[LINK] Study casts doubt on claims for broadband - R & C Kenny: "Superfast, Is It Really Worth a Subsidy"

Robin Whittle rw at firstpr.com.au
Mon Nov 29 16:44:42 AEDT 2010

Hi David,

The Age's version of the article is here:


The full text is below and has more details than the SMH version.

Charles Kenny's blog page is:


This links to the study itself, entitled "Superfast: Is It Really
Worth a Subsidy?", written with his brother Robert Kenny:


It looks impressive to me, and is well referenced.

 - Robin

NBN's benefits grossly overstated, study reveals
Peter Martin
November 29, 2010

THE federal government has been accused of misusing research to build
the case for the National Broadband Network in an international study
that finds the claimed benefits "grossly overstated".

Released in London ahead of today's vote in Canberra on legislation to
support the NBN, the study finds evidence to support the claims made
for fibre-to-the-home "surprising weak" and cites Australia as a key

"All else equal, faster is better," says the study, prepared by
British telecommunications consultant Robert Kenny with Charles Kenny
from the US Centre for Global Development.

"But faster technologies don't always triumph; think of passenger
hovercraft, maglev trains, and supersonic airliners. Concorde (if it
hadn't retired) would still be the fastest passenger aircraft today,
having first flown in 1969. It turned out that the incremental
benefits of speed to most customers were not worth the extra cost."

South Korea, cited as the world leader in providing fibre to homes,
enjoyed annual productivity growth of 7.6 per cent per capita in the
decade before it began the program and 3.8 per cent in the decade since.

"Many factors played into the growth slowdown," the study says. "But
maybe the massive increase in online gaming, facilitated by the
broadband revolution, played a role - the South Korean government
estimates that as many as 2 million of its citizens are addicted to
online gaming."

Worldwide, the authors find a weak negative relationship between fixed
broadband rollout and economic growth.

Launching the NBN in 2009, then prime minister Kevin Rudd said 78 per
cent of the productivity gains in service businesses and 85 per cent
in manufacturing flowed from information and communications
technology. The study traced this claim back to two papers from
Australia's Communications Department referring to gains of 59-78 per
cent and 65-85 per cent. "What was an upper bound in the research has
become a mid-point in Rudd's speech," it says.

"But more importantly the research was looking at all technological
factors. Thus the figures cited include the benefits of everything
from biotechnology to the rise of containerised transport." Also the
research cited by Mr Rudd covered the periods 1985-2001 and 1984-2002,
"when the internet was in its infancy and broadband was prenatal".

The paper says claims about the benefits of e-health, smart-grids and
online education bear little relationship to fibre-to-the-home.

Other claimed benefits such as a shift to home working or remote
medical care would themselves entail big costs in addition to the
broadband network. Business and government applications such as remote
medical imaging require connections only to major buildings rather
than every home.

"Julia Gillard will now have to include the authors of this study
along with Reserve Bank governor Glenn Stevens in her growing list of
wreckers, Luddites and enemies of human progress," said shadow
communications minister Malcolm Turnbull.

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