How reasonable is Turnbull’s NBN Transparency Bill?
- 02 November, 2010 12:36
- Comments 4
Shadow Communications Minister, Malcolm Turnbull, wants the Federal Government to present a 10-year business case and cost-benefit analysis for the National Broadband Network (NBN) but this is easier said than done, according to a telco analyst.
Last week, Turnbull brought his Coalition-backed private member’s bill to Parliament. The bill would force the Federal Government to publish a 10-year business case for the NBN with key financial and operational indicators by November 19.
The bill will also require the Productivity Commission to conduct a thorough cost-benefit analysis on the NBN to be submitted to Parliament by May 31, 2011
While Turnbull deemed a 10-year business case and cost-benefit analysis is reasonable for a extended rollout project such as the NBN, Market Clarity telco analyst, Shara Evans, said it would not be a straightforward task.
NBNCo’s infrastructure is likely to encompass a range of services that fall outside the traditional telecommunications sector such as the delivery of healthcare and educational applications, she said.
“It will be very difficult to try and put together a 10-year revenue forecast on things that are outside the traditional telco services that we don’t know how to define,” Evans said. “…You could do a cost-benefit analysis strictly on telecommunications but that would be missing part of the benefits of having this ubiquitous infrastructure.”
Some of these services may be hard to define at present as they are not sophisticated enough in their development cycle to be attributed a dollar value.
“Also, with any market forecast with services, what happens is the further out you go the hazier the crystal ball gets due to all kinds of unforeseen complications, new applications and new devices such as the Apple iPad,” she said. “Things like these change the paradigm that we didn’t even see coming.”
In terms of the bill’s demands for the cost-benefit analysis, there are some aspects lacking in its list of requirements, according to Evans.
One of the criteria for the proposed cost benefit analysis to include consideration of different options broadband could be delivered across Australia in terms of timeframe and cost.
“One of the things not in this section and should be is an undertaking of a comparative analysis on the upgradeability and lifespan of each broadband options and how well suited they are for long term deployment projects as well as associated cost of affiliated with upgradeability,” she said.
Turnbull wants the cost-benefit analysis to include an analysis of the effects the NBN would have on fixed-line broadband competition including its impact on competition between different broadband delivery technologies.
But another thing the bill has missed is to make the cost-benefit analysis assess the potential of the broadband market if ISPs were not allowed to add their own infrastructure-based innovations onto the fixed-line access.
One example she raised was when members of the ISP industry deployed their own ADSL2+ equipment on top of Telstra’s copper network before Telstra did so itself.
“Some of those types of innovations came about when ISPs have the ability to innovate at the infrastructure level, not by owning the copper but by adding their own equipment on top of it,” Evans said. “An investigation in that areas could look at what is the impact of the market if a single organisation literally has all the infrastructure.”
The Coalition has recently come to with a new broadband strategy which touted upgrading existing copper networks to deliver up to 12Mbps download speeds as a better alternative to the NBN.
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Comments
Emsig
1
Mr Turnbull is seking to cherry pick with his CBA as much as anybody else. He is only interested in the areas where he could potentially attack the govt NBN plan.
His interest does not extend to a complete CBA researching ALL aspects of the benefits to the nation, his interest is not in actually knowing what would benfit the nation.
His interest is restricted to finding some points of attack.
In other words he does not seek a true CBA, Turnbull and the coalition are instigating a fishing exercise at our cost, in order to see if they can come up with something to use against the NBN.
In other words, they do not seek the truth, otherwise their terms of reference would be comprehensive. They seek to create a one-sided perception of non-value and lack of expertise on behalf of the NBN staff.
As Robb stated for the coalition, they claim the NBNco is filled with talentless staff and a stodgy govt owned entity, whilst the coalition created govt owned entity would attract just the best in the industry...?? So Coalition, is a govt owned entity a govt owned entity or not?
http://www.computerworld.com.au/article/356405/nbn_co_talentless_liberals_robb/
A true CBA looks at ALL costs and ALL benefits and ALL aspects of analysis. If you only do half an analysis you lose the last four letters of the word analysis, and then you see what Turnbull and Robb would end up as having...
The incomplete terms of reference of the Turnbull demanded CBA demonstrate clearly that he does not understand or he does not seek and true CBA. Simple.
Get those right Malcolm and come back to us once again when it is COMPLETE... Do not risk become just the first half af the analysis you seek...
