Minchin uses NZ broadband study to call for NBN cost benefit analysis, again
- 03 November, 2009 13:51
- Comments 18
Shadow Minister for Broadband, Communications and the Digital Economy Senator Nick Minchin has used the publication of a new report into the productivity of high speed broadband to reiterate his call for a full-cost benefit analysis of the NBN.
The report, The Need for Speed: Impacts of Internet Connectivity on Firm Productivity which studied 6,000 New Zealand businesses, found while broadband adoption did boost productivity, no productivity differences where found across different types of broadband.
The implication - that high speed broadband delivered by the NBN may not result in greater productivity than that which is facilitated by current broadband speeds – was seized upon by Minchin as further evidence as to why the Rudd Government must commit to a full cost-benefit analysis.
“The Rudd Government must subject this proposal to a rigorous analysis in order to establish whether or not the enormous amount of taxpayer money it plans to spend will result in commensurate benefits, including productivity gains” Minchin said in a statement.
“Our estimates show that all these productivity gains can be attributed to adoption of slow relative to no broadband, with no discernible additional effect arising from a shift from slow to fast broadband.”
The report's authors, which include NZ Reserve Bank chair Dr Arthur Grimes, wrote that despite well-articulated pleas for upgraded internet access, reference to rigorous research that quantifies benefits actually accruing from network upgrades is generally absent in supporting materials.
A key reason for this conspicuous absence is that little rigorous research exists that measures the productivity impacts of a shift from one type of internet access to another, the report reads.
“Most research in the field has been conducted at an aggregated (regional or national) level or has bundled together various types of information and communications technology (ICT) rather than separating out the internet access component,” the authors wrote. “Neither type of aggregation enables reliable conclusions to be drawn about the extent of productivity improvements that might arise if, say, an ADSL network is upgraded to a fibre network.”
Despite this, the authors wrote that the finding that a move to fast broadband (cable) from any other form of broadband has no estimated effect should be interpreted with care.
This was due to a number of reasons such as the distinction between cable and other broadband types being a poor representation of differing internet speeds, not all survey respondents being aware of the technical nature of their firm’s broadband connectivity type, and firms recently adopting cable being yet to achieve the full productivity benefits.
“…We conclude that firms with faster connectivity make greater use of the internet in their commercial transactions. Furthermore, on the basis of our propensity score matching, we conclude that a shift to broadband connectivity (from dial-up) appears to raise firm productivity.”
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Comments
Greg
If a cost-benefit analysis is done and it is decided that the NBN is too costly for the benefits it will bring, what happens next? Will we be stuck with an old, outdated copper network forever? Minchin must realise that a new telecommunications network is a necessity if Australia is to keep up with the rest of the world.
James
A study on high speed broadband without a study of the potential future new services that will be developed in response to universal high speed broadband is a waste of time. One must realise that, with universal high speed broadband, a myriad of often unforseen applications will be developed over time that will most likely see an increase in productivity, but simply looking at the few people with access to the same old applications over a slightly faster connection is not going to tell you anything useful. It is a short sighted report that means little.
Asmodai
No, if the cost benefit analysis doesn't balance out then the government has to find a way to:
-cut costs
-increase benefits with the same amount of money spent
-come up with a new plan
-quit the plan for commercial and nationalise
Part of cost benefit is forecasting demand. You build with overhead so that by the time you finish building, you aren't already at capacity. That would obviously have to be scaled in of course.
But it sounds like you're not confident that the cost/benefit is provable here. If it isn't then Rudd's claim of 'evidence based governance" is a sham and should be exposed as such.
Phil
The flaw in Minchin's argument is that trials to quantise the productivity improvements observed by businesses moving to faster internet needs to business to start moving to new technology.
Of course 100mbps connections aren't going to help a company that uses services that run on 10mbps.
The point is that with 100mbps (and faster) connections available to homes and offices, it opens up a whole new region of working remotely from home.
Businesses can also take advantage of any new, unforseen, technologies that require high bandwidth connections.
Then of course there are the benefits to the general population, such as the remote medical consultations and monitoring applications, the removal of TV transmissions from the air (they can go down the fibre too). I'm sure there are many more applications for the fibre once its in use.
Guess its lucky for conroy that most people will probably prefer filtered fibre to the home instead of no fibre to the home, so conroy (and labour) will probably get the tech vote next election!
MrWhite
You should always be careful what you back to support your case Minchin.
The report starts with: "The results provide the first firm-level estimates internationally of the degree of productivity gains sourced from upgraded internet access"
And ends with: "Our study is the first, internationally, to estimate the productivity impacts of connectivity upgrades"
Ohhh, an international survey, fantastic, but you ... only 'surveyed' NZ businesses.
That's a bit 'American' isn't? Must have been the World Series of surveys :D
undermine
the report is for New Zealand a very small land mass compared to the size of Australia where high speed services are needed to communicate across long distances. NZ has the internet but does not require the local network loadings as in australia.
Adam
The government hasn't even worked out the costs of the NBN on the mainland yet.
You cannot do a cost benefit on something until you know what it will cost. Especially when it comes to numbers this large and benefits so hard to define.
If you did do a cost benefit on a hypothetical number, the planning will change to reflect what the hypothetical cost benefit indicates is a good idea. Problem is this could very likely change the entire course of the project, completely changing the outcome and assoicated benefits. Rendering the cost benefit useless at its best and destroying a great opportunity at its worst.
