The promised land: costs and benefits of the NBN vision

2017-05-01T03:58:47Z (GMT) by Martin, Ian
The substance of the Governments NBN vision has settled on its importance as a productivity driver. Top-down productivity analysis of the NBN appear to be quite strongly positive while bottom-up cost benefit analyses (CBA) seem to be invariably negative. Proposals to build the FTTN version of the NBN were subject to evaluation, which found that none offered value for money. The second iteration of NBN, the FTTP version, was not subject to such an evaluation. Instead an independent CBA by Henry Ergas and Alex Robson in August 2009 suggests that the incremental benefits of the FTTP NBN do not justify the incremental costs. Productivity gains from high speed broadband may have declining marginal benefit and possible gains from the next set of industry developments may be quite different and harder to achieve compared with those achieved on fixed networks over the past 20 years. The lack of CBA on the NBN means that there is an unquantified risk. We consider the Governments inherent desire to off-lay this risk from the federal budget undermines telecommunications policy development, legislation and regulation. We argue such a distortion has the potential to undermine industry development for more than a decade as Government tries to protect a poorly evaluated investment decision, a pattern that has long undermined industry development in Australia. Copyright 2010 Ian Martin. No part of this article may be reproduced by any means without the written consent of the publisher.