NBN costs attacked by research group

South Korea, China less costly, more moderate examples of public sector broadband projects

A research group associated with business publication The Economist has attacked the Australian Government’s National Broadband Network (NBN) for its high cost and high level of public sector involvement, ranking it ninth out of 40 countries in a global survey of broadband projects.

The report’s abridged executive summary (available via free registration) used multiple factors including clearly stated objectives, target speed, universal speed, rollout timeframe and cost and regulatory provisions, all ranked out of five, to determine its government broadband index.

The report, however, did not appear to factor population density in its rankings.

The survey ranked Australia ninth for the NBN with a score of 3.4 while South Korea, which ranked first, scored an average index of 4.4 out of five.

Australia fell hardest, according to The Economist’s analysts, in the “colossal” use of 7.58 per cent of annual government budget revenues, compared to a relatively minimal one per cent spent by South Korea on its rollout.

It also labelled the NBN one of the most extreme cases of public sector involvement, placing China as a more modest government project due to its $US22 billion stimulus package for broadband development.

The report did, however, acknowledge the lack of private sector interest in providing less lucrative rural broadband services, prompting involvement from federal governments to fill the ‘digital divide’ and ultimately announced wider broadband networks spanning the entire country.

“Governments in developing countries are also becoming involved in broadband, although many are initially focused on addressing regulation and market competition, along with backbone infrastructure and international capacity issues, before producing detailed targets or plans for ultra-fast broadband coverage,” the abstract reads.

The report comes as the latest in a series of scathing attacks on the NBN by the Economist Intelligence Unit which, earlier in January, released a technology briefing declaring the NBN’s commercial case “extremely fragile”.

The unit also criticised the Australian Government for its heavy reliance on fixed line over wireless technologies for deployment.

“The NBN business plan relies heavily on the view that fibre to the home will become the technology of choice for most Australians,” the briefing reads. “Yet 13 per cent of Australian households have already ditched fixed-line communications and gone 'wireless only'.

"The continuation of this trend, with the take-up of more advanced wireless technologies, would prove extremely damaging to the NBN business case, probably resulting in a negative rate of return for the business plan.”

Shadow communications minister, Malcolm Turnbull, immediately jumped on the report’s findings, labelling it as further evidence the NBN should be subject to a “rigorous cost benefit analysis”.

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