One of the main criticisms Malcolm Turnbull and the Coalition levelled against Labor’s FTTP (fibre to the premises) NBN was that no cost benefit analysis (CBA) was ever conducted.
Now, as part of the Government’s never ending NBN review process, we have such a CBA. It finds that Labor’s FTTP NBN provides much worse value for money than the Coalition’s ‘multi technology mix’ (MTM) NBN. The unsurprising finding is based on a number of assumptions that unfortunately do little to dispel the view that the report’s conclusions are tailor-made to suit the Coalition’s purposes.
It is the fifth of six reviews Malcolm Turnbull has ordered of the NBN since gaining office almost a year ago. Every single one of them has delivered a finding consistent with his own criticisms of Labor’s NBN. By a happy coincidence, each report, from a different group of ‘independent’ analysts, has justified Turnbull’s views.
The 196 page report compares four scenarios, and does a CBA on each.
- No further rollout scenario — assumes no further investment in high‐speed broadband infrastructure beyond the investments already made, and no change in speeds from those available today. “This is a purely illustrative scenario (it is clearly not realistic) used to estimate the benefits of high‐speed broadband.”
- Unsubsidised rollout 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. It provides a reference case against which to compare other scenarios.
- MTM scenario —assumes a combination of FTTP, FTTN, HFC and fixed wireless and satellite solutions (what the Coalition is implementing).
- FTTP scenario—assumes delivery of FTTP to all premises in the fixed line footprint, complemented in high cost areas by fixed wireless and satellite solutions (what Labor planned).
Guess what? The MTM scenario has a net cost of $6.1 billion, and the FTTP scenario has a net cost of 22.2 billion. The Coalition’s MTM NBN is costly, but much better value than Labor’s FTTP NBN. Who’d have thought it?
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All arguments to the contrary can now be put to rest. The new Vertigan CBA report proves conclusively that Labor was wasting money, and that the revamped MTM model – while still costly – is much less of a burden on the Australian taxpayer.
The analysis is there in black and white for all to see. What fools we were to believe that an FTTP solution would ever have provided the benefits we were promised. How fortunate we are that it has been replaced by the MTM option, which will bring us only slightly slower broadband, sooner and at a much reduced cost.
The Vertigan CBA report (‘Independent cost benefit analysis of broadband and review of regulation. Volume II – the costs and benefits of high speed broadband’) finally dispels all those foolish arguments that putting fibre into virtually every Australian home and business would have brought us untold benefits, and propelled Australia into the forefront of connected economies globally.
We can have most of the benefits for just a fraction of the cost. We need not worry that MTM speed are lower. “The MTM scenario … does not have the same speed capability, but has the potential to be upgraded at a later date,” we are assured. Vertigan’s analysis considers the cost of those upgrades, but the CBA technique it uses proves – beyond doubt – that it still offers better value because the costs are shifted into the future, while the slightly smaller benefits accrue sooner.
But don’t take my word for it. You can see it all for yourself here. There’s lots of charts and tables that make its conclusions impossible to refute. Now, armed with Vertigan’s two reports, with the Scales report, and with those other ones he got before and which are already largely forgotten, Malcolm Turnbull can comprehensively respond to any critics of his multi technology mix.
Independent analysis has comprehensively shown that Labor’s NBN was poorly conceived, that its planning was slipshod and its execution shoddy, and that it was a vast waste of money. That same analysis shows that the Coalition, despite having inherited such a dog, is fixing it all up as efficiently and as inexpensively as possible.
You would expect the Government to say this, because they are just a bunch of politicians who would say anything to get elected and stay in office. But these are independent analysts, chosen for their objectivity. Well done, all round.
