I was very pleasantly surprised to see Bill Morrow so publicly talking up the social and economic benefits of the NBN. As mentioned only a few weeks ago this was the element that was most missing from the NBN’s business case, both under Prime Ministers Rudd and under Turnbull.
For over a decade this has been my key argument for why we need the NBN and why there was a good reason for the government to invest in this infrastructure.
It has always been my contention that the investment would not stack up if the financing of the project was based solely on a commercial ROI. I have consistently argued that the social and economic benefits would be far greater than the ROI. If an ROI were to be allocated to the venture then it should be done in a way that indicates what part of the investment would be covered by the social and economic benefits and which part needs a commercial ROI.
When I started my discussions with the government in 2005 this was my sole argument for why the government should be involved in providing nationwide access to high-speed broadband. This was discussed in the context of Telstra clearly indicating it was there primarily to make a profit rather than serve the national interest; and it announced in 2006/2007 that it would therefore only develop an FttN network to 51% of the population.
At that stage the discussion was still only in relation to a $5 billion investment from the government for high-speed rural and regional broadband in Australia.
When the nationwide NBN started to emerge in 2009 I urged the government to clearly declare those social and economic benefits. There were reports from the CSIRO and others that could be used to at least provide some basic indicators in relation to a cost benefit analysis.
However the government thought that it was not necessary to state these benefits – that they were self-evident. This soon came back to haunt them as the then Opposition homed in on this and relentlessly started to ask the government for a cost benefit analysis; but once in government in 2013 they, too, failed to provide clear indications regarding the social and economic benefits.
Rarely has the importance of the social and economic benefits of the NBN been used by the government to promote this investment. Instead they have constantly played it down and blamed the previous government for an alleged “‘NBN disaster’. So it was a very pleasant surprise to see that NBN Co had commissioned renowned research company AlphaBeta to use, among other data, the 2016 Census to investigate the impact of the NBN, basically by comparing economic and social activity between those areas connected to the NBN and those that were not yet connected. Mr Morrow provided some of the highlights of the report:
- In NBN regions, it is estimated between 1,900 and 5,400 new businesses were created in 2017. This was five times the pace of regions without NBN. If this rate of growth continues, by the end of the rollout there will be between 30,000 and 80,000 additional new businesses as a result of the NBN network.
- The number of self-employed women in NBN regions grew at an average 2.3% every year, compared to just 0.1% in non-NBN areas. That’s 20 times more likely than in non-NBN areas. If this trend continues, up to 52,000 additional Australian women will be self-employed by the end of the rollout, due again to the ‘NBN effect’.
- In the financial and professional services industry it is estimated that this industry alone has benefited from productivity gains worth around $260 million in 2017.
- The NBN generated an estimated $1.2 billion of additional economic activity in 2017. By the end of the rollout, the ‘NBN effect’ is forecast to have helped create 31,000 additional jobs.
- By the end of the rollout, this ‘NBN-effect’ is predicted to have multiplied to $10.4 billion a year, and this effectively equates to a net present value of $122 billion.
- People with NBN are twice as likely to enrol in on-line courses than their non-NBN counterparts.
- People with NBN are 1.3 times more likely to use internet-connected devices to improve their health and well-being. NBN users are almost a third more likely to use health devices like FitBits or smart watches.
- The ‘NBN effect’ is estimated to have contributed about $90 million dollars in productivity gains to the health industry thus far.
- NBN users are 1.4 times more likely to socialise using the internet than non-NBN users.
There are some questions in relation to the data for example how influential are the early FttH connections in the results of the survey and is it realistic to simply extrapolate some of the results (eg jobs) into the future? Let’s hope that the full report will be made available as I believe that this is an excellent document for people to study who do have an interest in ensuring a good outcome of the future of the NBN.
The report is a significant vindication that the NBN is indeed delivering social and economic benefits worth far more than the network’s commercial ROI rate. As these benefits never show up on the balance sheet of the operator it is important for the government to recognise these benefits and take them into account in relation to their own investment in the NBN.
It will be interesting to see how the government now takes the NBN forward. Will it finally stop blaming the previous government for the alleged ‘NBN disaster’ and start taking credit for the social and economic benefits the NBN is delivering now – and even more so in future, as the AlphaBeta data clearly shows? And will it now take these facts into account in relation to the next decision to upgrade the FttN part of the NBN to a full-blown FttP/FttC network?
This research – commissioned and accepted by the NBN company, which is fully owned by the government – could be a gamechanger for the future of the NBN. Let us hope that the political will is there to grab this golden opportunity.