FTTH benefit calcs too hard, says consultant

A recent report commissioned to take a peek into the benefits of smart technologies has shied away from putting a number on the economic benefits of the government's $43 billion fibre-to-the-home project due to "insufficient data".

A recent report commissioned to take a peek into the benefits of smart technologies has shied away from putting a number on the economic benefits coming from the government's $43 billion fibre-to-the-home project due to "insufficient data".

(Fiber installation image by
macguys, CC2.0)

"There are insufficient data to accurately quantify the full economic benefits of [high speed broadband] at this time," the report written by economic consultancy Access Economics said, although it said that qualitative evidence pointed to large gains.

Since the study was formed by taking information from a lot of other studies and the idea of nationwide fibre-to-the-home was a new prospect internationally, it was incredibly difficult to form an economy-wide framework view on how it would affect economy growth and jobs, Access Economics director Dr Ric Simes said today at the offices of IBM, which commissioned the report.

The report, apart from looking into the benefits of broadband, also dealt with the increases to jobs and the economy, which could be achieved by investing in smart technology within the areas of electricity, transport, irrigation and health.

Not only was a broad roll-out of FTTH too new to have enough information on, but it was hard to gauge the timing of benefits, according to Simes. "Of all the areas in here, trying to get concrete evidence of the impact and then working out what it's going to do on an economy-wide basis, of all of it the stuff on the [National Broadband Network] is the hardest," he said.

In addition, he believed future applications for the 100Mbps speeds FTTH entailed could not be "reliably anticipated".

Because of these reasons, the consultancy decided to deliver figures based on a fibre-to-the-node network, from earlier results the consultancy had developed.

"There are studies around the world where you can make some parallel estimates, and that's sort of what we've drawn on to get a basis," he said.

He admitted that the figures could still be very wrong. "This one is blue sky stuff and so the margin of error has to be large because of that. That's why we've been deliberately conservative. Because even being deliberately conservative the numbers are large."

The report found that with a $12.6 billion investment in a fibre-to-the-node network, not only would the benefits, net costs, to gross domestic product be somewhere between $8 to $23 billion over 10 years, but it would also create 33,000 jobs by 2011.

Shadow Communications Minister Nick Minchin has been calling for a cost benefits analysis on the National Broadband Network project. However, Communications Minister Stephen Conroy has stated that no cost benefit analysis is required to know it is an investment Australia needs.

Access Economics published another report earlier this year on the impact of high speed broadband on behalf of Telstra.