The Government’s National Broadband Network has been slammed by a new index produced by The Economist magazine, which says it will cost more than 24 times that of similar networks built by other countries, including South Korea.
But while the Opposition has jumped on the index, with communications spokesman Malcolm Turnbull saying the report proves the NBN is a waste of money, telecommunications experts say the comparison is unjustified and unfair.
Telsyte director of research consulting Chris Coughlan says comparing several different networks in countries with varying geographies will never produce a reliable result.
“I think you need to look at different factors here. At the end of the day, South Korea is about the size of Victoria with a larger population than our country. The cost of deploying in that country is significantly less.”
“It’s a matter of geographic dispersion. South Korea can easily reach 100% of households, but it’s much, much harder in Australia where the range of the network is far greater.”
Telco analyst Paul Budde has told Fairfax he believes the results are “a bit ridiculous”.
“It is like making a comparison between a road system in Korea and that in Australia and then saying investments in roads in Australia are wasted investments because it costs far less to build such roads in Korea.”
According to The Economist, Australia has been ranked ninth with a score of 3.4 out of five, with South Korea ranked at the top of the list with a 4.4 out of five. Australia is so low on the list due to the “colossal” use of 7.58% of budget revenues, the index states, whereas in South Korea, only 1% has been used.
That 7.58% refers to the $27 billion commitment as a whole of the Government’s 2009 revenues.
The report also points out that by paying over $27 billion for the network, Australians will be paying 24 times more than South Koreans did for their own network. And initially, speeds would be much lower.
The Economist used a variety of factors including universal speed, time of completion and regulatory provisions in deciding how all the different projects should be ranked.
In the report, The Economist makes a thinly-veiled dig at the Gillard Government for seemingly embarking on a plan to fix competition issues without actually revealing many financial details or other targets.
“Governments in developing countries are also becoming involved in broadband, although many are initially focused on addressing regulation and market competition, along with backbone infrastructure and international capacity issues, before producing detailed targets or plans for ultra-fast broadband coverage,” the abstract reads.
The index also comes just one month after The Economist released a briefing in which it stated the business case for the NBN was “fragile”.
“The NBN business plan relies heavily on the view that fibre to the home will become the technology of choice for most Australians,” the briefing reads.
“Yet 13% of Australian households have already ditched fixed-line communications and gone ‘wireless only’.”
But in a statement, communications minister Stephen Conroy has said the report ignores several different factors between the NBN and the South Korean network – including geography.
“Australia’s land mass is over 7.6 million square kilometres compared with South Korea’s, which is just over 100,000 square kilometres. Australia has a population density 2.7 people per square kilometre compared with 487 people per square kilometre for South Korea,” a spokesperson said in a statement.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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