The Abbott government's "independent cost-benefit analysis
" of the NBN has clearly failed to settle the debate about Australia's broadband future, with politicians and industry rounding on the report for bias and questioning its conclusions.
One of the report's obvious eyebrow-raisers is its assumption regarding low growth in consumer demand for broadband, as Stilgherrian discussed yesterday
. There's not much wiggle room in the costs of either approach, so in order to get the desired (if not preordained) finding that Labor's fibre plan is too costly, some other assumptions had to be made. They appear to heavily discount the benefits of connectivity for Australia.
The reference case used to compare the two models was an unsubsidised roll-out of faster broadband by industry. This reference case had the best net benefit -- namely zero. This implies that the benefits of the broadband to society are only worth the money spent on them by industry and don’t warrant further government investment. Another way to say this is that the full benefit is gained in the commercial return the investment brings to industry, and the value for money received by consumers. The spillover benefits to society are of limited value.
This means that the Coalition’s own multi-technology mix (MTM) model, involving continued reliance on the bottleneck of the copper network, itself brings a -$6.1 billion net benefit. This is chiefly because the cost of bringing broadband to regional Australia outweighs the benefits -- by a factor of nine to one. That’s $6890 of net loss to society per household outside the cities. What does that say about the assumed value of being connected in the bush? About its power to bring services to the regions and enable people to stay in communities that might otherwise wither?