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.”