This paper argues that all regions benefit from the NBN but the economic effects are greater in the major cities because of their larger economic activity.
Executive summary
This paper is a partial summary of a study undertaken in the Centre for Energy-Efficient Telecommunications (CEET) at the University of Melbourne. The study focuses on the potential economic impact of Australia’s NBN.
The NBN affects the economy by making online services more widely available. Taking a conservative approach, we have considered just six categories of online services (cloud computing, electronic commerce, online higher education, telehealth practice, teleworking, and entertainment) from which there are documented economic benefits.
We have attributed to the NBN only the additional benefit derived from its deployment over and above what we estimate would have been the broadband situation in Australia without the NBN. That is, we have not assumed that broadband availability would have stagnated without the NBN.
We do expect, however, that future services will require higher access speeds, generally in the range 10-25 Mb/s. With this assumption and using a well-attested model of the Australian economy, we show that, in the long term, real GDP can be boosted by about 1.8% and real household consumption (a measure of national welfare) by about 2.0%. When we take into account the need to repay the cost of the NBN, GDP increases slightly but the benefit to real household consumption is reduced to 1.4%. Most of the benefit comes from telehealth and teleworking.
Because the access speeds (downstream and upstream) required for the services are quite uncertain, we have looked at the effects of access speeds. If all the services except entertainment can be provided with no more than 2.5 Mb/s down and up (typical of implementations today), then the costs of the NBN outweigh the benefits. Real GDP increases by less than 0.2% but real household consumption declines by 0.4%. That is, building an NBN just for entertainment is not economically viable.
An analysis of the regional distribution of benefits shows that all regions benefit from the NBN but the economic effects are greater in the major cities because of their larger economic activity
