Friday, September 17, 2010

There Seems to Be A Consensus That A Cost - Benefit Study on the NBN is Needed.

It seems to me that now we have a new Government it really is time to address just what the full build of the National Broadband Network will cost, what it will actually deliver and to get some assurances that this is really the optimal way to be doing this.

To restate my basic position on all this, it is that I think fast broadband is a really ‘good thing’ and I happily pay for a pretty fast link from Optus Cable. (see bottom of blog to see how fast that is!). I also think that for all fixed high volume use it is clear ‘fibre’ is future proof and sensible way to go.

My questions mostly sit in the area of what is actually needed today, what might make sense in the life of this project (say the next decade) and how much should we sensibly pay to get the most out of the Internet while not overdoing it, or indeed underdoing it - recognising some of the investment will be very long lived (the fibre etc.) while other parts will be progressively evolved to gigabit or even faster speeds.

My other question is just what the right mix of fibre, satellite, wireless and whatever gets invented next should be.

When someone like Paul Budde says we need a study I tend to take notice.

See here:

What's the NBN really worth?

Paul Budde, Election 2010

Published 6:44 AM, 30 Aug 2010 Last update 10:01 AM, 30 Aug 2010

When the NBN announcement was first made and the issue of the cost-benefit analysis came up, BuddeComm’s comment was that it would be necessary to be aware of all the ingredients of such a plan before one could carry out such an analysis.

This is not just an issue for Australia. Other governments are also grappling with it. If the analysis were to be based simply on the use of traditional telecommunications services, it wouldn’t even be worthwhile starting on it, as it would not hold together.

One could argue that this is national infrastructure – as distinct from simply telecommunications infrastructure – and that no national cost-benefit analyses were provided for previous large-scale infrastructure projects.

But the reality is that we live in different times.

Nevertheless, governments still have the option of launching such a project, but perhaps they should not link it to a commercial return – as soon as that link is forged the market can, quite rightly, request a proper cost benefits analysis.

Full commentary here:

We also had this a few days ago.

Broadband plan is smoke and mirrors

THE objective to build a high-speed National Broadband Network is visionary but the strategy for the NBN - building fibre direct to 93 per cent of Australian homes to deliver up to 100 megabits per second, let alone the suggested gigabit - is based on some false assumptions.

The case to spend $43 billion has been pursued largely by the beneficiaries; the consultants, technologists and Telstra competitors selling a series of myths to influence politicians, the media and the public.

No other country is remotely proposing such expensive government expenditure.

Nevertheless, these myths have grown up around the government's NBN venture.

1. It's an enabling technology: Broadband internet has been compared with the great enabling technologies of history such as the wheel, the steam engine, the printing press, electricity, the telephone, computers and the internet. But broadband is not a new invention, it is only a means of delivering existing and well proven technologies in a faster way.

2. We need speed: In the US the Federal Communications Commission national broadband plan is for download speeds of at least 4Mbps and upload speeds of at least 1Mbps to deliver "universal access". Though some countries offer far higher speeds, the US maintains this plan offers one of the highest universalisation goals in the world.

In Britain, the Digital Economy Act, known as Digital Britain, allows for 90 per cent coverage in Britain by 2012 with a minimum speed of 2Mbps.

The ability to provide at least 12Mbps nationally through wireless and satellite will enable all people, including those living in outer metropolitan, country and remote areas, to be able to receive the same email, social networking, internet, music, movies, videos, health, education, teleconferencing and public services as those with fibre in the cities.

3. Speed is expensive: The US congress and Barack Obama, under the Recovery Act, committed the US to spending $US7.2bn ($7.8bn) to improve the country's broadband infrastructure. More than $US2.5bn of this is exclusively for infrastructure projects to take broadband to rural and remote communities.

Of the remainder, $US4.4bn goes to support anchor institutions such as hospitals, schools, public safety broadband networks and public computing centres, and to teach Americans the skills and to provide centres for easier access to high-speed internet.

The US also intends to move $US15.5bn during the next decade from the existing Universal Service Fund, which would have been spent on telephone services, to support broadband in unserviced areas.

The proposed expenditure in Britain is even more meagre, with the government's pound stg. 300 million ($501m) home access scheme for low-income families. It further plans to provide pound stg. 200m for the delivery of its universal service commitment on a mix of technologies.

The US and Britain believe in the need for universal broadband but intend to spend only a fraction of the $43bn Australia is spending on the NBN alone, which does not even include the costs of educating and training the public in its use or the provision of services.


This is an edited extract from a full version on

Peter J. Cox is a media economist and analyst with Cox Media.

The link is here (with a great Bill Leak Cartoon!):

And then we have material like this.

US regulator set to back ‘WiFi on steroids’

By Joseph Menn in San Francisco

Published: September 12 2010 22:30 | Last updated: September 12 2010 22:30

The prospect of new wireless devices resembling “WiFi on steroids” will open up next week when US regulators will vote to liberalise an important part of the airwaves.

The new spectrum is set to end the frustration of users who lose connectivity when they move rooms. It will also bring affordable broadband access to tens of millions of rural users.

Full article here:

The bottom line to me is that some form of well-considered NBN is vital for effective use of e-Health. The question is just how well considered the present proposal is - McKinsey Study or no. Before this all happens I would really like to see a proper debate, while being aware that there seems to be almost religious conviction that this is a ‘good thing’ at any cost vs. those who reckon we can have what we need for 20% of the cost. I would just like to have a few more facts and plans to consider. I note today The Age is reporting that the business case is to be released in a few weeks - see here:

That would be a really good first step!


1 comment:

Anonymous said...

This is all classic stupidity and is symptomatic of the ills that beset infrastructure development in Australia. In many ways it is the same illness that besets the realisation of eHealth in Australia - any person, lay or so called economist who believes that in a developed world we can leave our streets, our businesses and our homes served copper wire is playing some sort of games aimed at advancing their own personal or political agenda.

Should Australia actually run into a true and serious economic problem with the roll out of course, undesirable as it may be, it could still be slowed but for anyone to think that it does not have to be done is just plain wrong - to me it is just like doing the economics of the internet before the web became a reality - you could do it but it will be wrong - to go through yet another economic study is simply to enable the nay sayers to further inhibit the development of e-everything (including e-health) in Australia.