on 27-08-2014 09:34 AM
The Abbott government's pared-back broadband plan is three times more cost effective than Labor's ambitious scheme and would leave Australians $16 billion better off, according to the first independent cost-benefit analysis of the national broadband network.
In a scathing verdict on the Rudd and Gillard governments' plan to introduce fibre directly to 93 per cent of premises, the cost benefit analysis finds the policy is so expensive it would barely leave the community any better off in net terms than if broadband investment remained frozen at present levels.
The much-anticipated report finds households and businesses will benefit from quicker downloads but the much-vaunted societal benefits of fast broadband – such as improvements to health and education services – will probably be extremely limited.
The cost benefit analysis panel, led by former Victorian Treasury head Michael Vertigan, modelled the estimated costs and benefits of expanded broadband access from 2015 to 2040.
Communications Minister Malcolm Turnbull, who commissioned the analysis, will use the findings to justify his decision to pursue a "multi-technology mix" broadband network using a combination of fibre to the premises, fibre to the node, hybrid-fibre coaxial, satellite and wireless services.
Mr Turnbull regularly attacked Labor for failing to commission a cost-benefit analysis before launching the national broadband network, the biggest infrastructure project in Australia's history.
The report finds the multi-technology mix model outperforms a fibre to the premises plan in net economic benefits in 98 per cent of scenarios.
A multi-technology mix NBN would cost $24.9 billion to launch from 2015 compared with $35.3 billion for fibre to the premises (FTTP), the report finds.
A multi-technology mix would deliver download and upload speeds of 20-100 megabits a second, while FTTP would deliver speeds above 100Mbps.
The report finds the most cost-effective option would be an unsubsidised launch in which the free market delivers high-speed broadband to 93 per cent of homes. This would have a net economic benefit of $24 billion, but would leave 7 per cent of premises in regional and rural areas without fast broadband.
Providing fast broadband to the bush through wireless and satellite services – as envisaged under both Labor and the Coalition's plans – will cost nearly $5 billion but produce only $600 million in economic benefits.
This suggests an alternative model for a government committed to fast broadband for all Australians at a low cost: subsidising the introduction to the bush while leaving private providers to serve metropolitan areas.
Compared with the unsubsidised launch scenario, the multi-technology mix model has a net cost of $6 billion ($620 a household) and fibre to the premises has a net cost of $22 billion ($2220 a household).
Australians would be only $2 billion better off, in net terms, than if there was no further launch of broadband under a fibre to the premises model. They would be $18 billion better off under a multi-technology mix.
The report finds a multi-technology mix is more "future proof" because it can be upgraded to fibre to the premises later if demand for fast broadband booms.
"The [multi-technology mix] scenario leaves open more options for the future because it avoids high up-front costs while still allowing the capture of benefits if, and when, they emerge," the report finds.
The cost benefit analysis finds most of the benefits of fast broadband – most notably video downloads – will accrue to private users within households and businesses. By contrast, hospitals and schools require relatively low bandwidth to deliver services.
As well as Mr Vertigan, the expert panel members were economist Henry Ergas, former Australian Communications Authority chairman Tony Shaw and former eBay Australia managing director Alison Deans.
Mr Vertigan said the findings of his report show that cost benefit analyses should be mandatory before construction begins on major public infrastructure projects.
Labor communications spokesman Jason Clare said the cost-benefit analysis was "tainted" by the involvement of figures such as longstanding NBN critic Henry Ergas.
"It's hard to take the report seriously when three weeks before the last election Malcolm Turnbull said he would get this report done by the government body Infrastructure Australia and instead what he has done is got some of the most vociferous critics of the NBN, as well as former staff, to write this report," he said.
Mr Clare said the government had a "myopic" view that fast broadband was just about video games.
This is about setting us and Australia up for the future. That is why Japan, South Korea and China and New Zealand are doing it and even in Indonesia."
