No Place for Short Sightedness Over NBN

There has been much press over the weekend over former federal opposition leader Malcolm Turnbull's opposition to the forthcoming National Broadband Network (NBN), a network which has already commenced rollout in Tasmania (via a pilot site), and is preparing for the rollout of pilot sites in a number of mainland locations.

Turnbull has labelled the network as “dangerous and a “potential white elephant“.

While there are many potential pitfalls, I feel that what Turnbull does not understand – (or at least show that he understands for the purposes of political point scoring) – is that the NBN will not operate under a “normal” business model.

People who are in any way thinking the network needs to recoup its oft-proported pricetag of $43B back quickly, is kidding themselves. The life of the NBN will be measured in decades, and the fibre being laid has already been show in the laboratory to be capable of delivering much higher speeds than the proposed 100Mbit barrier of the NBN. The NBN in its initial form, would therefore be barely pushing what it could be ultimately capable of.

Once operational, absolutely the NBN needs to be profitable – but we need to ignore the setup costs – (whatever they turn out to be) – for a moment, so we can look at the picture in a bit more of a wide-ranging way. The NBN is not just about internet. People need to start separating the concept of “broadband” and “internet” – they are not the same, and should not be considered the same. Many more kinds of services will be available over the NBN, many of which haven’t even been dreamed up yet.

We build multi-million and billion dollar freeway infrastructure in this country, without any case for the “money” to be returned. The “return” is the increased economic activity that will be supported by the existence of those freeways over the life of that infrastructure. This can also be equally said of rail infrastructure. You build a $300M ring road around a city to bring more than $300M of increased economic activity to the region that ring road supports over it’s lifetime. Obviously there are maintenance factors, but that’s all factored into the equation too.

The NBN is a freeway, and nobody disputes that $43B is a very large amount of money. The question is, over its lifetime, will the NBN provide more than $43B of benefit to the Australian economy? In my opinion, absolutely.

The cost advantages for S2S (site-to-site) and B2B (business-to-business) connectivity using the NBN in lieu of existing options will take care of a lot of that value all by itself. Inter-capital bandwidth in Australia is ridiculously expensive by world standards. The mere SAVING of money that business would be otherwise spending on overpriced and outdated inter-capital connectivity, can be directly injected into other areas of the economy, such as research and development – and this is only one example. There are also many potential flow on benefits.

For example, large numbers of people for whom telecommuting would not have been a consideration in the past will suddenly be presented this as a potential and viable option. Many more people working from home, for even a few days each week, leads to there being less people driving on the road. This leads to obvious environmental benefits, lower road maintenance costs, and the takng off of pressure from already crowded and failing public transport systems.

If people are not on the roads as much, there are less accidents, and therefore less road trauma, and in turn this reduces costs for the struggling health system in this country. Less accidents mean less pressure on both automotive and health insurance premiums. I’m sure there are many other ways you could extrapolate the very existence of the NBN to effects on other parts of the economy.

With the NBN you absolutely have to look outside the normal “box” of thinking. In the old Australian economy, the NBN is ridiculous, but in the new Australian economy the NBN would allow to be created, it will be crucial. If we do not transform our economy away from one that relies on the “sheep’s back” as it is often described, we will slip so far behind when every other country does this, that we’ll be absolutely nowhere.