discuss about the NBN, it is also important to mention about its structuralseparation. The NBN Co., a government-owned enterprise, has built and run this NBN. Thiswholesale only network has constructed not to provide direct retail services to end-users.Instead of this, retail service providers (RSPs) are its customers and Telstra is one of them inthe market (Aph.gov.au. 2018). Hence, this policy has started with legislation. As a result,any proposed changes are required to bring before parliament. After rolling out of fibrenetwork, Telstra may cease to supply retail services over the copper network, which thisspecified retail service provider controls. Moreover, based on the legislative definition of

3ECONOMICS FOR BUSINESSstructural separation, this network has provided a consistent service. Telstra has maintainedcopper lines for many premises under an agreement with the government of Australia.According to this agreement, payphone and standard phone services can operate inaccordance with the universal service obligation. The Coalition party has also supported thisstructural separation of Telstra (Gerrand 2017). However, the party’s technical solution refersto use copper lines of Telstra to the premises and for this; it has proposed to purchase copperlines from this provider. This concept has supported the cost-benefit analysis. In 2013, theCoalition won Government has implemented a policy stating that it would give sufficientspeeds for most of the users with fewer costs and fastest speeds this in turn has helpedcustomers to pay lower prices for internet. Initially, copper lines of Telstra have provided internet access before NBN. Moreover,through providing retail services to compete with other providers, it has earned the incentivesand abilities to favour its own retail arm (Coutts 2015). In this context, structural separationhas considered as the best solution of this NBN policy. Charging identical prices:One of the main bases of this original NBN policy is that nbnTM may charge identicalwholesale prices to retail service providers. This implies that for a service under the sametechnological footprint the wholesale prices can be identical (Morris and Nicholls 2017). Forinstance, within a fixed wireless area, all 25 megabit per second services may have theidentical wholesale price. Moreover, the wholesale price for at least the basic service can beidentical regarding all technology footprints.Based on this policy, the government has identified discrepancies in availability ofbroadband and price between commercially unattractive and unviable remote and regionalareas and commercially attractive metropolitan areas (Ewing, Rennie and Thomas 2015). Asa result, it has implemented the policy of charging identical prices to promote same uniform

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