NBN will boost GDP growth, help transform business: Access Economics report

Over half of Australian businesses believe the National Broadband Network will change the way they do business, and nearly all say the massive infrastructure project will allow staff to work from a range of locations, a new Macquarie Telecom survey has revealed.

But the survey also reveals that there are a “significant number” of businesses that are still uncertain about the applications of the NBN for their own business and that they will remain uncertain until the project is actually rolled out.

The results come as part of a new survey conducted by Access Economics for Macquarie Telecom. After surveying 540 organisations from 17 industry groups, the report finds that 86% believe the NBN will help source staff from around the world, and 88% indicate they will be able to invest in mobile sales and support staff.

The report comes after opposition communications spokesman Malcolm Turnbull and various other telco representatives including former Pipe Networks chief executive Bevan Slattery have called on the Government to conduct a cost-benefits analysis of the NBN.

It also comes after the Government’s arm was twisted by independent senator Nick Xenophon into releasing an amended version of the NBN’s business plan in order to pass the Telstra separation bill.

Most of these companies surveyed in the Access report were SMEs, with 44% counting less than five employees, while 38% had revenue of lower than $5 million.

Overall, the survey finds that Australian businesses will be able to “compete better” and expand their coverage as a result of the NBN – and it also finds may be significant macroeconomic benefits from doing so.

Macquarie Telecom chief executive David Tudehope said in a statement that while much of the focus on the NBN so far has been on residential use, the impact of the project on the business community has been relatively unmeasured.

As a result, the study finds that the NBN could have some serious ramifications for Australia’s economic growth.

The study also referenced a survey conducted by the World Bank in 2009, which found that each stage of “advanced” ICT innovation has a larger impact than those that preceded it. “This study found that a 10 percentage point increase in broadband penetration in high-income economies such as Australia resulted in an increase in economic growth of 1.2 percentage points.”

But Access also says this result is based on an assumption on speeds being much slower than they will be under the NBN.

The study also references the Crandall report from 2007, which found that an increase of 0.01 broadband lines per capita in the US increased the output of non-farm private sector by 0.46%, and another survey from Germany which found that the country’s NBN project will lead to an increase in GDP of 0.6% annually.

The survey found that 55% of businesses believe the NBN will “enhance online capabilities”, while 50% believe they will be able to offer new products and service offerings. A further 67% say they will be able to access more ways of communicating with consumers and suppliers.

Just over half of all the respondents said the NBN will allow them to compete better, while over 50% say the way they do business in general will change. About 20% say they will use the NBN to explore different employment models.

“The emergence of cloud computing – whereby end-users share resources for applications, storage and services provided over the internet – provides a clear example of this chain of development,” the report states.

The electricity, gas, water and supply industries have said they are the most likely to be affected by the introduction of the NBN, (80%), followed by information technology companies, education and training groups and then retail trade, (60%).

About 78% of companies say the NBN will enable “great diversity and depth”, and 72% say they will be able to bring their products to market quickly. Many companies also say the NBN will have a large effect on social media.

“The ability to use more interactive and richer site content will enable significant further development in the presentation of virtual products and “augmented reality” applications. This technology has the ability to transform eCommerce, and online retailing in particular,” the report states.

But the report also shows that 24% of companies are unsure about how the NBN will affect them. And 3% say that the NBN will “definitely not” have an impact on any part of their business, with the transport, postal and warehousing industries saying they will be the least likely affected (40%).

“It is worth noting that a significant proportion of businesses remain “unsure” as to whether (or how) the NBN might change their business model (25%-30%),” the report states.

“One in four respondents had also not considered the role that the NBN might play in attracting new competitors to the market; only one in five thought new competitors a likelihood,” it said. But it also noted that the network “is still in its infancy”, and that as the rollout continues, “we can expect more companies t understand the potential of the NBN”.

“The survey results, together with the case studies undertaken, give added weight to earlier research into the productivity and economic growth gains to be made from ICT transformations, which suggests that the Australian economy will receive significant impetus from the rollout of the NBN and associated gains in productivity.”

Communications minister Stephen Conroy said in a statement the report “reinforces that the NBN will increase economic growth and productivity across the Australian economy”.

“Australian businesses understand that faster, more affordable broadband will provide greater business opportunities by offering new capabilities, products and services and better online communication facilities.”