Some Non-Financial Costs of the NBN

Graig Gamble wrote about "Some advantages of the NBN" in the Canberra Times (11 Jun, 2011 12:00 am). But these advantages will not be without some cost. Apart from the financial cost of the system, the the National Broadband Network (NBN), will invovle social changes. There will need to be investments to counter the undesirable possible changes.

1) Benefit of the NBN will not be evenly distributed

As with most technological developments, those with more resources and education will be in a better position to benefit from it. The NBN will provide high speed broadband to homes and small businesses across most of Australia, However, having speed broadband is not the same as being able to make good use of it.

Rural Australia will benefit from better Internet access, but the more remote areas will get only wireless access, which will reduce the relative speed of access they have compared to the city.

There will be advantages for those with a disability, for telecommuting, e-health and e-learning. However, these will not necessarily be extra optional services. When banks introduced ATM, phone banking and Internet banking, this allowed them to reduce the number of branches. Similarly, government, medical and educational institutions will be able to reduce their face-to-face services, by introducing on-line facilities.

2) Ubiquitous broadband will be wireless

There is a myth that Australians are early adopters of technology. As my colleague, Dr Idris Sulaiman has found, the residents of Indonesia are overtaking Australian Internet use. This is due to due to wireless Internet on mobile phones. Internet on phones is more expensive, slower and less reliable than the NBN's optical fiber network. The NBN's fixed wireless for regional Australia is a little better. But mobile Internet provides the great advantage of being with you where and whenever you have a phone. Just as Australia is investing in a fixed network, the world is remaking the Internet to be mobile.

3) TV is the NBN killer application

The major application for the NBN is digital TV, the less glamorous one is old fashioned telephones. While much has been made of low take-up rates for the NBN in pilot sites, the government has a guaranteed market for the NBN. It is planned to phase out copper cable, with it not being installed for new housing developments. If a homebuilder wants a phone connection or Internet access, then they will have a choice between the NBN's fiber cable or wireless. Old fashioned copper telephone cable will not be an option. This will ensure the takeup of the NBN, assuming householders want a landline phone.

The most likely use for the NBN will be for digital TV. Already pay TV providers are offering services over ADSL Internet connections (and Transact's fiber optic cable in Canberra). While much is made of free DIY video on the Internet, it is likely that households will be willing to pay for professionally produced TV. It is also likely that current broadcast channels will be carried over the NBN. This will create some interesting regulatory issues, with the NBN not being limited by traditional broadcast regions.

4) NBN Worth it Just for Phones

The cost of the NBN was estimated at $42B, then $35B and likely to go lower, as the NBN Corp works out how to install it efficiently. Also newer technology is likely to lower the cost. Installation in new suburbs and apartment buildings is the cheapest option and retrofitting old suburbs the most expensive. The best strategy in social terms is to install the NBN in regional areas and those pockets of the city without adequate broadband currently. New greenfield developments can also be done first as they are cheap. Most Australian city suburbs with adequate ADSL broadband can be done last, or perhaps never, if wireless technology improves to the point where NBN is not needed.

5) NBN Will Not Make Internet Cheap

The cost of providing an Internet service has little to do with the cost of cables, but is mostly about billing and marketing. So the NBN will not make the Internet cheaper, but we will get a faster and more reliable service.

There may be some low cost add-ons provided on top of the NBN. It would be feasible to provide a wireless services using the NBN as the back-haul channel. Low power wireless bas stations would be plugged into the NBN and used to carry the signal the last few tens of meters. This could be used for wireless Internet access at speeds faster than current ADSL and also be used for telephony. With this arrangement, only a few houses in the street would need an NBN connection to provide coverage for the whole street.