NBN to save costs of ageing population

Australia’s National Broadband Network (NBN) could pay for itself in just 10 years thanks to spillover savings in four key sectors of the economy – electricity, health, transport and education – according to a just published Organisation for Economic Co-operation and Development (OECD) study, Network Developments in Support of Innovation and User Needs.

Online magazine, Crikey, reports that the study has found, “A cost savings of between 0.5% and 1.5% in each of the four sectors over 10 years resulting directly from the new broadband network platform could justify the cost of building a national point-to-point, fibre-to-the-home network”.

The study also supports public-sector investment in the NBN. Private telcos need to see direct returns, it says, but governments can justify investments “relatively easily” through minimal savings elsewhere in the economy.

“There could be cases where the social returns of broadband connectivity are potentially much larger than the costs of building the network but the operators do not invest because their private returns would not justify the investment,” the report says.

The report says health systems face “tremendous pressure” to improve health quality, accessibility and outcomes in an ageing population.

“Broadband increases the potential for more doctor-to-patient interaction between hospitals/doctors and end-users at home. Two specific areas where broadband will likely have a significant impact are increasing the efficiency of health monitoring and reducing the costs on the system via remote consultation and intervention, particularly as the percentage of the population over age 65 rises significantly.”

The report also highlights intelligent traffic management systems to reduce fuel costs, “smart grids” for electricity networks, and the ability for industry to locate facilities more competitively, for example, placing data centres nearer to sources of cheap electricity rather than labour pools, as well other health and education benefits.

The OECD compares the rollout of an NBN, which transports digital information, with the introduction of the canal and railway networks that fuelled the innovation of the Industrial Revolution by moving physical goods, and the electrification that transformed 20th century industry and society.

“There were relatively few uses for electricity when the networks were first built but that electrification quickly transformed techniques and locations of production such as the physical layout of factories.

“The introduction of electricity (allowed) the factory manufacturing segments to be re-arranged to accommodate the flow of production rather than the equipment’s power requirements. This turned out to be a key innovation boosting productivity.”

According to the OECD, “Telecommunication investment largely mimics GDP growth -but in a more exaggerated way.”

Meanwhile, Australia remains in the middle of the OECD pack in terms of broadband take-up. New figures based on June 2009 data show Australia has 24.9 broadband connections per 100 inhabitants, just above the OECD average of 22.8 and below the US at 26.7.