Last week, I took a virtual slide rule to the potential REVENUE earnings of the forthcoming National Broadband Network (NBN), and came up with some rather surprising numbers. I didn’t even need convincing, but the numbers even surprised me and I’ve been working in the industry for 15 years.
Obviously I was unable to factor in costs – (as I doubt NBN Co themselves understand the cost model completely yet, so I have NO hope) – but any company with such potential for revenue earnings – whether they be public or government enterprises – should be able to deliver value against those earnings. The numbers are potentially VERY big, and NBN Co is certainly not run by any old bozos.
These are people who have built and operated large, successful telecommunications companies in the past.
Another NBN “win” is the potential benefits the network will be able to bring to the rest of the economy. Detractors say it is all “hairy fairy”, and replete with “ifs” and “buts”, but the mere existence of the NBN will bring massive flow on effects to the rest of the economy.
Take a look at this report from the Bureau of Infrastructure, Transport and Regional Economics (BTRE), as part of the federal Department of Infrastructure and Transport, in respect to the costs to the Australian economy in terms lost productivity and potential GDP, simply because people are stuck in traffic staring at someone else’s number plate. That is, congestion on our roads during our daily commute.
| Urban Traffic & Congestion Cost Trends for Australian Cities |
“BTRE base case projections have these social costs of congestion rising strongly, to an estimated $20.4 billion by 2020. The city specific levels rise from $3.5 billion (2005) to $7.8 billion (2020) for Sydney, $3.0 billion to $6.1 billion for Melbourne, $1.2 billion to $3.0 billion for Brisbane, $0.9 billion to $2.1 billion for Perth, $0.6 billion to $1.1 billion for Adelaide, $0.11 billion to $0.2 billion for Canberra, about $50 million to $70 million for Hobart, and $18 million to $35 million for Darwin.”
By 2020 – (about the time the network is likely to be completed) – the annual cost to the Australian economy simply because people are stuck on the roads getting to and from work, is projected to be $20.4 billion dollars.
Every year.
If the very existence of the NBN provides the stimulus to entice even only 10% of workers to telecommute – that is, work from home using the bandwidth the NBN will provide to make doing so particularly viable – that is reducing that congestion by 10%, and therefore saving the Australian economy $2 billion EVERY SINGLE YEAR once the network is completed.
Against a build cost of up to $43 billion dollars, with large potential revenues, and potential savings in the order of billions of dollars just by reducing congestion on the roads by even small amounts, that’s a compelling outcome.
There are potentially savings of similar magnitude right across the Australian economy – this has been only one single example. To me – yet again – the NBN still continues to stack up against the numbers.