Audit reveals rural broadband subsidy costs

An audit into the Federal Government’s Australian Broadband Guarantee (ABG) has found the program cost the Federal Government up to $258 million during its operation.

The Department of Broadband, Communications and the Digital Economy established the program in 2007 as a subsidy to service providers for the setup cost of internet connections that do not meet metro-comparable broadband speed benchmarks.

The program was allocated $237.7 million by the government in 2008 to operate for four years, and was initially worth some $2500 and up to $6000 per customer for participating ISPs.

The department has reviewed the program on an annual basis, with benchmarks adjusted accordingly; current standards stipulate speeds of at least 1024 kilobits per second (Kbps) downstream and 256Kbps upstream with six gigabytes (GB) of monthly data quota. The plans must not cost individual customers more than $2500 over three years.

However, a report into the broadband subsidy released this week by the Australian National Audit Office found the government had paid out some $258 million to 34 ISPs to connect more than 103,000 customers to broadband between the program’s inception in April, 2007 to 30 June 2010. Almost 95 per cent of those connections were for satellite broadband connections, according to the audit report.

A spokesperson for the department told Computerworld Australia in an email that the $237.7 million in funding provided in 2008 by the Federal Government did not take into account the subsidy payments made during 2007.

The program is expected to terminate at the end of June this year, by which time National Broadband Network wholesaler NBN Co expects to have an interim satellite solution in place to suit the needs of most rural consumers and businesses.

It is unclear whether the department expects further uptake of services under the guarantee over the remaining months of the program.

The audit report, which considered the planning, implementation, monitoring and performance of the broadband guarantee, found that despite its existence, non-metropolitan uptake of broadband services lagged behind metro areas by up to 15 per cent in recent years.

Figures cited from the Australian Bureau of Statistics indicated the gap between metropolitan and non-metropolitan broadband uptake had actually increased from 11 per cent to 13 per cent between 2004 and 2009.

While the guarantee assisted the reduction in the number of under-served premises, the report found little in the way of documentation used by the department to provide advice to communications minister, Senator Stephen Conroy. The report also identified shortcomings in the technical testing undertaken by the department of eligible providers and customers.

The audit report concluded that there was doubt in the “underlying rationale for changing (or retaining) program elements” during each year of the program, and recommended that the department offer more transparency in its reporting for all broadband programs.

“At times, there have been inconsistencies or anomalies in the program metrics reported in internal management reports—an issue compounded by the practice of not keeping records of how the data reported was derived,” the report reads.

“Similarly, by not keeping copies of the outputs of the demand forecasting model, the department has impaired its ability to effectively review and adapt the model.”

The department has agreed to redevelop key performance indicators for broadband programs and provide greater accuracy of reporting on trends over time, according to the audit office.

Follow James Hutchinson on Twitter: @j_hutch

Follow Computerworld Australia on Twitter: @ComputerworldAU

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