March 14, 2011
Governments around the world are looking for ways to stimulate their economies and many have identified high speed broadband networks as an opportunity to invest billions of dollars in an infrastructure that will net economic rewards, outside of the initial construction, for many years to come. The Australian government has chosen to take the most expensive route by rolling out a fibre optic cable network to most of the homes and premises in the country. This essay reviews the benefits provided by the implementation of the Australian National Broadband Network (NBN) from an economic perspective, focussing on the government’s own highlighted areas of economic and societal improvement, namely: education, health, business, families and rural. Fibre optic cable has an immense capacity for carrying data and it is very expensive, this essay questions the universality of the implementation, identifying which industries, sectors of society and individuals will benefit from this and explaining that the level of investment is not justified. Examining each area individually the nature of the benefits and justification of high speed and very high speed broadband is considered, for these important components of our society, from an economic perspective and reveals the limited requirement for all homes and premises to be connected by fibre optic cable. It also considers that broadband usage is already occurring in sectors and how the implementation of the NBN may be replacing adequate and advanced technology that does not need to be changed. Many industries need to have high speed broadband and they are already finding effective solutions. The government does not believe that these are long-term solutions and is advocating the roll-out of a fibre optic network that will accommodate all of the countries communications’ needs for the foreseeable future. The aim of this review is to show that there are alternate choices and that the government is unwisely choosing the most expensive path at a time when frugality may be more prudent.
In early 2009, during the tail end of the Global Financial Crisis (GFC), Prime Minister Kevin Rudd announced that the Australian Federal Government was to invest $43 billion, over eight years, in constructing the latest generation high-speed broadband network across Australia: the National Broadband Network (NBN). The chosen broadband carrying technology was ‘Fibre to the Home/ Fibre to the Premises’ (FTTH/FTTP) which would provide the entire population with access to very high speed broadband. The NBN will comprise of fibre optic cables being laid across the country connecting 93% of homes and premises with the remaining premises benefitting from high speed broadband through satellite and wireless resources. Representing the largest infrastructure investment Australia had ever undertaken the NBN was promoted as a critical upgrade to a deteriorating copper network and an investment in the nation’s future that would create jobs and increase productivity. As stated on the home page of the Government’s National Broadband Network website: The National Broadband Network is a key nation building project. It will stimulate the economy and help drive Australia’s productivity, transform service delivery in key areas such as health and education and energy efficiency applications and it will connect our big cities, regional centres and rural communities (AGNBN, 2010). In terms of global trade the NBN is to underpin Australia’s competitiveness, as highlighted by Prime Minister Rudd’s own media release: The NBN is critical to securing Australia’s international competitiveness. It is central to Australia’s economic future because it will deliver universal superfast broadband to all Australian households and businesses no matter where they live or do business (Rudd, Conroy & Tanner, 2010). This essay...