NBN Survey: Seven top ICT analysts think the NBN will be worth the money spent
- 27 August, 2009 12:17
- Comments (13)
Seven of Australia’s top ICT analysts agree the social and economic benefits of the Federal Government’s planned National Broadband Network (NBN) will outweigh the forecast $43 billion cost.
The unanimous view came in response to an ARN survey covering five areas: The economic and social benefits against cost; alternatives to a fibre-to-the-premises (FttP) network; status of existing networks; the NBNco arrangements; and the public discourse on the NBN.
[The analysts’ responses will be detailed in a series of articles over the next few days.]
Notably, analysts from IDC, Gartner and Market Clarity said the cost of the NBN could be lower than the Federal Government’s forecast $43 billion.
Gartner enterprise communications applications research vice-president, Geoff Johnson, said the analyst firm estimates the NBN will cost around $20 billion for the access network and $7 billion for the core. In his response he described the $43 billion figure as a “stimulus announcement”.
Improvements in eHealth, education, and smart grids were highlighted by several as key indirect benefits. Buddecomm analyst, Paul Budde, said eHealth could deliver a $30 billion saving over 10 years as old age people monitoring can reduce their hospitalisation by 40 per cent while smart grids can save energy by up to 30 per cent.
“All of these applications alone could be enough to make this long term infrastructure investment,” he said. “I am only highlighting obvious savings/applications so it is not too difficult to see these will only be the top of the iceberg.”
Several of the analysts pointed out the public should view the NBN as a long-term infrastructure project – much in the same way the national roads network has evolved – and that some benefits will not be realised until well into the future.
“In another ten years it is likely that traditional telco services like broadband access will only account for a small proportion of the total revenue generated via the NBN,” Frost & Sullivan ICT practice senior research manager, Phil Harpur, said in his response. “The full benefits of the NBN will actually continue to flow for decades beyond the completion of the project.”
Layer 10 founder and telco analyst, Paul Brooks, also noted the NBN timeframe for investment returns is uncertain and much of the benefit will be indirect and achieved in the long term across the whole nation.
“This is a vast infrastructure program, and needs to be analysed over typical infrastructure lifetimes – 50 to 100 year timescales, like dams and the national highway system – not the much shorter single-digit years in typical commercial business cases,” he said. “I doubt very much that paving the national highways could have a positive business case within 10 years. However, nobody will argue that having paved roads across the country hasn't had very significant benefits for the nation in the long term compared to the alternative!”
Meanwhile, Ovum principal consultant, Leith Campbell said the planned expenditure is not much different from the Federal road funding and IDC telecommunications program manager, David Cannon, said “the NBN has the potential to deliver society wide benefits well in excess of the cost”.
Market Clarity CEO, Shara Evans, however, was more cautious in her response noting it is “impossible to predict” the benefits in pure economic terms.
“There is very little empirical data available to directly predict the GDP impacts of broadband; moreover, the price tag of $43 billion is also contentious. The network may cost more, or it may cost less,” she said. “However, I believe that equitable access to high speed, symmetrical broadband services is linked to Australia's future economic prosperity and to social good, and such it outweighs a purely economic justification.”
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Comments
Frank
Not so pie in the sky
Shara Evans ought to be congratulated for your comments. You are pretty much spot on with your comment "was more cautious in her response noting it is “impossible to predict” the benefits in pure economic terms.
Comments and predictions by others are wishful thinking, just like the $43 billion price tag. No actual evidence, no real costings, just pluck a figure out of the air, the bigger the better. Just fanciful pie in the sky stuff, that sucks people in.
Anonymous
eh?
But she also says "I believe that equitable access to high speed, symmetrical broadband services is linked to Australia's future economic prosperity and to social good, and such it outweighs a purely economic justification.”
Doesn't that also indicate she thinks it is a good idea? It's just the others have been quoted giving how it will be a good idea.
But I agree the $43 billion figure was about stimulating the economy and not on any cost analysis
dubious
costs, benefits and stakeholders
If these gurus are right there are great benefits to be gained from the NBN investment. BUT what they say leads to the inevitable conclusion that no one seems to have grasped, that it means that many benefits are social, accrue to governments (and not all health providers are federal, yet) or even the kind of individuals with no money to pay, so the taxpayer will have to foot the bill. Show me a listed company that will want to invest on that basis. If you can I will sell my shares quickly.
Tim
Do the same 7 ICT Analysts that have their snouts in the trough
I wonder if the 7 analyst have a vested interest in make a killing out of consulting for the NBN?