When people can teleconference on demand or with very little waiting times with a doctor to get quick advise on minor issues hundreds of thousands of pointless GP visits will be avoided saving our health system and its users unimaginable amounts of time and money.
Hell you could pay a couple hundered doctors triple their normal rate to run all night teleconferencing just to keep people going to the ER for minor issues. Especially parents with children. Also a major saving.
Rural students could also attend night courses in the CBD of large cities from their living rooms. Opening up opportunities not dreamed of before.
Bouses like this are very hard to define in a cost benefit analysis.
Minchin just wants to avoid his government looking stupid when the NBN works wonders. He also wahts to save telstras shareholders as they will vote for him. I would rather vote for a better health system and the endless possibilities the NBN will bring.
Anonymous
Again we have Phil trotting out the usual lame non-reasons for faster broadband. No, not everybody is going to have a MRI scanner at home so that they can upload huge medical scans. The current system is adequate. No, there isn't going to be any significant new medical monitoring applications. That could be done now, but nobody can be bothered. No, a faster connection isn't necessary for working from home. That can be done now, and it is done now, but only some employers are ever going to trust you. But yes, we will all be able to download porn a lot faster. Why didn't you mention that as a good reason for faster broadband Phil?
Asmodai
Further, we have the usual "discredit the report rather than deal with it" types who show up to shoot the messenger and ignore the message...
At some point reality will kick in, probably when they realise their bills are going through the roof and the government is getting turfed for the single biggest rise in internet fees in over a decade.
Don't take my word for it though, just wait and have faith. I'm sure everything will work out perfectly as long as you wish really really hard. ; )
Greg Alexander
Apparently there was a big debate before electricity went in - the opposers said that gas lights were good enough.
I firmly believe the higher speed broadband is significantly important and will be a good investment for the country. And the last mile is best monopoly run (for the most of Australia)
However, I do wonder about the main cities. If NBNco took over Telstra copper, could it just continue to resell that in areas which have Telstra & Optus HFC? Encouraging them (and copper resellers) to compete in those areas?
Adam
People do not need an MRI at home to make use of telemedicine.
When it comes to kids with minor infections many parents will go to a doctor. This is a perfect opportunity for telemedicine. All that is needed is a fast connection and a simple HD web cam for around 150 bucks. There are many similar examples.
Even for minor injuries that need a doctor many arn't urgent. Think spraned ankle... A doctor could see the problem advise the best measures to look after it to begin with, perscribe a small dose of good pain killers and the person goes to see a docter when they know it will be quiet. The doctor then enusres no further treatment is needed.
Finally telemedicine would allow an experienced doctor to advise how long a visit to a GP is likely to take. Bookings could be made accordingly and wait times will decrease.
While telemedicine could be done over some connections today people will want high enough quality to make the situation feel like they are having a quality consultation with a doctor. Not to mention the need for a decent image quality to look at minor problems. Anyone with experience with quality HD video conferencing will know you need at leaset a 2MB up to pull this off. Most of the population does not have a couple meg up. A huge percentage of the population needs to use telemedicine before it is cost effective.
For those who say the NBN will bo too expensive, remember a 100 dollar a month fiber connection with some traffic unmetered will replace your phone bill, your internet bill and allow you to recieve pay TV and home security system monitoring from any providor. Businesses will also be able to subsidise consumers by buying high end symmetrical connections and running servers at the office.
Kean
What is Nick Michin's solution then?
Jay
Adam, why would you need a higher speed than what is available today just to use a simple web cam? People have web cams already you know. And some doctors even have computers right now! So what possible difference will a few extra Mbps make? As it stands doctors aren't really interested in so-called telemedicine because if they were they would be using it today.
Anonymous
Minchin is right on the money here. Rudd has committed us to the biggest infrastructure spend in our History based on nothing except wanting to announce the biggest infrastructure spend in our History.
IPTV, teleconferencing etc are all available now on the existing network.
He has NOT provided a single technology that would happen on the NBN but can't be done now. He just wants to nationalise telecommunications so he's got a lot of new employees and he can get the unions in.
swordfishBob
Narrow report misses point.
The main opportunities for NBN are NOT "more bits per second". They are:
- Ubiquity of high-speed data access. New applications become possible once you can assume *everyone* has a certain kind of access.
- Low latency national networking, dramatically improving usefulness of small-business WANs
- Restructuring. IPTV could be offered both bundled with and separate to general internet access. Likewise access to a university you're enrolled at. Likewise telephony. Likewise VPN to employer's network.
Fibre is viable even in rural Australia (to the farm gate!), as Telstra proved last decade. It stopped because wireless/mobile technologies have a much quicker cost recovery, and were ready to be upgraded anyway.
A "bits per second" target is terribly shortsighted and wouldn't justify major changes, but NBN isn't (or shouldn't be) just about bits per second.
Anonymous
Ha, ha. It's funy to see supporters of NBN are running out of nice looking excuses. In reality there are two types of supporters: (1) Telstra's competitors who think anything weaking Telstra must be good for them, (2) Those who hope for cheaper and faster broadband providing that the costs are paid by someone else.
In either case where is the real benefit to the wider public?
Anonymous
The biggest advantage of the NBN is streaming multi-angle HD widescreen adult content.
Take that, Fielding, you puritan.
Anonymous
Forget the MRI in every home ruse. The NBN has got far more to do with Rupert Murdoch being able to deliver his subscription based e-NewsPapers and absolute torrents of his abhorrent American pop culture media crap, directly into his OZ customers homes each day, all provided at the expense of the OZ taxpayers....!
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