Brian Fallow at the Herald asks if we need a 1.5 billion dollar taxpayer funded ultra-fast broadband roll-out:
It cries out, in short, for rigorous cost/benefit analysis, but that is nowhere to be found.
All we get are lofty assertions about how vital broadband is to economic growth, productivity and international competitiveness.
But when economists led by Arthur Grimes at the think tank Motu went looking systematically for empirical evidence of productivity gains from the adoption of fast broadband by firms they found a productivity effect of around 10 per cent from having broadband as opposed to no broadband,”with no discernible additional effect arising from the shift from slow to fast broadband”.
That does not augur well for big or fast economic gains from fibre to the home.
I’m even less qualified to comment on this than most subjects I prattle on about – but I will note that people who work in communications technology often get weirdly cultish and fanatical about the subject. So a policy advisor recommending new transport infrastructure might do so because they’ve done a cost/benefit analysis, while a policy advisor recommending new fibre cables might do so because they think high speed internet is ‘a basic human right’, or that it will speed up the coming of the singularity and the dawn of the trans-human.
It’s all about the pron. That and sharing cute/funny/O for Oarsome youtube videos. Oh and Facebook.
That’s all the justification polllies need – noting here that Labour proposed, Joyce carried on with.
Comment by Chris — July 22, 2010 @ 1:31 pm
I was in Australia recently. Their government is currently advertising their equivalent roll out of fiber on TV. We’re doing it because they’re doing it.
Comment by mjl — July 22, 2010 @ 1:48 pm
You can’t do cost benefit analysis for really new products. Broadband is a platform for god-knows-what. Research never reveals the true benefits of really new products, like google, facebook, the walkman, video recorders, the introduction of personal computers and so forth.
If we were restricted to cost-benefit analysis, all you’d get is super-fast dial up with pistachio-coloured modems and a free set of steak knives.
Comment by Vibenna — July 22, 2010 @ 1:54 pm
What is the purpose of this ultra-fast broadband? If it is just to upgrade the infrastructure for business – that is, a gigantic taxpayer subsidy for the corporate sector – then they should pay for it. If it is meant to ensure all New Zealanders are equally digital citizens then it is just plain the wrong way to go about it. Currently, every New Zealander “benefits” from the famous “kiwishare” – guaranteed free local calling. Only they don’t – Telecoms monopoly on the local line meant that until recently they just recouped the cost of providing free local calling with arbitrary line rental & wire maintenance charges. Many people on low incomes now can’t afford the monthly fixed charges for a fixed line, and miss out on the Kiwi share. It seems to me the kiwishare in its current form is obsolete. My catch cry wouldn’t be “1.5 billion ultra fast broadband for a few.” It would be dark 2048kps for all – you can deliver this speed over copper or fibre, and every home should be guaranteed a dark connection to every home for free. Any household can then connect to this, add a voice over the internet service (i.e. Skype), and allow access for free to a range of e-government and public service websites (say, anything with a .govt.nz address), allow the user to make Skype to Skype or emergency services calls, and so on for free. Users who wish to access anything which doesn’t come within this new “kiwishare” or wishes to makes calls to the PSTN pays as we do now to a normal ISP for a normal internet connection.
Comment by Sanctuary — July 22, 2010 @ 4:21 pm
I’m a huge web nerd, and I don’t think it will make much difference going from ADSL2+ (24Mbit) to fiber, at least in the short term, because hardly anything can deliver data to you fast enough to make a difference. In 10 years time it may be very different.
What would make an enormous difference to what we can do on the internet is to make all data transfer unlimited, instead of pricing it as if it were a finite resource. The proposed new trans-pacific fibre might hurry things along.
Comment by Steve — July 22, 2010 @ 5:06 pm
Cost-benefit analysis, from the “party of business”. Yeah right. The party of simplistic ideology, more like.
Comment by rainman — July 22, 2010 @ 6:58 pm
I fear this is just one of those areas where economists are especially useless at predicting where the growth is going to come from. At the end of 2000, with the global tech bubble hurtling into oblivion and New Zealand doing its usual “five years behind on the techology” thing, I imagine few of them would have picked “communication” as the fastest-growing sector over the next decade.
