Wednesday, October 27, 2010

Frustrations over the NBN discussion

Last night I watched the episode on the  new National Broadband Network on SBS TV's Insight Program. You will find the transcript here. For the benefit of readers outside Australia, this is the new national optical fibre network under construction by the NBNCo for the Australian Government at an estimated cost of c.$A43 billion. It is a political hot potato in this country.

I got quite frustrated during the program. I felt that Jenny Brockie as moderator failed to control discussion, allowing it to be high jacked. As a consequence, I felt that I had learned nothing new. I also got cranky at her failure to let one of the UNE Deputy VCs really speak. The University has had more than fifteen years' experience in on-line delivery.

There was a time that I knew quite a lot about this stuff, first as a policy adviser and then as a consultant and at community level. Watching Paul Budde and Kevin Morgan duel really took me back. Kevin was in attack dog mode, while Paul reiterated the potential benefits on the other side. Neither added much to my understanding, nor for that matter did Malcolm Turnbull.

Accepting that I am now out of touch, I wanted to make a few general comments about issues that concern me.  

    There is no doubt that cost-benefit analysis is a useful tool in assessing major projects. However, it suffers from a number of weaknesses, weaknesses that mean that cost-benefit analysis can actually be a good way of blocking things that might well be desirable. Treasuries are very good at this technique. You can be pretty sure that the reason why Mr Turnbull is so keen that the NBN be referred to the Productivity Commission is that, in his judgement and on his numbers, the PC is likely to report in negative terms.

In cost-benefit analysis, there is often an asymmetry between costs and benefits. The costs come first and are generally better known, whereas the benefits are always in the future and are more difficult to calculate. This is especially so where there is a prospective or blue sky element.

If you look at the various proponents in the broadband debate, you can see that those in favour argue in part in terms of applications and take-up that are yet to be defined, those against dismiss such prospective benefits and also argue that the same benefits can be achieved in alternative ways and at lower cost.

One of the reasons why I got frustrated with last night's show was that much of the discussion was couched in generalities, whereas I wanted more discussion on examples and specific possibilities to inform my thinking. Some of this was there, but it got swamped.

Another problem with cost-benefit analysis is that it can be difficult to identify and include externalities, costs or benefits associated with but beyond the project. This, too, is present in the current debate.

If you look at Mr Windsor's arguments, for example, he is arguing that the sum of the parts will be greater than the whole, that beyond the benefits to the individual consumer (private or business) come benefits in economic activity and in service delivery that would not otherwise be possible. Those on the other side are dismissive. Again, I would like to have seen this teased out in greater detail.

In all this, there is also an important distributional question. Cost-benefit analysis deals with aggregates. This conceals the reality that the distribution of costs and benefits will vary between types of customers and between areas. Reactions to the NBN are affected by this. Again, we can see this in play at the present time.

To illustrate all this a little further, I want to take inland New England as something of a case study.

As in the rest of the country, views on the NBN are split. Those comfortable with the service they are getting now are more likely to be opposed on the grounds that it's not needed. This group ranges from those who rarely if ever use the internet through to quite intensive users with currently reasonable connections. Conversely, those unable to do the things they want, or who are frustrated with the current service, are likely to be pro. This is a big geographic area, so there is a third group as well, those falling to the 5% who won't be able to get cable anyway. Many in this group are doubtful of the NBN as a whole because there are major costs with fibre, whereas they won't benefit.

These views all represent current positions, one of the features of the overall debate.

West Armidale was selected by the NBNCo as one of the pilot sites for initial test roll-out. This area includes the University of New England.

Roll-out coincided with the Federal election campaign. In the highly politicised environment and with doubts about costs, benefits and indeed the NBN's very survival, initial acceptance of the offer of free connection was very low indeed among ordinary residential users - less than 10%. Following the election, the University, Tony Windsor as Federal MP, the Council, the Chamber of Commerce and both local newspapers (among others) combined in a campaign to get sign-ups. The end result was an 88% connection rate, including the University.

There is a history to this one that is relevant to the broader debate, one of the reasons I was cranky with Jennie Brockie's failure to consult UNE's Professor Duncan until the very end. I quote from the transcript:  

JENNY BROCKIE: Annabelle, you had your hand up all through the last section and I want to involve you because you are Deputy Vice Chancellor in Armidale, one of the next roll-out sites for the NBN. More than 80% of students at UNE use distance learning, is that right?

PROFESSOR ANNABELLE DUNCAN, DEPUTY VICE CHANCELLOR, UNE: About 70% of them use distance learning, yes.

JENNY BROCKIE: What will it mean for them?

PROFESSOR ANNABELLE DUNCAN: It will make a huge difference to them. At the moment, much of the interaction between the students, both domestic students and the university, is really passive. There's some active interaction - that is, we can send the material through chat rooms for example, we can get material back that way. But all of those students who study off-site miss the real experience that comes from tutorials, for example, at the university. The interaction between different students, the interactions between the student and real-time with their lecturer and the discussions that go around that - that is all a very important part of the learning experience of the people on the university campus. They miss that if they are not on the campus.

With broadband we can have a virtually classroom, we can have a tutor, maybe in Armidale, maybe somewhere else in the world - anywhere. We can also have students joining that particular tutorial from anywhere again around Australia or internationally, for that matter, if we choose to. They can then take part in a real classroom experience so it makes it a much more powerful learning experience for those people.

As a major distance education provider, UNE has been concerned about better communications for a number of years, as have some of the other educational institutions in the city, including especially The Armidale School. In the first half of the 1990s, the university was involved in complicated and ultimately largely fruitless discussions with Telecom about the establishment of a new network that would allow it better on-line delivery. As part of this, I went to the trial of a new videoconferencing facility intended to allow interactive distance education. It was still very clunky, difficult to use.

During this same period, a number of us were involved in an attempt (the Collective Wisdom Project) to create an on-line network between Armidale schools, one that would allow cooperation and resource sharing between schools and would compliment the UNE work.

As part of this, early in 1996 we mounted a major display in the Armidale Town Hall in which students from various schools gathered to prepare web pages from material sent in from the schools. There was also an interactive link to an audience gathered at the UNE centre in Sydney. In retrospect, this was a remarkably ambitious project. What was semi-concealed at the time, was that a key element in the display - the then Telecom dial-up access from the schools - actually failed.

To UNE as well as some other Armidale interests, NBN is actually a make or break type of thing for a non-metro centre in a competitive world. The progressive wiring up of the university, of its colleges, of the schools, of the hospital, the doctors' surgeries, of the aged care facilities, provides opportunities to do things previously denied, as well as things not yet foreseen.

The extension of high speed connections elsewhere adds to the potential benefits. For example, the teaching of medicine in an environment where trainee doctors have to do part of their training at places distant from the home campus.

It will be clear that, like all of us, my own perceptions of the NBN are affected by my own experiences. However, my experience has also been that it is always helpful to point and counter-point between general principles and actual examples. Without the first, things are likely to fall over. The second is required to test and inform the first.

How would I summarise all this? I suppose simply this.

Both Minister Conroy and Malcolm Turnbull are attempting to argue cases. Minds fixed, their purpose is to persuade. This dialectic can be helpful in delineating alternative views, but it can also confuse. More effort needs to be devoted to disentangling and testing the various arguments.

Herein lay my problem with the SBS program. Too much time was devoted to the protagonists, too little time to a forensic analysis of the issues. At the end, I wasn't much wiser.    

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