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Why $43B seems a lot for the NBN.. but isn't

Upgrading the NetworkWow, $43Billion for a piece of national infrastructure that will reach approx 93% of the population on a continent that is one of the most sparsely populated continents in the world. Yes $43Billion is a lot of money to you and me.  I’m sure $43Billion would even be a lot to the Gates and Murdoch’s of this world as well.

And this is the rub for the government trying to sell something that people have yet to find the need for (outside of the few that read this blog and my quite geeky friends that is).

Because people here $43Billion and immediately draw parallels to the world they live in.  People say but I am on an average wage (Male:  A$64,594p/a) and go OMG that is so much money it is beyond my comprehension therefore it must be a waste.

So here is a something you can use as a baseline. Roads.  Like the NBN they are part of a national infrastructure and the vast majority are not tolled.  And I would like to point out nor do they make a profit.  (Even most of the toll roads seem to only work as a tax write off scheme).

And while Australia has over 360,000 kilometres of paved roads, consider the freeway.  The forest track was your 300baud modem, then came the paved single lane road your 14.4k modem.  Now we have a national highway mostly single lane but you can do 100kph just fine as your ADSL connection.  But the future lies in your open limit Autobahn without traffic lights, roundabouts and other things to slow you down.  (I really tortured that metaphor).

Of course Australia doesn’t have Autobahn’s the closest we had was the open speed limit in the NT which got throttled to only 120kph. But we do have nice big fat freeways.  Look closely at the cost of a few of them.

  • Currently under construction is the Ballina Bypass (Pacific Hwy NSW), a massive project covering a whopping 11.km, cost $640,000,000 (.6 of a billion dollars)
  • The Albury Wodonga bypass cost $524million in 2007 and is 17km long
  • Eastlink in Melbourne cost $2.5 Billion and runs for 39km.
  • Northern Expressway in Adelaide is 23km long and comes in at very tidy $564 million
  • The proposed Southroad Superway is a massive 4km long project with a cost around the $812million mark
  • Duplication of the Southern Expressway in Adelaide is 18.5km long as will run around the $445million mark.

So here 122.5km of dual carriage road the cost is $5.47billion dollars. (The distance is just beyond the drive from Melbourne to Ballarat.)  Doing some rounding, calling it $5billion for 100km of Freeway.  $10Billion gets you 200km of Freeway, $20 Billion gets your 400km and $40 Billion gets you 800km of all singing all dancing freeway.  (Not even the distance between Melb and Sydney).

And instead of a road that only people between Sydney and Melbourne can use, your money gets you a fibre to the home network to 93% of the population.  Now once this 100Mbps connection is built the cost to upgrade to Gbps speeds is dramatically smaller due to the fibre being the road.

Now a lot of people don’t drive the road between Melbourne and Sydney.  But a lot of business does with road freight on the road.  So whilst you may not use the road directly, the products you buy even at your local deli may well have come down that highway.  So we all benefit from having this road.

We are all going to benefit from the NBN, but like the internet in 1995 not everyone can see why just yet.  But think how much of your life is digital now, now project forward 10 years and there is your business case for the NBN. A project that is for the vast majority of the population and for a damned cheap price once you get over the shock of $43Billion.

(Please note: a transport metaphor was killed to write this post)

(I used the high $43Billion  figure,  not the lower $30billion or so that has been thrown around in the last few weeks since the Telstra deal with NBN Co came out. The lower figure means around 500km of freeway)