Friday, November 19, 2010

Australia - OECD questions cost-effectiveness of NBN project

[smh] The Organisation for Economic Cooperation and Development (OECD) believes Australia's National Broadband Network (NBN) promises large benefits, but may not be the most cost-effective strategy.

Releasing its Economic Survey of Australia on Sunday, the OECD says at a cost of $43 billion, or 3.25 per cent of gross domestic product, it also entails "substantial financial uncertainties".

The OECD says the Gillard Government's strategy will improve internet services for the entire population and promote a fairer competition between private firms on retail services.
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Part of the plan is to shut down Telstra's existing copper network and the country's main cable network.

"While establishing a monopoly in this way would protect the viability of the government's investment project, it may not be optimal for cost efficiency and innovation," the Paris-based institution says.

It says research has stressed the value of competition between technological platforms for providing broadband services.

"It would therefore be preferable to maintain competition between technologies in the broadband sector and, within each technology, between internet service providers," it says.

The federal opposition has strongly criticised the government for not producing a business plan for the NBN, but key cross-bench independents that helped form a minority government are supportive of the plan.

Last week in a re-released version of the so-called Red Book, Treasury said the NBN program carries significant risks, including financial risks for the public balance sheet and risks around competition and efficiency in telecommunications and related markets.

"The government's response to the NBN Implementation Study will set the parameters for the outcomes in these areas for decades to come," it said.

"It therefore warrants very careful consideration by cabinet in coming months."

The Red Book, which is a series of recommendations from Treasury for the incoming Labor government, was reissued with some restrictions that had previously been blacked-out in the document under an FOI removed.

The coalition's cheaper $6.3 billion broadband and telecommunications plan announced during the August election campaign would select private sector companies to build and execute a national network based on both fixed and wireless technologies.

Keep broadband competition: OECD

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