NBN most “extreme” use of Government broadband policy, new report claims

The National Broadband Network has come under attack again, after a report in the Economist Intelligence Unit criticised the $U25 billion price tag, calling it one of the most “extreme” plans by a Government to create a broadband infrastructure program without use of the market.

The report has prompted coalition communications spokesman Malcolm Turnbull to attack the NBN program once again, saying it is the “telecommunications version of Cuba”, although the Government has said the EIU’s report understates the amount of money that will be repaid.

The EIU wrote in its latest report that the NBN is the “outstanding example of extreme government intervention”.

“At the extreme end of this range of intervention is Australia, which has both the highest level of total public funds pledged, ($27.1 billion), and the highest level of public spending per household, due to the government’s plan to create, own and operate an ultra-fast fibre network in virtually all parts of the country,” the EIU said.

“There will be no infrastructure-based competition, with NBN Co acting as both passive and active network operator in both urban and rural areas.”

The report claims that Australia will spend the most to construct a national broadband plan at $3,455 per household, compared to $150 and $57 for both the United States and Britain. Australia is also one of nine governments willing to spend more than 1% of annual revenue on broadband plans.

Australia, the United States and China are spending the most in total out of all other countries, with the US to spend $US15 billion, and China $US11 billion.

“This is in contrast to Denmark, whose government prefers to facilitate competitive market-driven rollout through regulation and by setting lower targets for both speed and coverage,” the report states.

“In North American, the focus is largely on reducing the digital divide, with both Canada and the US funding network rollout in rural and regional areas.”

This is not the first time the NBN has been named in such a report, with comparisons of worldwide broadband programs citing the Australian Government’s plan as one of the biggest of its kind. The previous edition of the EIU report found a similar conclusion, and the Government attacked the report hen as well.

Turnbull has responded to the report, saying it shows the “lunacy” of the program. He references China, and claims the country is taking more of a competitive approach and that Australia is lagging behind in innovation.

“Labor is entitled to argue that it knows better than the rest of the world. But it should at least do the responsible thing and have its assumptions tested by an independent body such as the Productivity Commission.”

Communications minister Stephen Conroy has taken issue with the EIU’s approach, saying Australia cannot be compared with other countries which are smaller and have a higher population density.

A spokesperson has said that the report is “right-wing dogma”.

”The Gillard government is proud to be investing in the NBN, which is the right solution for Australia,” he said, according to Fairfax.