Feeds

NBN to be built even if cost-benefit analysis shows no ROI

Parliamentary Secretary for Comms Paul Fletcher finds an exemption to the Qantas doctrine

Internet Security Threat Report 2014

In opposition, the current parliamentary secretary for communications Paul Fletcher and his boss, minister for communications Malcolm Turnbull, made much of the fact Australia's national broadband network (NBN) had been commenced without a cost-benefit study that would show whether or not the network will deliver positive return on investment.

Now that they are in government, Fletcher and Turnbull have made much of the fact they are conducting just such a study, so that the government's mixed-media NBN plan will provably be worth the $37bn of public money it will require.

But Fletcher seems today to have suggested the outcome of the study might be irrelevant.

Fletcher spoke yesterday on the Gold Coast at the Tech Leaders conference and spent a lot of time decrying the slow progress made by the NBN. He also criticised the previous government for never having set clear goals for the NBN, adding that the Strategic Review found that no government department understood how they would use a 100Mbps connection or the changes to services it would enable.

“A cost-benefit study would have forced clarity of benefits,” he said.

The Reg then asked Fletcher how the government justifies investment in the NBN. The context for our question was recent government decisions not to continue industry assistance funding to car-makers in part because to do so would distort that market, but to find a to-be-determined method of supporting the airline Qantas because it is constrained by legislation that does distort its market.

No Australian telco possesses the financial muscle or ability to build a fibre-to-the-premises (FTTP) NBN, we argued, making government intervention understandable. Fiscal and regulatory conditions do not, however, preclude a telco investing in the upgrades to hybrid fibre coax cable and the copper local loop (although incentives to do so are not massive). Those upgrades will, under the government's plan, be paid for by NBN Co with public funds. Might than not be an odd decision given other recent decisions on how to best use government funds?

Fletcher's response started with a rejection that only FTTP justified government investment. “The question in policy terms is do you believe there are network effects and other benefits from a one-time broadband upgrade that you believe will not happen without government intervention,” he asked, going on to say that “the standard public policy prescription is you go ahead if there is a positive benefit to cost ratio.”

The government's cost-benefit study is not complete so your correspondent asked what would happen if it shows investment in the NBN won't produce a positive outcome.

“We have made it clear we will complete the NBN.”

Conventional wisdom suggests governments ought not to conduct inquiries if they do not know the findings they will produce. Even before one considers the many studies suggesting universal broadband produces economic benefits it therefore seems safe to assume the cost-benefit study will therefore justify the government's NBN investment. But the admission the network will be built come what may is nonetheless interesting, if only because of the long insistence a cost-benefit study should have been a prerequisite to its construction. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Same old iPad? NO. The new 'soft SIMs' are BIG NEWS
AppleSIM 'ware to allow quick switch of carriers
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Brits: Google, can you scrape 60k pages from web, pleeease
Hey, c'mon Choc Factory, it's our 'right to be forgotten'
Of COURSE Stephen Elop's to blame for Nokia woes, says author
'Google did have some unique propositions for Nokia'
It's even GRIMMER up North after MEGA SKY BROADBAND OUTAGE
By 'eck! Eccles cake production thrown into jeopardy
Mobile coverage on trains really is pants
You thought it was just *insert your provider here*, but now we have numbers
Don't mess with Texas ('cos it's getting Google Fiber and you're not)
A bit late, but company says 1Gbps Austin network almost ready to compete with AT&T
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.