If they think it is such a good idea how much of their own money are they willing to invest into the NBN.?
This is a terrific headline, very lacking in substance, almost looks like it came out of conroys office
To be credible these analysts need to produce a business case / plan. Trust me doesn't cut it for me.
There is already talk that the tassie NBN will have to be governement subsidised, So much for conroys assertion that it will produce a commercial return, yeh right I off to visit the fairy god mother
Anonymous
Commercial return
Why are people focussed on an immediate commercial financial return? I pay my taxes in the hope the government will spend them on essential services and infrastructure. I don't often hear people complaining that police, our prison systems, hospitals, our water supply and sewerage system, our road and rail networks etc. aren't making a good return on investment. The return for all of these utilities and services are the benefits provided to society and our general well-being. The NBN should be considered in the same context, as mentioned by Shara Evans in the article.
dubious
commercial return
yes it is all fine to go ahead because of all these societal wellbeing benefits but let us all be realistic and accept that is going to cost taxpayers a motza and get past the bull about this being shared with industry, we are all going to pay for it for a long time.
harry
cost
How much is it going to cost me to use it? $43 billion is figure pulled out of the air.
Anonymous
For all of the negative folk here, what do you think is a better option then? Keep the same networks we have now? I'd love someone to outline what a better plan is then what has been put forward.
Yes the figure was plucked and that was just plain silly work by the govt - but seriously, what figure would anyone be happy with for what has been suggested?
What is a figure you would be willing to pay for any infrastructure like the roads, hospitals, schools, ports and railways we currently enjoy? (Well maybe not the railways...)
If you can't express it yourself then how can you have a crack at these analysts who spend their professional careers looking into it.
Michael Saunders
100 billion (Why not. It is only a few extra billion)
I think people have lost sight of cost. It is very easy to say tax payers will cover it. Where does this money come from? Us.
If we really wanted high speed broadband a private company would do it. If we don't want to spend $43 billion between all the private and public companies doesn't that mean we don't really want the product?
Politicians: Please walk down the street and ask people to donate $250 each to the cause or to give up drinking this weekend and put the money to the NBN. Then we will really understand does the public really want this?
Anonymous
Re: 100 billion
Why would any private company spend billions on totally new infrastructure when they can just keep charging us for the service we get now without any outlay?
And why would any private company spend money rolling out fibre to unprofitable areas of the country?
The public wants this, but private businesses focussed on short-term profit are never going to deliver it.
Oh please!
Oh please give me a break.
You guys are funny, 43 billion dollars is loose change. and this is over like 5 - 10 years. 4 billion dollars/year is *nothing* for our government. The federal budged expenditure is on the order of 340 billion. if they get private investment they don't even spend that 4 billion, they spend more like 2 billion!
My god! even 100 billion would be fine! spread it over enough years (like 10, or 15 or however long its *really* going to take to build this thing) and its *easily* affordable.
Remember, as soon as you build your competitively priced interstate trunks, you start making money off it!! You start the process of paying it off the moment you've built it!
Oh, and to those saying: "if we wanted it business would build it" how many private roads (of significant length) are there? and how many of those were built without public money? any? And to parrot another commenter, how much did those roads earn the government last year? Where is the business case for them?
<i>Ofcourse</i> we pay for them with our taxes. That's what our taxes are for!
As an aside, do you know how much we spend on our military? 2.4% of our GDP (2006 - CIA World Fact book). our GDP in 2006? 753 Billion dollars. My quick maths states we spent 18 billion dollars on our military in 2006. 2.5 years of military spending pay *entirely* for our NBN. (and I just noticed, these "dollars" are US dollars! 2 years pays for it!). Where's the business case for our military hmm? How do they give rise to a profit?
Michael Saunders
Ow please
Maybe you like giving away 50% of your income to the Government but personally I don't. You talk about that it is only a small amount of Government expenditure. This is exactly correct. The problem if you haven't noticed. Most of Goverment's are broke and the money comes from us.
The way our Governments come out of insolvency is to charge more taxes. You seem to trust how Governments spend money. I personally don't. I therefore don't want to embark on another project that will run billions over budget. Suddenly in the future we will need an extra tax to pay for the NBN. Then again in the future we will finish paying off the NBN but will the taxes disappear like promised!!
I believe history has shown this to be true!!
Anonymous
Its OK, perhaps one day you naysayers will get your wish and it will be user pays for roads, schools, hospitals and hopefully air if the government can somehow ration that out.
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