The Government’s own cost benefit analysis on its plan for the NBN has revealed businesses have much less to gain, compared to households, from the implementation of a nationwide high-speed network.
The Government’s NBN plan will be of little value to business, with the study reporting businesses are only willing to pay 50 per cent more than households to upgrade their current internet service.
The Australian reports households downloading TV shows will be the big winners, worth about $34 billion over the next decade, compared with a $6.2bn gain to business.
The majority of commercial companies, located in central business districts, already enjoy super fast fibre-optic connections.
However, the analysis concludes Malcolm Turnbull’s plan will leave Australia $16 billion better off than the previous Labor government’s plan to send fibre to 93% of Australian premises.
The reporting panel, led by former Victorian Treasury head Michael Vertigan, modeled the costs and benefits of the two plans between 2015 and 2040. It found that Turnbull’s “multi-technology mix” NBN would cost $24.9 billion to launch next year rather than the $35.3 billion the fibre-to-the premises plan would have cost.
The report also finds that in 98% of scenarios, the Turnbull plan outperforms fibre-to-the-premises.
But the panel also recommends an unsubsidised launch which would rely on the free market to deliver broadband to 93% of premises but this naturally means that 7% of premises – those in the bush, regional and rural areas – would be without fast broadband.
Government investment in infrastructure should not be simply made on pure accounting terms and the plan looks flawed insofar as leaving the provision of services to the bush up to market forces.
The panel says that providing services to this 7% would cost $5 billion but only lead to $600 million in economic benefits. This implies the bush should be left to its own devices – something the Nationals are likely to take issue with.
One of the key questions for the nation and Government spending billions on the NBN under either plan is the question of future-proofing. The report finds that the plan is future-proof because:
“The [multi-technology mix] scenario leaves open more options for the future because it avoids high up-front costs while still allowing the capture of benefits if, and when, they emerge.”
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