US-based thinktank Technology Policy Institute has issued a scathing assessment of the NBN, believing it is fast becoming a case study for how not to run a next-generation network project.
While the project began with goals of ubiquitous high-speed coverage and lower prices, researchers from the Institute saw the project as failing to deliver on its promises.
And they believed the NBN held important lessons for governments worldwide that were pondering similar incursions into the telecommunications space.
“The Australian case reveals how state owned broadband might not be the best answer to meet full coverage and competition objectives,” the Institute said.
“The NBN is an example of an intrusive policy subject to political pressures that has resulted in inefficiencies that distort consumer patterns and investment decisions without changing the competitive landscape.
“Government’s role and its continuous attempt to ‘catch up’ in a sector characterised by its dynamism should be revaluated.
“This case study illustrates how large scale public infrastructure projects in the telecommunications sector take decades to roll out, are subject to political pressures and result in little or no value to consumers.”
While the Institute saw state intervention as justified “when market failure exists”, it believed the state also had to be confident the intervention would create “benefits that … exceed the costs”.
“Countries have experimented with different intervention models for increased broadband coverage with mixed results. Australia’s wholesale government-owned broadband is among the most interventionist,” the Institute said.
“The NBN rollout has suffered from political and design obstacles that has made it impossible for Australia to reach its targets in the estimated timeframe.”
The Institute alleged that coverage and adoption rates for fixed broadband had slowed under the NBN, and that the project hadn’t ushered in the type of retail competition that it might have been expected to.
Although it also attempts to size up NBN’s overall effect on prices, the Institute notes it was unable to get appropriate data, and therefore makes few conclusions in that area.
Apart from using the NBN as a case study to discourage governments to similarly intervene into the telecommunications landscape in future, the Institute also raised questions about whether NBN needs to shake up its model and support the continued growth of mobile broadband services instead.
NBN has fast-tracked the commercial launch of mobile backhaul services this year, meaning NBN is going to haul traffic from more mobile towers in the future, assuming it is price-competitive.
“While mobile and fixed broadband were not originally perceived as substitutes, faster mobile connection speeds may be changing consumer patterns,” the Institute added.
