Australia’s telecom expansion still paying for NBN policy mistakes

Despite rising data usage and network growth, structural flaws in the NBN continue to shape affordability, competition and Australia’s long-term digital resilience, writes Paul Budde.

AUSTRALIA’S TELECOMMUNICATIONS sector is often presented as a success story: near-universal internet access, increasing data usage, expansion of mobile networks and steadily increasing broadband speeds.

Australian Communications and Media Authority (OPENING)’s Trends and developments in telecommunications 2024–25 The report broadly supports this narrative.

However, the same report also reveals a more painful truth. While technology and consumer behavior continue to advance, Australia remains constrained by structural decisions made more than a decade ago; these decisions still shape affordability, performance, durability and national interest outcomes.

A data-driven economy on a precarious foundation

Australians now consume extraordinary amounts of data. Around 13.6 million terabytes have been downloaded over broadband and mobile networks in just three months to June 2025, with the NBN carrying around 85 per cent of this traffic. This matters because it confirms something policymakers still often underestimate: Fixed broadband is essential economic infrastructure, not a legacy service.

Despite continued growth in demand, the most common NBN speed tier remains 50 megabits per second. Higher-speed plans are becoming increasingly available, but mass uptake remains limited. This isn’t due to a lack of digital ambition. It reflects wholesale pricing signals, retail complexity, and long-term constraints created by a mix of multiple technologies.

This outcome was predictable. From the moment the original all-fiber NBN vision was diluted into a patchwork built around copper and hybrid fibre-coax, Australia planned to pay twice: once to build a compromised network and once to fix it. The ongoing transition from fiber to node to fiber to the facility confirms this fact.

Fiber is only now becoming the dominant fixed-line technology, with a delay of more than a decade.

Wireless growth is not replacing fiber

The report highlights strong growth in 5G, fixed wireless and satellite services. These technologies are particularly important for regional and remote Australia. But they are often framed as a substitute for solid fixed infrastructure. They are not.

The rollout of 5G continues to be concentrated in major cities. Fixed wireless is valuable but limited by spectrum, contention and geography. Satellite services – whether starlink, Kuiper Project or direct-to-mobile offerings can significantly increase coverage but are not designed to carry the essential burden of a busy, data-intensive economy.

A key point is often overlooked: Wireless depends on fiber much more than fiber depends on wireless. The more “wireless” Australia becomes, the more confident it is in its fiber backhaul, interconnect capacity and network engineering discipline. Treating these technologies as if they were interchangeable continues to produce faulty policy assumptions.

Competition is shaped by structure, not choice

The report also reveals where competition actually occurs. Small providers dominate the highest-speed NBN tiers, while big players retain control of the main services. Competition exists but is directed towards narrow areas defined by wholesale pricing and infrastructure design.

Income trends reinforce the familiar pattern. Telstra, optus And KPI remains structurally dominant in mobile infrastructure, and competitors’ market shares are growing extremely slowly, targeting enterprise and high-speed niches.

This raises a question that Australia has avoided for too long: What is the telecommunications market for? Is it designed primarily to maximize shareholder returns, or is it designed to maximize national productivity, resilience, and long-term economic capacity?

I have long argued that the NBN should never be framed as a commercial profit centre. The real returns are economy-wide: productivity gains, social inclusion, digital service delivery and competitiveness in a software-driven world. The report indirectly supports this. Data volumes continue to increase, but growth rates are slowing; This is not because the connection is less important, but because its value has shifted from consumption to addiction.

Artificial intelligence, energy and the next blind spot

The report also points to the next strategic challenge: artificial intelligence. Telcos are increasingly incorporating AI into networks, operations and customer service through partnerships with global hyperscalers.

This raises two risks that have not been adequately examined. First, AI-powered networks are increasing energy demand at a time when Australia’s electricity system is already under pressure. Second, greater reliance on offshore cloud and AI platforms is eroding digital sovereignty, as data security and geopolitical volatility become defining constraints.

The outcome that decision-makers continue to postpone

The report portrays a sector that is technologically advanced, heavily used and commercially active. But it also confirms that Australia is still paying the price for past concessions.

We are upgrading a network that should never have needed this level of improvement, celebrating wireless growth while underestimating the centrality of fiber, and embracing AI without an integrated strategy that connects telecommunications, energy, and national interests.

Australia does not need another round of phased corrections. It needs a renewed telecommunications vision; a vision that treats digital infrastructure as fundamental nation-building, not just a market to be tweaked at the edges.

The evidence is clear. The question that remains is whether policymakers are ready to act on this issue.

Paul Budde IA is a columnist and managing director of independent telecommunications research and consultancy. Paul Budde Consulting. You can follow Paul on Twitter @PaulBudde.

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