PM’s National Broadband Plan Really Is No Net Gain

Has there ever been a major Commonwealth program more hastily conceived than the national broadband network?

After it was clear their previous $4.7 billion broadband plan was a dismal failure, it was reported Kevin Rudd and the Communications Minister, Stephen Conroy, dreamt up this $43 billion plan while on two flights between Sydney and Canberra in April.

That’s not just policy on the run. That’s policy desperately sprinting from a horde of angry zombies while trying to pretend that the bite mark on its arm is nothing to worry about.

This latest iteration of the great broadband plan is three months old and already behind schedule. The Tasmanian leg – supposed to be available to consumers from this month – has been pushed back until mid-2010.

The project’s conception is still at an embarrassingly early stage. The Government’s financiers haven’t yet been consulted about exactly how the funds for the project will be raised, as a Senate committee heard last month. It’s veiled in secrecy. The Government has told the Opposition they’ll have to cough up $24,000 to see the documents which were supposed to have recommended the Government build the network.

And, unsurprisingly for a project entirely developed by two career politicians in the brief time while the seatbelt sign was off, the broadband network’s business case is supremely flawed.

The economist Henry Ergas has calculated it would have to cost individual subscribers at least $215 a month for the network to pay off its investment, and only if almost every broadband customer in Australia – 80 per cent – signs up.

Furthermore, the Government is discovering to its surprise that it can’t untangle the telecommunications industry’s dense knot of competitive rivalries and regulatory quagmires just by waving around a giant novelty cheque.

Yet to argue that the great broadband plan is perhaps just a tad undercooked is to invite accusations of Luddism. This seems to be because a lot of people view the broadband network as less an infrastructure project, and more the first tranche of broad social and economic revolution – the opening set-piece for the utopian-sounding “digital economy”.

So we’re repeatedly told it is a tragedy that Australia’s broadband take-up rates are somewhat lower than in other developed countries like Korea, because … well … think of all the cool things you can do online!

For these supporters, the technicalities of the national broadband network are just technicalities – what really matters is the internet’s sheer awesomeness.

So, fittingly, the Communications Minister’s pronouncements about broadband are rarely little more than a checklist comprising of a few key terms: “smart infrastructure”, “digital education revolution†and the more mundane “œmobile banking”.

Those are all wonderful, of course. Who isn’t looking forward to “e-Government”? But most e-Gov ideas are usually either stunningly obvious (such as more government information being provided online) or fashionable but pointless (the vapid, machine-written “blogs” of Stephen Conroy and Kevin Rudd).

Another commonly cited benefit from the Government’s broadband plan is its potential to revolutionise Australian hospitals with “telemedicine”.

But hospitals have been the recipients of a decade’s worth of special government programs to deliver them the best internet available. It seems silly to have to point this out, but Australia’s hospitals aren’t on the same ADSL plan the rest of us are.

Sure, your internet connection might have frustratingly capped just before you finished downloading that handicam copy of Transformers. But that doesn’t mean surgeons at St Vincent’s have to wait for another doctor to finish downloading x-rays before they can start the next heart bypass.

The most common argument for government-sponsored broadband is productivity. But the national broadband network isn’t going to be a magical productivity switch. There just aren’t many potential Australian entrepreneurs having their innovative business plans stymied because their broadband isn’t fast enough. Some businesses might find a faster internet connection useful, but few people seriously think our present internet speeds are what’s holding the economy back.

Anyway, our hunger for ever-greater productivity might be better satisfied by allowing the private sector to build the network. (As much as four years ago Telstra was begging the government for a regulatory reprieve so it could build a new broadband network by itself.)

Hell, if it’s productivity we want, perhaps the Federal Government could just reduce a few taxes. That’d give the economy a bit of a kick-along.

Of course, faster broadband for everybody would be delightful. But so would government subsidies for sunshine, flowers and walks on the beach.

Just because everybody loves the internet doesn’t mean that this $43 billion government-owned national broadband project is good public policy.