In the four years that I have been researching and debating broadband policy there is one thing I have learned, it is hard to take a position other than a straight “yes” or “no.” The Government and Opposition know this and have taken sides. Neither are entirely right or entirely wrong. Neither are really serious about gathering proper evidence. Anyhow, let me summarise what we know about the value of the NBN and what we still need to find out.
- The NBN will be unlikely to earn a commercial return. The Cost-Benefit Analysis on this has been done but not by the Government but by Telstra and many other telecommunications companies. Telstra told us for years it was not viable. I’d be willing to bet they are right about that but they are silent now because they want it to go ahead. Given that, the Opposition’s call for a Cost-Benefit Analysis to be produced again is surely political grandstanding and a waste of time. But the Government’s continual claims without evidence that it will be commercially viable is a worse affront.
- The NBN may earn a social return. This is a Cost-Benefit Analysis that might be done but the problem is that a social return depends on Government policies yet to be enacted or thought about. While the debate is off on the commercial side, the social side has been left for dead. As Peter Martin has reminded us, there is precious little evidence that there is a social return on things like eEducation, eHealth or what have you. But that does not mean the evidence can’t be gathered. The problem is there is no pressure to do so.
- The largest immediate social benefit from the NBN is competition in telecommunications. As I wrote way back in 2008 when I first proposed all this, we have failed in telecommunications competition in this country. We have a monopolist and no real way of regulating it. The NBN is a way of doing so; the first real option proposed. It is expensive, to be sure, but it will do the job unless …
- The biggest risk to the NBN is a bad deal with Telstra. The NBN will achieve competition by duplicating telecommunications infrastructure. Stop duplicating to save some money and you may kill the benefits from competition. That seems to be what the Government wants to do. Here is Minister Conroy from today: “And the deal we have with Telstra and the McKinsey report was based on no deal with Telstra. The debate about take-up has become completely irrelevant; the deal that we have with Telstra is that they are decommissioning, closing down the copper network. To have a fixed line in what we call the 93 per cent footprint, the only way at the end of this process you’ll have a fixed line is on the NBN’s fibre network.” This is outrageous and I hope the ACCC applies s45 properly and stops it. But the Opposition should get its act together and hold the Government to account here.
- The NBN is superior to other alternatives like FTTN or some regional option but is currently being implemented in a manner that is way too costly to the taxpayer. There is no buts about it. As it stands the NBN is a massive subsidy to the rich and will likely cost the poorer half of Australia more than they get in benefits. This very fact should be an affront to any true believing Labor follower. It is to me. We can implement the NBN more cheaply if we put in a solution whereby in areas where it is commercially viable, it receives no subsidy. That is, we need an Austan Goolsbee like scheme here.
We should recognise that at the moment the Government and Opposition are just scoring political points and not really getting to the heart of the issue.