The panel appointed by the Federal Government to conduct a cost-benefit review of the NBN has released the fifth of its six reports. This report, The costs and benefits of high-speed broadband, focused on the economic and social costs and benefits arising from the availability of broadband of differing properties via various technologies.

The panel of four, consisting of Dr Michael Vertigan AC, Ms Alison Deans, Professor Henry Ergas and Mr Tony Shaw, suggests that the current government’s multi-technology mix (including fibre-to-the-node, fibre-to-the-premises, fixed wireless, satellite and hybrid fibre-coaxial technologies) will deliver the NBN at a lower cost and its benefits will be realised sooner than a full fibre-to-the-premises rollout.

The report has a particular focus on estimating the household willingness to pay (WTP) for high‐speed broadband and using this as a measure of the consumer benefits of the additional speed that the NBN offers.

The report states that consumers would rather have moderate broadband speed increases sooner, than wait longer for more significant speed increases.

The CBA involved the comparison of four different options for the rollout.

• No further rollout scenario — this scenario assumes there is no further investment in
high‐speed broadband infrastructure beyond the investments already made and no
change in speeds from those available today. This was a purely illustrative scenario
used to estimate the benefits of high‐speed broadband.

• Unsubsidised rollout scenario — this scenario models the rollout of high‐speed broadband using hybrid‐fibre coaxial (HFC) and fibre to the node (FTTN) technologies to areas where it can be undertaken without the need for any government subsidy but not to the areas that do. It provides a reference case against which to compare other scenarios.

• Multi‐technology mix scenario (MTM scenario) — this scenario assumes a combination of fibre to the premises (FTTP), FTTN, HFC and fixed wireless and satellite solutions (as set out in the NBN Co Strategic Review).

• Fibre to the premises scenario (FTTP scenario) — this scenario assumes delivery of
FTTP to all premises in the fixed line footprint, complemented in high cost areas by fixed wireless and satellite solutions (as set out in the ‘radically redesigned’ option of the NBN Co Strategic Review).

These scenarios differ in the upload and download speeds made available, in the timing of delivery and in their coverage. In particular, the following features should be noted.

• The FTTP scenario and the MTM scenario provide higher speeds Australia‐wide.

• The unsubsidised rollout scenario provides higher speeds to the majority of the fixed line area (up to 93 per cent of premises) but not to areas covered by the other investment scenarios through fixed wireless and satellite services.

• The FTTP scenario provides the highest speeds but is more costly and takes materially longer to deploy.

The FTTP scenario takes longer to deploy than the MTM scenario because it involves replacing the HFC assets (which are used in the MTM scenario) and copper connections to premises (which are used in FTTN delivery in the MTM scenario) and placing entirely new connections in almost all premises. Given the greater tasks involved, accelerating the deployment of FTTP to match that in the MTM would likely entail substantial cost increases.

The report primarily uses the 2014 Communications’ Chambers report to estimate domestic bandwidth requirements from 2013-2033.

CBA

Communications Minister Malcolm Turnbull says that the report supports the government’s multi-technology rollout policy.

“On a financial basis, purely financial basis, that saves over $30 billion. And when you do the cost benefit analysis which has been done now and completed which takes into account all of the social benefits to the whole society – e-health, education, the works – even on that basis, the approach we’re taking is $16 billion better. That’s to say Australians are $16 billion better off by taking the approach we’re taking.”

The report does however suggest that fibre-to-the-premises technology be kept open as an option in the future as data use increases.

In an interview with Michael Brissenden, Turnbull dismissed the possibility of an unsubsidised NBN rollout that would leave residents in areas that cost more to connect (mostly in regional areas) without access to the NBN.

“Well it’s a subsidy. There’s no question about that. It is, the Government, the nation can afford it. We can afford that cross subsidy.”

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