27-08-2014 10:04 AM - edited 27-08-2014 10:05 AM
on 27-08-2014 10:19 AM
on 27-08-2014 10:25 AM
Correct am3 ref:
......NBN Co has not released a single document explaining how capacity and congestion will be dealt with...........
on 27-08-2014 10:31 AM
on 27-08-2014 10:36 AM
on 27-08-2014 10:39 AM
TASMANIAN retiree John Lovelock and NSW businessman Richard Drozdowski are the two sides of the same NBN coin.
Both were among the first in Australia to be hooked up to faster broadband speeds and downloads — courtesy of the initial NBN rollout being centred in the rural electorates of key independent MPs — but their subsequent experiences with the technology could not be more different.
For Mr Drozdowski, a small business owner in the northern NSW town of Armidale, the shift from a copper to a fibre network has made his life vastly more difficult than before.
“It’s a mess,” says Mr Drozdowski of the New England city’s connection to the NBN. “It’s a pure mess.”
Across Bass Strait, there are no such complaints from Mr Lovelock.
While he freely admits that faster broadband speeds have not been “a life-changing experience”, the retiree says the rollout in his hometown of Kingston, southwest of Hobart, has been trouble-free.
The former Holden business manager decided to pay the extra $30 a month for an $80 Telstra plan, despite only using the connection for browsing the internet and online shopping.
It’s the same story with his neighbours, and their neighbours.
“It was the most seamless process, even from the day they were installing the fibre,” Mr Lovelock said.
“I’m very happy with it but I must confess it hasn’t been a life-changing experience.
“It has just allowed me to do the things I do a bit faster.”
The second-generation owner of a business that sells ceramic wall and floor tiles, Mr Drozdowski was never going to benefit greatly from faster broadband speeds and downloads.
He uses the internet mostly for orders and invoices. But when Mr Drozdowski made the move to connect to the NBN, he began to experience major difficulties with other business systems including his telephone line, credit card machine, fax machine and alarm system.
“The perception was once you changed from copper to fibre it would be just a simple swap over. That didn’t occur,” he said yesterday.
“Firstly we lost our business telephone. For eight working days we just didn’t have a phone.
“And then the phone number that we had for 50 years that’s splattered all over our letterhead and advertising, we couldn’t get back.
“For our business, that phone number is everything. People thought we had gone out of business.
“And now the fax machine and the credit card machine don’t work with the new system, and the alarm system only partially works. It no longer has a back-to-base facility.
“We were happy with what we had. But we had to go to NBN, we had no choice.”
Mr Lovelock said it was likely, had the project been market-driven from the beginning, that Tasmania and other regional areas would have been the last to gain access.
“It’s purely a population and demographic thing,” he said.
“There are more people aged over 65 here than even in South Australia. I’m not downloading two-hour movies or anything like that.”
Mr Lovelock’s plan allows a maximum download speed of 12Mbps and upload speeds of 1Mbps. If he wanted the full 100Mbps offered by the NBN technology, he would need to pay another $20 per month.
Mr Lovelock’s plan allows him about 5GB of downloads every month and he estimates he uses about 80 per cent of it. Was the investment worth it?
“I suspect I would have done similarly well under Turnbull’s plan,” he said.
“In terms of the taxpayer investment, the thing that always concerned me from the beginning was the fact it seemed to have been worked out on the back of a coaster on a VIP flight with Kevin 747.”
Back in Armidale, Mr Drozdowski says the vast costs involved in subsidising the rollout of the NBN in bush areas have delivered limited pay-offs.
“If they’re talking about a faster internet, that’s fine, and if that’s all you’re after it’s terrific,” he said. “But it’s all been a headache for us.
“I would say probably 70 per cent of businesses that I’ve talked to in this town are in a similar situation. There’s nothing but complaints about the NBN. You can get your internet, you can get a telephone line (but) you can’t get anything else.”
on 27-08-2014 10:52 AM
All talk for ....how many months now since LNP have been at the helm???....
Give me a break!
on 27-08-2014 10:53 AM
27-08-2014 10:57 AM - edited 27-08-2014 11:00 AM