Impact of National Broadband Network on Financial Sector

Topics: Economics, Costs, Supply and demand Pages: 17 (5452 words) Published: June 30, 2013
* Executive Summary

This report aims to identify and explain the implications and microeconomic impacts of the National Broadband Network (NBN). This report also explains how NBN will help businesses to implement innovative and efficient business processes to increase revenues, competitiveness and productivity that will further drive the economic growth of Australia. The report will briefly compare the impacts of NBN to financial services sector in Australia and how financial services sector can benefit from the implementation of NBN in long run. This report aims to cover the supply side elements of NBN i.e. increased penetration of ICT to meet the demand side elements created by Private and Public sectors, thereby, feeding the benefits of broadband to the economy allowing broadband to unleash its potential as General Purpose Technology (GPT). While the impacts of NBN are in other sectors as well including Education, Healthcare etc. but the scope of this report is limited to financial services and insurance business sector only.

Table of Contents
Executive Summary1
1.Introduction3
NBN and the Australian productivity3
2.Implications of NBN6
2.1Efficiency and productivity6
2.2Increased competition and consumer surplus6
2.3Creation of jobs7
2.3.1NBN construction effects7
2.3.2NBN positive externalities or spillovers8
2.3.3Wages9
2.4Access to Education and Training9
2.5Access to Healthcare services10
2.5.1Increased Efficiency10
2.6Environmental implications10
3.Impacts to future business development in Australia11
3.1Lower costs of production11
3.2Access to ICT and ICT enabled services11
3.3Globalisation of services12
3.3.1Reliability of Infrastructure12
3.4Promote innovation13
3.5Flexible workforce from Telework13
4.Impacts of NBN to Financial services and Insurance sector15
4.1Innovation in Financial services15
4.2Reduced cost16
4.3Efficiency16
4.4Advanced customer insight and analytics17
Conclusion17
5.References18

1. Introduction

In the previous assessment, we looked at how Australia had unprecedented growth in past two decades and continues to do so. It was also noted that productivity growth declined on the back of mining boom in last decade that needs to improve for Australia to be competitive and tap in to the opportunities from rising Asian middle class and withstand challenges like ageing population. According to various Macro and Micro studies undertaken by various government and non-government organisations in past decade, there is a direct correlation between Information & Communication Technology (ICT) and productivity growth in Australia where broadband has provided a major platform supporting endless applications for faster information sharing, trade transactions, new product and process innovations etc. Macro studies have proven the aggregate impact of broadband on economic development based on endogenous technical change model (Barro, 1991) through contribution to GDP growth, employment and productivity whereas micro studies conducted at firm level has proven the contribution of broadband to sales growth, business efficiencies not limited to supply chain and increased revenue. Overall, the growth in Total Factor Productivity (TFP) comes from greater use of ICT rather than development of ICT applications and goods produced by machines. The report aims to cover the following sections:

* Spillover impacts of NBN to overall productivity such as innovation, new business creation etc. * Impacts of NBN contributing to future business development in Australia * Impacts to financial sector compared to other sectors

It has been proven through various studies that ICT has positive impact on the drivers of economic growth including productivity, trade, innovation, employment, wages, foreign investment and, subsequently, competitiveness of a country in...

References: Katz, R L 2010, ‘The Impact of Broadband on the Economy’, in Enabling Tomorrow’s Digital World, Columbia Institute of Tele-information, Senegal, 10 November 2010, viewed 11 April 2013, <http://www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/documents/GSR10-ppt1.pdf>
Katz, R L 2012, ‘The Impact of Broadband on the Economy’, International Telecommunication Union, viewed 7 April 2013, <http://www.itu.int/ITU-D/treg/broadband/ITU-BB-Reports_Impact-of-Broadband-on-the-Economy.pdf>
MYOB 2013, BUSINESS BENEFITS OF TELEWORKING ECHNOLOGIES, image, MYOB, viewed 10 April 2013, <http://myob.com.au/myob/news-1258090872838?articleId=1257830837509>
OECD 2012, OECD Economic Surveys: Australia 2012, OECD, accessed 12 April 2013, <http://www.keepeek.com/Digital-Asset-Management/oecd/economics/oecd-economic-surveys-australia-2012_eco_surveys-aus-2012-en>
PwC 2012, Digital – Lower cost banking channel, image, PwC, viewed 04 April 2013, <http://www.pwc.com.au/industry/banking-capital-markets/assets/Digital-Tipping-Point-Jun12.pdf>
Ruthven, P 2012, ‘A Snapshot of Australia’s Digital Future to 2050’, IBM, viewed 14 April 2013, <http://www-07.ibm.com/au/pdf/1206_AustDigitalFuture_A4_FINALonline.pdf>
The Treasury 2007, Intergenerational Report 2007, The Treasury, Australian Government, accessed 12 April 2013, < http://archive.treasury.gov.au/igr/igr2010/report/pdf/IGR_2010.pdf>
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