[LINK] Study casts doubt on claims for broadband

Tom Worthington tom.worthington at tomw.net.au
Mon Nov 29 18:12:52 AEDT 2010

David Boxall wrote:
> Another one for the NBN-knockers: 
> <http://www.smh.com.au/technology/technology-news/study-casts-doubt-on-claims-for-broadband-20101128-18cfg.html>
> Study casts doubt on claims for broadband Peter Martin ECONOMICS
> CORRESPONDENT November 29, 2010 ...

The report "Superfast: Is It Really Worth a Subsidy?"
by Charles Kenny and Robert Kenny, at Communications Chambers, Sat 27
Nov 2010 12:08:02 EST. This is just a working paper, but it presents a 
reasonable argument:

Executive summary

Governments around the world are investing multiple billions to support
the roll-out of fiber to enable high speed broadband. These subsidies
are based on the premise that fiber to the home (FTTH) brings
substantial externalities. It is argued that FTTH will support economic
growth and is key to national competitiveness; that it will benefit
education, healthcare, transportation and the electricity industry; and
that it will be the TV platform of the future.

In this paper we argue that the evidence to support these views is
surprisingly weak, and that there are several errors that are made
repeatedly when making the case for FTTH. In particular:

* The evidence that basic broadband contributed to economic growth
is decidedly mixed, and some of the studies reporting greater benefits
have significant flaws

* Time and again, data that basic broadband brings certain benefits
is used to justify investment in fiber – but the investment in fiber
must be based on the incremental benefits of higher speed, since (in the
developed world) there is already near universal basic broadband

* This error is compounded since other high speed broadband
infrastructures (such as cable, and in time wireless) are often simply
ignored when making the case for fiber

* Fibre is credited with bringing benefits that would in fact
require major systems and social change in other parts of the economy,
such as a widespread shift to home working, or remote medical care. In
practice, these changes may never happen, and even if they do they will
have significant additional cost beyond simply rolling out fibre

* Frequently business or government applications, such as remote
medical imaging, are used to make the case for FTTH. But these
applications require fiber to certain major buildings, not to entire
residential neighborhoods (and these buildings often have high speed
connections already)

We do not argue that there is no commercial case for rolling out fiber,
nor do we argue that fiber brings no societal benefits. But we do
believe that those benefits have been grossly overstated, and that
therefore, particularly in a time of tight budgets, governments should
think very hard indeed before spending billions to support fiber
roll-out. A decade ago telcos wasted billions of shareholders’ money on
telecoms infrastructure that was well ahead of its time – governments
are now in danger of doing the same with taxpayers’ money.

From: Superfast: Is It Really Worth a Subsidy?, by Charles Kenny and
Robert Kenny, Communications Chambers, Sat 27 Nov 2010 12:08:02 EST,


Tom Worthington FACS CP HLM, TomW Communications Pty Ltd. t: 0419496150
PO Box 13, Belconnen ACT 2617, Australia  http://www.tomw.net.au
Adjunct Senior Lecturer, School of Computer Science, The
Australian National University http://cs.anu.edu.au/courses/COMP7310/
Visiting Scientist, CSIRO ICT Centre: http://bit.ly/csiro_ict_canberra

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