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.