Comment by Miguel Sanchez — July 22, 2010 @ 9:06 pm
“a policy advisor recommending new transport infrastructure might do so because they’ve done a cost/benefit analysis”
Ha ha ha, unless they are a SMART urban planning public transport train spotter, and they are rarely spotted beings – yeah right.
Comment by har — July 22, 2010 @ 10:06 pm
Miguel, economists are useless.
“especially useless” is unnecessary.
Comment by peterlepaysan — July 22, 2010 @ 10:20 pm
Actually what we really need is decent broadband in rural areas.
Dialup is rubbish and broadband is not available unless you want to install a satellite dish and pay big $$
Farmers etc are getting more hi-tech and good internet is important for them.
As far as I can tell the fibre to the home plan doesn’t include rurals, only higher density areas who already have access to reasonable broadband.
Also, in 10 years time the hottest thing will be some kind of wireless tech.
WiMax already looks promising. But we’ll still be using silly old fibre.
Probably with limited compatibility with everyone else. Remember CDMA?
Comment by Roger Parkinson — July 22, 2010 @ 10:54 pm
Argument is even more useless when you consider the fact work – a web dev company of a dozen in Christchurch CBD – is looking at moving onto a fibre connection. It’s already available privately in the main cities: if a company is willing to pay for it.
Even the argument for rural broadband for farmers is absurd. So satellite is expensive – instead we’ll make everyone else pay to run hundreds of kilometres of fibre-optic to service a handful of houses who then may, or may not, use the service.
While they’re at it, I’d really like a pony also. We don’t know what the possible economic benefits are in 10 years time, but how can you say no to it? I could rent it out to the neighbourhood kids for rides. Then when they grow up, they’ll fondly remember riding a pony. They could invent a cure for cancer. Or not stab someone. VSL Bingo!
Comment by MrM — July 23, 2010 @ 8:58 am
I think the theory is that all those struggling sheep farmers will download eclipse, develop web solutions and sell them to the Chinese.
Comment by danylmc — July 23, 2010 @ 9:01 am
@MrM: if the argument is whether govt should fund *any* infrastructure then you have a point about farmers paying for it themselves. You’d want to apply the same argument to roads, of course, including urban ones.
If it is whether the govt should fund infrastructure usefully then my argument for making sure one of our main export earners has access to the technology everyone else has is still a good one.
@Danyl: farmers are doing interesting things such as integating fertiliser spreading with GPS, monitoring water levels in troughs remotely etc.
I can’t judge how truly useful this is, but they seem to think it is worth spending money on so that’s good enough for me.
Comment by Roger Parkinson — July 23, 2010 @ 10:52 am
Purchase Chorus to ensure that Fibre NEAR The Home happens and will be wholesaled in a free-for-all manner. Then subsidise any business or home that wants to connect to that – expose people to some degree of the cost so that we only connect those who actually see value in it, but keep that connection cost down enough that the individual cost/benefit consideration is quite straightforward.
Comment by garethw — July 23, 2010 @ 11:02 am
@MrM again: “instead we’ll make everyone else pay to run hundreds of kilometres of fibre-optic to service a handful of houses who then may, or may not, use the service”
did you notice I was advocating wireless tech?
Comment by Roger Parkinson — July 23, 2010 @ 11:17 am
” but they seem to think it is worth spending money on so that’s good enough for me.” Comment by Roger Parkinson
So, can’t you just DONATE to the cause? I don’t need superfast internet, so I don’t want to pay for it.
“So a policy advisor recommending new transport infrastructure might do so because they’ve done a cost/benefit analysis”
They’ll only run the C/B AFTER they (or their political master) thought up the new scheme. (I’m thinking of a tunnel under one’s own house.)
http://www.brianmadden.com/blogs/brianmadden/archive/2009/12/08/how-to-lie-with-cost-models.aspx
Comment by Clunking Fist — July 23, 2010 @ 2:03 pm
re 16: “I don’t need superfast internet, so I don’t want to pay for it.”
I gave examples in answer to Danyl’s remark that sheep farmers would be selling web apps to the Chinese. I was trying to show they are making use of serious tech for their own industry needs and spending money on it. These guys aren’t (AFAIK) chasing super fast broadband, but they’d quite like to get off dialup and onto the same tech the urban dwellers have easy access to. It wasn’t an argument from me for super fast internet.
Comment by Roger Parkinson — July 24, 2010 @ 8:42 am