Broadband benefits get a reality check

Broadband benefits get a reality check

Summary: The federal government has not provided any evidence that its proposed AU$4.7 billion national broadband network would deliver claimed economic benefits, an analyst said this week.


The federal government has not provided any evidence that its proposed AU$4.7 billion national broadband network would deliver claimed economic benefits, an analyst said this week.

Communications Minister Stephen Conroy has stated it was essential for the nation's "future economic prosperity" that Australia build its own national broadband network. The government is currently negotiating with the industry to work out who will receive AU$4.7 billion of funding to build and operate the network.

However, Intelligent Business Research Services analyst Guy Cranswick this week said the Australian government had not produced any documents laying out proof of its economic claims.

Cranswick said his research on reports of a similar network in Japan had showed the country had not benefited economically from the infrastructure roll-out. "They haven't found anything; nothing," he said.

The analyst said if anyone was to benefit, it would be the finance and media sectors, particularly broadcasters. "I think everything else is rather nebulous," he said. He didn't believe industries such as hospitality and agriculture would see many advantages at all.

Cranswick also took aim at the technology proposed for the network, fibre-optic cables linked to the existing copper telephone network through street-side cabinets known as "nodes". He said the technology was not cutting edge, with speeds only "pseudo-adequate" for 2001, let alone 2010.

"In my own view it's a waste of money," he said. "Why go to fibre simply so you can say that Australia has a fibre network?"

The analyst pointed out Australia had placed ninth out of 30 countries in the recent Organisation for Economic Co-operation and Development (OECD) broadband rankings. However, the nation only reached twenty-third place when it came to the price of monthly subscriptions.

"ADSL2+ is plenty fast. It'd be nice if it was more widely spread and cheaper," he said. "The issue is not technological. It has to do with regulation and market structure."

Australia needed to tackle its regulatory framework and move the economic levers to encourage investment in Australian broadband, Cranswick said and "not necessarily say let's start again with another new technology".

"There should have been a longer and more thorough research and consultation process," he continued.

Cranswick said the government's promises — 12Mbps reaching 98 per cent of the population — were unlikely to be met, or at least not within budget: "Life experience and project experience tells you this is probably not realisable."

"Even in Britain they can't guarantee the speeds across the nation," he said. "You don't want to give everyone a Rolls Royce," he added, saying the costs wouldn't match the benefits.

Cranswick said he was not against fibre, but just against spending tax payers' money without a proper case. "It's everyone's money."

Topics: Broadband, Networking, NBN, Tech Industry

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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  • What planet??????

    Is this guy for real, and I guess we didn't need to upgrade from dirt roads either...........

    This is the same guy who probabbly has a 386 machine with a "whopping" 40M harddrive.

    Telstra is ready to do the hard yards NOW!!!

    WE desrve the best NOW!!!

    FTTN all the WAY for the future of Australia!!
  • Pfft!

    The economic benefits are immense. My Telstra shares will finally be worth something when we get the Government handout to build the network!

    Roll on the gravy train!
  • Need for speed.

    What does this dude mean "even in Britain" as if we should follow the old country which is a basket case in most areas. Maybe he has just left the cave.
  • Pfft2!

    Good point, I'd better sell my Optus and iiNet shares. Maybe the free ride on Telstra's back is coming to an end?

    Oh dear, all the king leeches with their snouts in trough, will have to send back their unofficial Telstra sponsored Ferrari's too!
  • Pfft2 - Fake Post

    You wouldnt say such comments if you had optus or IINet shares.
  • The Emperor Has No Clothes!!

    This whole thing started as an attempt by Telstra to bamboozle the then government to restore its monopoly and has now can a full circle. There is excellent high speed broadband in our major cities and we need to address regional areas. OPEL was a good plan to do just that at 5% of the current cost. It is still not too late
  • What about regional Australia?

    So the media has finally started to ask the right questions - Alan Kohler, John Durie and now Suzanne Tindal. Every one knows that major Aussie cities enjoy world-class broadband except for RIM/Pair Gain problems inflicting about 10% of users (Phil Burgess not withstanding), regional Australia is neglected and must be fixed. Why is Conroy quiet on this shortcoming? Why are all pollies quiet on this problem?
  • Happy to wait another decade

    Sounds good as long as you are willing to wait 10 years for that $2 company to do anything. There is only one truly competitive telecommunications service and that is the mobiles market. Let's look at some facts.

    1. It has been an open competitive market for over 10 years
    2. Telstra has recently built a network using their own funds
    3. No other company has come close to the speed or coverage of that network
    4. Telstra has plans in place to ensure this network increases it's coverage and speeds on a regular bases for the next 5 years or more
    5. The other carriers have plans to increase the coverage and speeds over the next 2 years.
    6. Even after these carriers increase their coverage they will still be about 2 years behind Telstra for speed and have no plans to catch up to Telstra's coverage.

