National Broadband Network (NBN) cost-benefit analysis released

Updated

A cost-benefit analysis of the National Broadband Network (NBN) shows the Federal Government's plan would provide an $18 billion boost to the economy.

An independent panel commissioned by the Government found the Coalition's multi-technology plan to roll out high-speed internet had greater net benefits than Labor's model of fibre to the premises.

The review modelled four scenarios and found the Government's model would deliver about $18 billion in net benefits compared to almost $2 billion under Labor.

Communications Minister Malcolm Turnbull said the analysis, headed by leading economics adviser Michael Vertigan, should have been done earlier.

"Now the tragedy of course is that this work was not done before Labor embarked on the NBN project back in 2009," he said.

"I mean this is a great piece of work, but it would have saved tens of billions if it had been done four or five years ago."

Mr Turnbull said the report confirmed the Government's multi-technology approach and its decision to not persevere with Labor's plan to take fibre into 93 per cent of premises.

"On a financial basis, a purely financial basis, that saves over $30 billion," he said.

"And when you do the cost-benefit analysis, which takes into account all of the social benefits to the whole society — e-health, education — even on that basis, the approach we're taking is $16 billion better.

"You don't need one gigabit per second to video conference with your lecturer or to have a video conference with a health professional."

Labor says analysis 'not worth paper it's written on'

But Opposition communications spokesman Jason Clare said the report was not the independent analysis that was promised.

"Malcolm Turnbull's got some of his former staff and his former advisers to write a report about the NBN, and believe it or not, it says Malcolm Turnbull's right. I'm not surprised," Mr Clare said.

"What we've got instead is the report that's been written by people who used to work for Malcolm Turnbull and some of the most vociferous critics of the NBN. That's why Malcolm Turnbull picked them."

Sorry, this video has expired Video: Jason Clare speaks with ABC News Breakfast (ABC News)

Mr Clare said the analysis should have been done by Infrastructure Australia and was not worth the paper it was written on.

"Now this report says that they expect in a decade that only 5 per cent of Australia will want 45 megabits or more, and now already we have got more than 28 per cent of Australians ordering more than 50 megabits per second or more. So the report is already out of date on that front," he said.

"Another problem with the report is it says the cost of building fibre to the home is going up, when yesterday Malcolm Turnbull said the cost of building fibre to the home is going down.

"When you build a network like this, you need to make sure you build for today and tomorrow, and we are getting a second-rate network based on the old copper network."



High cost of providing NBN to the bush

The review did highlight the high cost of providing the NBN to rural and regional areas.

It said the plan to provide wireless services to the bush exceeded the benefits by almost $7,000 a household.

Mr Turnbull said it was a cost the Government was prepared to wear.

"The cost of providing telecommunications to regional and rural areas is dramatically higher than people's capacity or willingness to pay, hence there's a big subsidy," Mr Turnbull said.

"When you're making a big subsidy to anybody or any area it's important to be clear-eyed and open about what you're doing, and this is a very significant subsidy in the order of $5 billion."

Mr Clare said the report should strike fear into the heart of all National Party members across the country.

"This report effectively says don't roll out the NBN to the bush. If you are to go down that path, there will be civil war inside the Coalition," Mr Clare said.

He also said the Government needed to speed up the rollout of the NBN.

"The NBN is rolling out slower today than it was last year or before the last election," Mr Clare said.

Government has taken 'conservative approach'

Josh Taylor from website ZD Net said it was not surprising the report favoured the Government's model, however the findings were still worth considering.

"It does actually point out a lot of the benefits and the productivity benefits that come with very fast broadband are much better," he said.

"Their argument is based on the timelines that were put as part of the NBN strategic review last year.

"People will get onto fibre to the node much quicker than they will get on fibre to the premises and therefore start using it a lot more and therefore it is a lot more cost-effective. I guess that's the basic premise of what they were trying to get at with the report."

But Mr Taylor said the Government had taken a conservative view of the NBN rollout.

"The way that they've argued the benefit side of things is that the benefits of fibre to the premises aren't fully realised yet. We don't know what applications are going to be able to use them, whether they're going to need all those higher, higher speeds," he said.

"I think that they're sort of taking a very conservative view of whether it's worthwhile to invest all that cost in rolling out fibre to the premises now, rather than just waiting and seeing if the applications are there in the future."

Associate Professor Kai Riemer from the University of Sydney's Business School said the inherent benefits of these technologies are impossible to know.

"My point is that we cannot fundamentally do a cost benefit analysis for a technology, the benefits of which are fundamentally unknowable," he told The World Today.

"If you go back 25 years, which is roughly the timeframe of the report, and you try to imagine what the internet could possibly do for us in the future, there's no way we could ever imagine.

"If we can't know the benefits and we extrapolate what we know today, then the conservative solution, the multi-technology mix, will always look better because it has lower costs."

Topics: internet-technology, federal-government, information-and-communication, government-and-politics, turnbull-malcolm, wireless-communication, internet-culture, australia

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