Broadband Communities

JAN-FEB 2019

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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J A N U A R Y / F E B R U A R Y 2 0 1 9 | w w w. b r o a d b a n d c o m m u n i t i e s . c o m | B R O A D B A N D C O M M U N I T I E S | 4 3 investment. If the return on investment meets the government's threshold for action, the government can implement the policy. On the other hand, if lengthening the school day just makes children tired or improves test scores but has negligible effects on later-life outcomes, the policy proposal should be rejected. Other approaches to social return accounting have been used in the U.K. and Australia, but the method these authors propose is the first to use experimental social science data. It also takes a broader view of social capital development, including human and social capital in addition to financial and physical capital expenditure. THE NATIONAL BROADBAND NETWORK In 2009, the Australian government, responding to complaints about low internet speeds, announced a plan to build a nationwide infrastructure to support high-speed internet. It created the NBN Company and charged it with building a wholesale FTTH network to connect all but the most remote Australians. Retail services were to be provided by private partners. NBN Co began building the fiber network and immediately encountered difficulties. In 2013, a new government was elected and switched to a fiber-to- the-node strategy to reduce buildout costs. e FTTN strategy, too, developed cost overruns and other problems, but the project continued to go forward. NBN broadband services are now marketed to 67 percent of Australian homes and businesses, and the network has a take rate of nearly 60 percent. e government demanded that the NBN Co seek a 7 percent rate of return, which requires the retail providers to charge high fees. "erein lies a tension," the authors point out. "Although NBN is safeguarding the taxpayers' investment, those same taxpayers are potential NBN users. e users may not see their tax dollars lost, but they are still paying a high price for NBN service." e authors question whether imposing such a high rate-of-return requirement on NBN Co was reasonable or whether the social benefits of this publicly owned network should be factored in along with its financial returns. ey also ask whether the social returns for the FTTH portion of the network differ from those for the FTTN portion. SOCIAL BENEFITS OF NBN What are the social benefits of FTTH, and how can they be measured? Personal income. e authors look first at a German study in which certain communities received fast broadband in the 1990s before similar, neighboring communities. Residents of the well-served communities developed substantially higher technology skills and were able to command higher wages than residents of the unserved communities. Applying these findings to present-day Australia, the authors calculate a conservative estimate of the wage increases over a 30-year period that could result from NBN. Education. Education is often cited as another benefit of broadband. e authors examine a number of studies of broadband's effects on test scores but ultimately do not calculate any benefits for education, both because the studies are contradictory and inconclusive and because any positive effects from education would ultimately be captured in their estimate of wage increases. Health care savings. e authors cite an Australian pilot study that showed a telepediatrics program saved Queensland's Department of Health a substantial amount because fewer patient transfers were required. Applying these findings to other specialties and geographic areas and assuming that videoconferencing can save the states and territories 50 percent of the $188 million in travel assistance they spend each year, the authors add 30 years of travel cost savings to the benefit side of the ledger.

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