    Open competition works but in the one and only real example of this in Australia it demonstrates that Telstra is the only one willing to take the risks to invest first and in areas the others do not see an appropriate return to justify their investment.
  • He's right

    We don't need nationwide FTTN yet. Hell we don't even have a proper ADSL2+ network yet across the outer suburbs of most cities.

    We just need the current ADSL2+ network upgraded, opened to competition, and extended to everyone and provided at a reasonable price.

    Those who can already get ADSL2+ from ISPs other than Telstra already pay reasonable prices for broadband, while those who can only get ADSL1 do not because of Telstra's monopoly over the lines.

    It would cost much less to do this and the benefits would be greater.

    Once we have nationally established ADSL2+, we can garner investment for gradual FTTN or even FTTH improvements as necessary.
  • Guy Cranswick provides no proof either

    I'm sick of all these crank experts barfing out useless articles for the media. FTTN fixes two major problems with the current network, its slow unless you live near an exchange and unavailable in many areas, plus its unreliable and expensive to maintain all those ancient trunk cables.
  • fake post really?

    really was it fake - no? it's called sarcasm rocket scientist.

    because apparently anyone who sticks up for telstra is obviously a shareholder and anyone who sticks up for optus or iinet aren't, they are concerned citizens. what a crock.
  • opel = bamboozle

    the words bamboozle and opel are most apt together!
  • Move on Australia.

    Do I detect a shift in thinking concerning the NBN from Telstra opponents who now see that they are not capable of building the NBN so in desperation try to hold Australia back and deny the majority of Australian's fast broadband in their hope of maintaining the current system and the free ride on Telstra that they have enjoyed for so long?
  • What a crock


    Screw this "equity partnership" with the Government. Show us the money! If Terria (and others) want to share the network with the Government let 'em; us Telstra shareholders want to make as much money from our investment as possible. Give us our money first and support the rest of the country second!

    This whole process has nothing to do with broadband; its about getting the Government to give Telstra a big bag of cash and lock our customers into nice, fat, juicy contracts for as long as possible maximizing our returns.
  • Don't Telstra Staff Have Other Work To Do ?

    Everyone in the Australian Telecommunications Industry (other than Telstra staff and their paid suppliers and analysts) understands that the NBN has always been a furphy.

    The only reason the Labor government is backing such a ludicrous plan to spend $4.7b of taxpayers money on this donkey is because a couple of years ago the engineers at Telstra developed a way to get their Monopoly back (build a new network FTTN network).

    They then lobbied the liberals very hard but were told to get lost. Coonan could see through the smokescren.

    Unfortunately the labor party, who weren't in power back then, said we support this Telstra proposal bacause we hate the liberals and must disagree with all of their policy decisions - pretty obvious politicing.

    So now the labor party is committed to delivering on an a election promise that evolved purely from Telstra's monopolistic intentions.

    The bit about speeding up everyones BB is just a big furphy - ADSL2+ at all exchanges and wireless BB to fill in the gaps is the perfect solution for Australia - if only we could get the politicians (and Telstra) out of the way !!!
  • Have you any idea what Telstra's really done?


    You seem to have swallowed Telstra's propaganda hook line and sinker! Although legislation was introduced 10 years ago to introduce competition, the main objective of the related processes and rules was to preserve the monetary value of Telstra to maximise its sale price.

    Notwithstanding major flaws and Telstra's exploting these flaws to indulge in serious anti-competitive conduct (which is exceptionally well documented), it is competition that has delievered service innovation at affordable prices to Australians. We have seen stagnation in services wherever there is lack of competition. For example, in all major cities, consumers enjoy high quality high speed broadband at prices they can afford. In regional areas, the consumers are screwed because of lack of competition due back haul constrictions, high cost back back haul and poor condition of the underlying network. Although Telstra has received billions in government subsidies, it has not invested in regional Australia.

    This NBN thing is political hogwash promised by Labor simiply to embarass Liberals during electioneering and telcos/ISPs in Australia will not come and say that publically because of fear of retribution from the government.
    PS: I am not what my name suggests.
  • Broadband Countrywide

    I am not a tech but feel the cheapest way to get broadband to the population in the country is to provide a wireless network that is sold at aprice equal to ADSL or less. No need to put wires underground. There may be a problem that I am not aware of but speeds of up to 20meg are said to be coming online in the next 12 months. I am a wireless user who lives in the outer suburbs of Melbourne and even there ADSL is not available
  • Broadband Countrywide


    That is a very smart observation-wireless indeed is the quickest way least expensive to blanket Australia with broadband. Speeds do not have to be 12 Mbps or higher. Everything works great in the range 1.5 to 5 Mbps.
  • support the rest of the country

    support the rest of the country, which country singapore

    come down from your tttt soap box and smell the roses