BB5
2
If you think the government can best run infrastructure to your advantage, take a look at your recent water and electricity bills. I think some form of CBA / financial analysis is warranted as the NBN has been sold to the public as a future money making venture, one that will attract private investment.
What the NBN actually looks like is a very large rural and remote area subsidisation package at the overwhelming and unfair expense of city users. Now I am not suggesting that some amount of rural subsidisation is warranted, but spending is some cases between $40,000 and $100,000 per house to provide a link to some very very remote houses (with some houses worth less than the cost of the link) is IMHO unreasonable use of contributed tax dollars.
Broadband in most city locations is good (apart from the blackspots that are agreed and well documented by other commenters), but without the ongoing competition, it will be up to a single government owned provider to set the pricing required to provide the expensive rural subsidisation and so IMHO no city or large regional city user will be better off.
If the NBN is actually a large Social equality scheme then the govt. should state that and put it in the budget as such and state its benefits, but if it is actually a going concern business, then a CBA will clearly and irrefutably show this. Without a CBA / prospectus, no one would invest.
If it was $43BN before, and now you need to pay $16bn to Telstra (noting this will somewhat reduce the $43Bn) , probably about $4-6bn to Optus to decommision their HFC assets, iiNet, internode and many others need compensation for over-building or purchasing their backhaul fibre networks. What are the final numbers? To me its looking like a moving feast at the current and future taxpayers expense.
Many of the regional areas IMHO drastically require decent mobile coverage, and this also provides a platform for remote area broadband so can be a good value choice in low density areas.
Many 'urban' regional people have horrendous or non-existant DSL coverage and these should be fixed IMMEDIATELY without delay. Ironically it is the NBN that is holding up adding more ports, as the ISPs are in a holding pattern and don't want to buy new DSLAM equipment just to junk it. If no more DSL ports are added AND you had to wait 8 years for a fibre, you would be ten times more cranky than you are now. Also, ADSL line extenders can more than double normal loop lengths, so can fix many of the low speed ADSL people for quite a low cost.
Fix the regions and the bush and the city blackspots and forget the city users who are well serviced, and also reduce the NBN coverage from the un-economically viable 93% to somewhere between 85% and 88% and service the rest with mobile broadband (and satellite for those in the last 3%), which will also greatly improve mobile phone coverage in the far away regions and remote regions.
There, just saved about $15Bn - $20Bn
John
3
@ BB5
Yes, there has been rising price for water bills. Treatment of water from the varous reservoirs can only be economically done by a single party. That party happens to be non-profit govt body.
So what makes you think the private sector can do it at a lower cost when they have to add a profit margin on top to return to shareholders (those who have the money to buy their shares, not the poorer folks)? Scenario - if the total water consumption falls, you think it is in the private sector's interest to see that, honestly?
There are limits to competition.
In the case of NBN, the metro rollout will actually subsidise the regions and bush as these areas are simply not viable to service. This is NO DIFFERENT FROM YOUR COPPER LINE SERVICES NOW. So you see, there are limits to applying competition. Remember, these copper lines are laid by the govt during the govt-owned Telstra days and they come from tax payers' money. And landline phone service cost to the consumers are essentially uniform throughout Australia.
What is wrong with that when applied to the NBN? I stay in the metro and can get 100Mbs but lots of your country(side) men cannot get assess to a decent broadband speed and you ask yourself why - we the price they can charge, it isn't viable for them to deploy services there.
In Australia, the only private sector party who can deploy nationwide fibre is Telstra but you have witnessed they will not come to the party if they cannot get a price they **think** it is fair to them. That essentially limits the competition. Hence the wasted years of fighting.
From all that I can see, for this great (big) nation, the NBS strategy is thus far the better option for the longer run. Fibre deployment is a next great leap forward and currently only the govt can provide the vision and the drive to move this. This rollout has to move forward with political will, similar to the govt banning the use of globe by 2012 and plan cigarette packaging by 2012 ( which was opposed by some with laughable reasons like limiting consumer choices, erosion of brand names, hurts retailers).
Leave the NBN deployment to the experts. And spending a jaw dropping $43 bil to deploy a Mercedes infra lasting over serveral decades is good money over long run.
Comrade
4
What's the Labor government got to hide with the NBN? Where's the fully transparent cost benefit analysis?