Misguided on broadband

Why is it when anti-government types lay into a policy they insist on targeting the hype rather than evaluating the policy and the market failures themselves? I refer to today’s SMH rant by Chris Berg. He complains about the broadband hype of increased productivity, lagging behind on take-up and e-everything and dismisses them and in the process argues that $43b isn’t good government policy. The problem is that these arguments are ‘straw men.’ They are the things governments say about every policy but surely they aren’t the ones serious commentators should focus on.

In the case of broadband, the serious issue is competition in telecommunications. We have face both high costs and a regulatory morass that is killing investment where there isn’t real competition. For years, Telstra seemed unchallenged by competition. Then, in April, the government finally wakes up to this and notices that they can provide that competition. Since then everything has changed. What is more, to ignore that is to fail to evaluate the policy for what it is.

Instead, on the costs you have to consider the fact that once Telstra faced serious competition, asset split offs are likely to build the NBN and so the $43b cost is a hollowman’s projection. It will be much cheaper. Second, on the benefits you shouldn’t just look at what people might pay for broadband but what they will pay for cheaper telecommunications. As I have argued, those sums do seem to add up. The point is by focusing on the hype rather than the real issues you can’t provide proper policy analysis.

And there are concerns here as Stephen King articulated. We have to hold the government’s foot to the fire on ensuring long-term competition and an evolving and functional regulatory structure. If we don’t get those things, the broadband policy will not be a successful one and the case will quickly fall away.

4 thoughts on “Misguided on broadband”

  1. Why is it when pro-government types support a policy they insist on believing the hype rather than evaluating the policy and the possible government failures arising from it?


  2. I don’t think you can say these issues are “straw men”. Hype or no, they are the matters stated by the government as the reasons why the NBN is a good investment. Your argument seems to me that “The reasons are hype, but it’s a good idea anyway”. Fine, but I think you are the one changing the subject.
    And it’s very difficult to accept an argument based on the belief that a project will cost much less than the governments says it will.


  3. Well, if the reasons are so good why doesn’t the govt release a cost-benefit analysis. Never has so much been spent with such little thought.


  4. To me the ‘elephant in the room’ is that the Government pretends that this is going to be a commercial project, but it could not possibly believe that rolling out to any more than the highest density areas is likely to be commercial. The whole exercise would be much easier to analyse if the Government declared what amount of its investment is designated as a subsidy to the network builder (to capture the social benefits) – although I guess to calculate what that subsidy would be, one would also need a social cost-benefit analysis!


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