NBN may be subjected to a partial cost-benefit analysis

The Productivity Commission may be ordered to conduct a cost-benefit analysis on whether fibre-to-the-home (FTTH) is the best way to go for the National Broadband Network (NBN).

The Commission attended a Joint Committee of NBN parliamentary hearing in Canberra.

Despite constant requests by the Opposition, a complete cost-benefit analysis on the NBN has repeatedly been dodged and dismissed by the Federal Government as a waste of time and money.

Shadow Communications Minister, Malcolm Turnbull, questioned Productivity Commission deputy chair, Mike Woods, on whether fibre-to-the-node (FTTN), which would be cheaper to deploy than the fibre-to-the-home (FTTH), would a better alternative for the NBN.

The assumption is since FTTN is cheaper to implement, the cost to consumers would also be lower.

FTTN extends fibre to a node which can use the existing copper line to provide the last mile connection and branch out to multiple homes. FTTH puts fibre directly to the home.

Drawing on his experience with the Commission, Woods stressed the cheapest option is not always the best option.

“Different technologies will produce different benefits and that’s what a cost-benefit analysis would illustrate,” Woods said.

Turnbull then asked whether the Productivity Commission, upon the request of the Joint Committee, would be able to undergo research into which broadband technologies would be a more economic approach for the NBN rollout.

The Commission would be able to produce a document for the Committee that drew of information it has at hand.

“If government requested us to make an enquiry in to the matter [in the form of a cost-benefit analysis], we could go through our normal processes,” Woods said. “… We undertake thorough investigation into matters.”

Independent Minister, Nick Xenophon, also explored the idea for the Productivity Commission conducting a cost-benefit analysis on FTTN versus FTTP.

He pointed to a letter issued to by Prime Minister, Julia Gillard, last year which allowed government agencies, including the Productivity Commission, to aid and advise the NBN Joint Committee accordingly.

“If the Committee says we would like you to look at this issue about the cost-benefit differences between FTTN and FTTH, is that something you would have the authority to do so, short of getting specific authority from the assistant treasurer?” Xenophon asked Woods.

Xenophon was keen for a report on the efficacy, cost and differences in delivery of FTTN and FTTH.

The Productivity Commission would be able to do so as long as it can rely on the information it already has at hand and the request is consistent with the terms of the Prime Minister’s letter, Woods said.

“We’d be happy to explore those opportunities and see if they fit within that letter,” he said.

The parliamentary hearing continues today.

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