Kiwi broadband study stirs Aussie NBN debate

Shadow minister calls for cost-benefit analysis

Australia's shadow minister for Broadband, Communications and the Digital Economy, Senator Nick Minchin, has used the publication of a new report into the productivity of high speed broadband to reiterate his call for a full-cost benefit analysis of the NBN.

The report, The Need for Speed: Impacts of Internet Connectivity on Firm Productivity which studied 6,000 New Zealand businesses, found while broadband adoption did boost productivity, no productivity differences where found across different types of broadband.

The implication — that high speed broadband delivered by the NBN may not result in greater productivity than that which is facilitated by current broadband speeds — was seized upon by Minchin as further evidence as to why the Rudd Government must commit to a full cost-benefit analysis.

“The Rudd government must subject this proposal to a rigorous analysis in order to establish whether or not the enormous amount of taxpayer money it plans to spend will result in commensurate benefits, including productivity gains” Minchin said in a statement.

“Our estimates show that all these productivity gains can be attributed to adoption of slow relative to no broadband, with no discernible additional effect arising from a shift from slow to fast broadband.”

The report's authors, which include NZ Reserve Bank chair Dr Arthur Grimes, wrote that despite well-articulated pleas for upgraded internet access, reference to rigorous research that quantifies benefits actually accruing from network upgrades is generally absent in supporting materials.

A key reason for this conspicuous absence is that little rigorous research exists that measures the productivity impacts of a shift from one type of internet access to another, the report reads.

“Most research in the field has been conducted at an aggregated (regional or national) level or has bundled together various types of information and communications technology (ICT) rather than separating out the internet access component,” the authors wrote. “Neither type of aggregation enables reliable conclusions to be drawn about the extent of productivity improvements that might arise if, say, an ADSL network is upgraded to a fibre network.”

Despite this, the authors wrote that the finding that a move to fast broadband (cable) from any other form of broadband has no estimated effect should be interpreted with care.

This was due to a number of reasons such as the distinction between cable and other broadband types being a poor representation of differing internet speeds, not all survey respondents being aware of the technical nature of their firm’s broadband connectivity type, and firms recently adopting cable being yet to achieve the full productivity benefits.

“…We conclude that firms with faster connectivity make greater use of the internet in their commercial transactions. Furthermore, on the basis of our propensity score matching, we conclude that a shift to broadband connectivity (from dial-up) appears to raise firm productivity.”

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