Just three days out from the election, the Department of Broadband, Communications and the Digital Economy (DBCDE) has released a report it commissioned from Deloitte Access Economics which estimates that the average annual household benefit of high-speed broadband - aka the National Broadband Network - will be worth around $3,800 by 2020.
Are the assumptions behind this work reasonable? What else does it have to say about the impact of high-speed broadband? And is there anything to the timing of the release of this report?
Crystal ball-gazing about the future impact of technology is fraught with risk, yet it is a necessary part of informing good commercial decision-making and good public policy. In reviewing this report, it is useful to consider three reference points:
What were we doing seven years ago?
What has been the historical growth of domestic broadband?
What are the justifications and assumptions cited for Deloitte’s projections?
In 2006, Facebook moved from a student social media site to being open to the public - it now has over 1 billion users. Youtube was one year old and was delivering 100 million video clips per day - it now uploads 100 hours of video every minute. Google Maps had just started supporting Australian cities but we were still relying on printed street directories for most of our navigation. Skype was three years old, and represented less than 5% of international phone call traffic (it now exceeds 30%). Most of us still used video tape recorders - today our iPad or Smart TV delivers video on demand from the ABC’s excellent iView service. And the iPhone was still in development, not seeing the commercial light of day until the following year.
All of these applications and technologies have driven rapid growth in internet speeds and volumes, and changed the ways in which we work and play, in ways that only a brave soothsayer could have predicted. The message is clear: even if we take issue with the specific examples in any predictive report, projections based on conservative assumptions are very likely to be exceeded.
When was the last time you recorded a TV program, looked at a printed street directory, bought a CD or sent a fax?
Growth of broadband
Multiple industry sources have observed that internet connection speeds double every 21 months. The data supporting this claim is long-running and compelling, so the notion that the mainstream connection speed expected by consumers in Australia will be 100Mbit/s in 2020 is entirely feasible.
This observation lends credibility to predictions that accept that growth in pervasive internet bandwidth will continue at the same pace, whether or not we accurately identify specific applications that will drive this growth.
The report released this week comes in two parts: a top down view of average financial benefits per household, and a small selection of scenarios which flesh out the impacts of a range of applications for representative households.
The average figure comes to $2400 of financial benefits, that is cost savings, and $1400 represents monetised consumer benefits such as travel time savings and convenience, for a total of $3800.
It is easy to criticise these projections - they are, after all, predictions of the future. However the authors have been careful to base their projections on a wide range of authoritative sources, even if some of these sources could arguably have an agenda if commissioned by governments or industry bodies. However, my careful reading of the report is that the assumptions are conservative and balanced.
It is particularly refreshing to see the analysis based not on particular applications but instead a significantly diverse range of categories. These are the impacts of communications, e-commerce, online services, travel savings, employment and productivity. All too often, the debate around broadband has focused on specific examples - tele-medicine and online education for example, which provide for good sound bites but do not inform good policy or business or consumer decision making. On the other hand, this part of the report is really targeting policy makers and is not terribly accessible to non-experts.
The second part of the report looks at a range of household scenarios - families and individuals, across remote, outer and inner regional and major city locations.
These scenarios are designed to provide a narrative for where we will be in 2020. The easiest way to critique them is to imagine ourselves in whichever scenario we find most familiar, then consider not only what we might be doing in 2020, but what we were doing in 2006.
Whether or not you take notice of the monetary valuation of these scenarios, which again are for the benefit of policy decision making, there is much insight to be gained for anyone wanting to understand what the NBN means for them. If you can imagine yourself working productively from home three days a week or attending most of your university classes online then these examples will likely resonate with you.
The release of this report at this time is no coincidence with the election coming up. It paints a positive picture of the impact of high-speed broadband on Australian households, and it does so using well-sourced evidence and conservative assumptions.
Little wonder that the coalition spokesman Malcolm Turnbull refuses to be wedged. He has publicly accepted the report and used it to argue the case for the opposition plan. Whether that alternative will deliver the upload speeds and reliability implicitly assumed in the report is perhaps a lively technical discussion for another time.