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27 April 2015

NBN is costing us millions, say councils

Households are a more lucrative customer as they choose high cost/high speed service regardless of actual need.

Thousands of jobs and millions of dollars in benefits across Australia have been lost because of NBN Co's decision to target residential areas instead of businesses, according to a new study into the $41 billion national broadband network.

Research firm Geografia surveyed 322 businesses in three precincts in Southeast Melbourne on behalf of the Frankston, Greater Dandenong and Kingston councils.

It found that in those areas alone the lack of NBN services had cost the region 1024 jobs and $8.4 million per year – a figure that could be far higher when extrapolated across the country.

"The current NBN roll out has focused on connection to residential areas rather than business precincts," the report said. "Current policy suggests they will gain fibre to the node at some unspecified point in the future.

"Enterprises estimated they would achieve a 14 per cent productivity gain if they had access to high speed broadband and this equates to a current loss to the economy of $8.4 million per annum and up to 1024 jobs in the region."

Having faster broadband would stop businesses being forced to send jobs overseas or relocating for better internet speeds, the report said.

Manufacturing businesses, transport firms, data analytic companies and other businesses hoping to "reshore" operations back to Australia were all dependent on faster broadband speeds, it added.

Missing the boat
But it also said that while studies of Sweden and South Korea showed NBN-like services helped local businesses, moving too slow would result in Australia missing the boat while losing jobs and money.

"[NBN Co's] long term financial forecasts show its revenue streams will rely primarily on the residential market … because households are more likely to purchase the highest cost/highest speed service regardless of actual need," the report said.

"There are real economic costs to not rolling out HSB as soon as possible to commercial and industrial precincts [and] high speed broadband is, and will increasingly become, essential to Victoria's and Australia's economic prospects."

An NBN spokeswoman said: "[Our] role is to connect all Australian homes and businesses as quickly as possible using whatever means necessary while minimising the burden on taxpayers.

"We have publicly stated our goal of connecting eight million homes and businesses by 2020 within the $29.5 [billion] funding envelope and generating $4 [billion] in revenues by this time."

NBN Co has already announced plans to change the implementation and target urban apartments in an effort to head off TPG Telecom's plan to connect 500,000 apartments to a rival network.

The Geografia report comes as NBN Co prepares to award new contracts that could force businesses to pay thousands of dollars for fibre optic cable connections as part of its Technology Choice program.

NBN Co's new policy is to charge individuals and companies $330 that apply for an upgrade to fibre optic cabling. They then pay an extra $330 to receive a quote on top of the costs for actually building the connection.

Under Labor's version of the NBN about 93 per cent of homes and businesses were meant to get fibre optic connections for no extra fee as part of the implementation. The Coalition in turn claims Labor's model was flawed and would have cost more than originally promised.

NBN Co is working to sign up more homes and businesses sooner, and will today launch the new logo and branding change that cost $700,000 and drops two letters from the company name to become NBN.