The cost-benefit analysis favouring the Federal Government NBN model is flawed, according to an expert in digital disruption.
Kai Riemer, an Associate Professor at the University of Sydney, says conservative management tools such as business plans and cost-benefit analyses fail when applied to potentially game-changing, infrastructure technology such as the National Broadband Network.
“It is inherently impossible to undertake a cost-benefit analysis in any credible way that will do justice to such technologies,” he says.
He says there was nothing wrong with the way the analysis was conducted but it shouldn’t have been done in the first place.
“The problem is that, while we are well able to extrapolate the cost of building the NBN, the benefits it will unlock are fundamentally unknowable and unpredictable,” Dr Riemer says.
The analysis concludes that Malcolm Turnbull’s NBN plan, which plans cable to local nodes rather than all the way to user premises, will leave Australia $16 billion better off than the previous Labor government’s plan to send fibre to 93% of Australian premises.
Riemer says the analysis looks at 25 years into the future, a distance in time too far to make any accurate predictions.
“Any extrapolation of the benefits will always be on what we know of broadband today,” he says.
“We have no way of knowing what the business community will do with the technology such as fibre to the premises.
“It sounds counter intuitive because it sounds like common sense to do a cost-benefit analysis but I believe it is the wrong tool for the job.”
Just go eight years back and try to forecast how the iPhone will change the world.
“It is the platform which has unlocked the current wave of technological innovation,” he says.
“There is no way to predict what fibre to the premises will do for us.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.