Economic value of FttH
A lot has been said (and often as well) on the costs involved with rolling out FttH. Less consideration went into some economic studies into the returns.
De Allen Consulting Group onderzocht de economische en maatschappelijke impact van een glasvezelnet. Opvallend is dat men komt met twee varianten, namelijk één waarin sprake is van een verticaal geïntegreerde aanbieder en één met een open en universeel netwerk. In beide gevallen is de impact positief – maar het grootst en het snelst in het tweede geval.
Hieronder de Management summary – en het hele rapport (PDF).
This study evaluates in detail the economic impact of a true broadband network throughout a major urban centre in Australia. Specifically the study examines the impact on the host region, which in this case is the Brisbane and Moreton statistical divisions, as well as for the State of Queensland at large. It also examines the impact for industries within the State.
A true broadband network is a broadband infrastructure capable of supporting at a minimum video, voice and data services and applications simultaneously over a single physical infrastructure. True broadband delivers symmetric services at speeds greater than 10 Mbps.
The analysis factors in a network cost of approximately $850 million over a four-year construction period. This includes backbone infrastructure costs as well as the hardware, software and installation costs of delivering fibre-to-the-home connectivity.
It is foreshadowed that the development and use of a true broadband network would involve four broad direct impacts including:
• an expansion of the communications activity in the region as the new business is developed and provides services (buying and selling inputs, employing staff
• enhancing competition in telecommunications — in a range of areas, but especially in Internet Service Provision;
• opening up scope for productivity gains that are apparent from the use of broadband technologies in business; and
• competitive gains for key industries that are particularly dependent upon affordable broadband Internet access.
The thrust of the study was to estimate these impacts and assess their value as they work their way through complex, interconnected economies in the region and the State at large. The magnitude and timing of the impacts were found to vary according to the level of competition that will accompany its construction, takeup and use.
The findings of the study suggest that if the network is owned and operated by a vertically integrated retail service provider, there will be substantial benefits for the region, including:
• an increase in output (GRP) for the region. This increase has a net present value (NPV) over 15 years of $2,640 million; and
• an increase in employment of around 15,000 jobs over 15 years to 2018-19.
The model results also suggest that, similarly to other more traditional forms of infrastructure, the use of a true broadband network will not only benefit people and businesses in the immediate area but will also benefit those further away that rely on services delivered in major cities that become more efficient. The changes are also large enough to have macro-economic significance. That is, it may change wages, prices and factors such as capital flows and the exchange rate. The findings suggest that the Queensland economy would benefit in the following
• increase real output or gross state product (GSP) by $854 million per annum at the end of 15 years (i.e., by 2018-19). The increases in output have a value today (i.e., NPV) of $4,180 million;
• additional employment equivalent to 1,155 new jobs in the year 2018-19; and increase annual aggregate consumption by around $499 million in 2018-19. This has a value today of $2,835 million.
• Every industry segment located in the State will benefit from a vertically integrated true broadband network throughout the region. Over the simulation period, industry will benefit in the following ways:
• manufacturing and agriculture and mining will experience an increase in output of over 0.5 per cent;
• communication services will experience an increase in output of around 0.43 per cent; and
• other industry segments (including government) in the State will experience increased output of between 0.14 per cent and 0.39 per cent.
The study also analysed what the economic impacts would be if the infrastructure was operated as an open access true broadband network. This approach leaves the network operation in the hands of a neutral carrier, while it was open for a number of retailers to offered a range of different services that would be carried over the network. This would introduce more choice and innovation in the bundles of services offered or carried over the network with even more competitive prices. Under this scenario it was expected that better services and lower prices would stimulate faster subscriber takeup and use of the network.
The simulation results suggest that there are additional economic benefits for the region and the state from additional competition in the provision of true broadband services. These include:
• an earlier realisation of increases in regional output. Additional competition raises the NPV of the increases in GRP to $3,160 over the period (relative to $2,640 million if the network is owned and operated by a vertically integrated retail service provider);
• additional increases in GSP. This raises the NPV of increases in GSP to $4,900 million (compared to $4,180 million assuming a vertically integrated retail service provider); and increased consumption. The NPV of the increases in aggregate consumption assuming additional competition is $3,414 million relative to $2,835 million if the network is owned and operated by a vertically integrated retail service provider.
For the communications industry there is an additional gain from increased competition. This incremental gain is equivalent to 0.07 per cent of output by the year 2018-19. Other industry segments would experience a slightly lower growth in output relative to the vertically integrated scenario. Relative to the base case, however, all industries benefit from the construction of an open access true broadband network in the region.
The findings of the study suggest that the majority of the above benefits accrue from the increased productivity gains experienced by industry generally and to a lessor extent, expansion of the telecommunications sector (i.e., the businesses providing the true broadband network), with expansion of digital content industries making a relatively modest contribution.
The overall message of the analysis is that there are substantial net economic gains available to the region in the analysis, and probably many other major urban areas in Australia from the development and use of a true broadband network. These gains far exceed the initial investment costs required to finance the network.