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Broadband benefits get a reality check

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.
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Written by Suzanne Tindal on

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."

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