The NBN predictions made in a 2013 report that did not happen

Remember when we were told we’d save $3800 a year by 2020 thanks to the NBN? Things didn’t quite work out the way a 2013 report expected.

Back in 2013 when Australians were grappling with whether to support the huge investment in the National Broadband Network, the deal was sweetened by the promise of $3800 a year in benefits.

A Deloitte Access Economics report, commissioned by the government and released ahead of the federal election, estimated Australian households would benefit to the tune of $3800 a year by 2020.

The report looked at six areas including communications, e-commerce, online services, employment, travel savings and quality and price changes.

Some of the savings would be financial but others were linked to time savings thanks to the ability to work from home and access to online government services.

So with the NBN due to be completed next year, did the mega project deliver on its promises?

WHAT THEY PREDICTED

The 2013 report from Deloitte Access Economics estimated there would be an annual benefit of $3800 (in 2013 dollars) to Australian households from the NBN in 2020.

It predicted households would save an average of $2400 thanks to the NBN and $1400 in other benefits such as travel time savings and the convenience of e-commerce.

One of the most significant benefits was expected to be improved communication opportunities, including better internet phone calls and video calls, which was estimated to save households about $74 a year.

Time savings from being able to buy goods online was estimated at $156 per household, while the increased competition from an increased choice and variety of goods was estimated at $453 a year.

Access to online services such as movies and games was expected to save households $269 a year. There would also be a $217 saving from people not having to travel thanks to e-education, e-health and e-government services.

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High-speed broadband was expected to benefit consumers by providing access to online movies and games.

The ability to work from home was expected to save households $253 in travel costs and an extra $381 benefit was generated by telework’s potential to create more jobs and to increase the number of people working.

However, the biggest boost came from increases to business productivity, with households expected to gain about $2000 a year thanks to price reductions, improvements in quality, changes in wages and earning higher profits from businesses they owned.

The report noted many of the benefits of broadband would not be visible to households but would gradually emerge as consumers found price discounts and variety online, more people started to work from home and as people got used to accessing services online.

Benefits would vary among different households, with rural and regional areas gaining value from certain changes that those in cities may not.

DID IT DELIVER?

Economist John O’Mahony, one of the authors of the report, told news.com.au some of the expectations in the report had been delivered while others hadn’t.

One of the most spruiked benefits of the NBN was the possibility for teleworking but this hasn’t developed in the way expected.

Mr O’Mahony said back in 2013 there were assumptions that 5-10 per cent of Aussies would work from home five days a week, saving people about $253 a year in travel costs and $381 in other economic benefits.

But while more people do seem to be working from home, this appears to be happening on a “flexible or opportunistic” basis when it suits them rather than according to an established routine.

“You do have a certain population working from home … but it tends to be on an ad hoc basis,” Mr O’Mahony said.

However, he pointed out the NBN was very different to the version they assessed in their 2013 report.

Instead of being a fibre-to-the-premises network with speeds up to one gigabit per second, the Coalition changed it to a fibre-to-the-node network with speeds up to 100 megabits per second (Mbps), which is 90 per cent slower than initially promised.

According to the Speedtest Global Index, the average fixed broadband speed in Australia is now 40.37Mbps.

Many consumers have also reported trouble accessing top speeds during peak periods and have issues with dropouts because of the remaining copper connections to their homes.

Mr O’Mahony, who was involved in the development of the NBN proposal under Labor, said it was difficult to assess the extent that NBN had been responsible for changes to the digital economy, however, he thought predictions in the 2013 report had broadly been delivered despite the slower system.

Australians are now able to access lots of government services online.

WHAT DID HAPPEN

Many of the report’s expectations did eventuate including the rise of social media, e-entertainment and other consumer changes that could been seen, for example, in the rise of cultural references to “Netflix and chill”.

“People are filing their tax returns online, applying for their licence, paying fines and doing a lot more online,” Mr O’Mahony said.

“Nationally, the number of digital (government) transactions went from 473 million in 2014 to 825 million in 2018.”

Mr O’Mahony also believes productivity has improved for households and businesses, which were using digital technology to save time and money.

He said applications such as cloud storage are now being used by 42 per cent of large businesses compared to very few in 2013, and this technology could not function effectively without high quality fixed line broadband.

Cloud services save businesses money because they reduce the need to have lots of servers to store data and a large IT team to maintain these.

Small businesses are also using online accounting software like Xero, which can save them time, as well as using social media and websites as part of their business operations.

A separate study done by Deloitte and released in August found those small businesses achieving “high” or “advanced” levels of digital engagement had grown from 39 per cent in 2017 to 55 per cent in 2019.

For those who had moved from “basic” to “advanced” engagement, revenue per employee increased by 60 per cent.

People often search for coffee shops online now. Picture: John Gass/AAP

This follows research in December that found small and medium businesses with higher levels of digital engagement were 50 per cent more likely to be growing revenue and eight times more likely to be creating jobs.

A spokesman from NBN said a 2018 report from AlphaBeta found the “NBN effect” helped drive an estimated $1.2 billion per year in extra gross domestic product (GDP). This is expected to jump to $10.4 billion in 2021.

“In NBN activated regions the number of new businesses accelerated at more than twice the annual pace of the national average since 2011,” he said. “Five times the pace of regions without NBN.”

The report also estimated that by 2021 up to 24,850 new businesses could be attributed to the nbn in NSW alone.

“In addition, the number of self-employed women in NBN regions grew at an average 2.3 per cent every year, compared to just 0.1 per cent in non-NBN areas,” he said.

“The research also showed that people with NBN are twice as likely to enrol in online courses ... (and) 1.3 times more likely to use internet connected devices to improve their health and wellbeing.”

Despite the positive figures though, Mr O’Mahony acknowledged that overall productivity growth in Australia’s economy “hasn’t been stellar” in recent years but believes this was due to other factors.

Mr O’Mahony believes the financial benefits from increased productivity savings to businesses have flowed through to consumers. However, it was a different story for the dollar estimates of time savings, as some of these have not been achieved.

WHAT DIDN’T HAPPEN?

While the shift to working from home was one prediction that fell flat, another major change that hasn’t eventuated is the shift in education to massive open online courses that would replace the role of traditional universities.

Some students do use streaming services to watch lectures from home or are doing the occasional short course online but Mr O’Mahony didn’t think this was taking the place of classes held on campus.

There has also been slower than expected changes around smart networks to make running cities more intelligent through the use of sensors on energy assets and transport grids.

“Is this what we thought 2020 would look like? Yes and no. The biggest change has actually been to the vision of the NBN, but it still has contributed significantly to the digital economy,” Mr O’Mahony said.

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Most workers still can’t avoid the daily commute. Picture: Nicole Garmston

‘WE’RE NOT GOING TO BE REPLACED BY ROBOTS’

Interestingly, while a Deloitte study in June found there had been a huge increase in digital transactions, the amount of traditional transactions done in person, by mail or phone, also remained high over four years from 2014 to 2018.

The average Australian still spends the equivalent of one working day every year doing things like waiting in queues, waiting on hold or mailing forms to complete government transactions.

The report found there had only been a small drop in the numbers of traditional staff and this could be because more complex transactions still needed support from a staff member.

This means the benefits from moving to digital have not yet been fully realised.

Mr O’Mahony said this may be partly due to governments changing their attitude to in-person transactions, with many trying to improve their customer service.

“We can have good broadband and use it, but that’s not going to stop us wanting to interact with each other,” he said.

It’s one of the interesting lessons that has emerged as digital has become more popular.

“People still value that in-person connection,” he said. “There is still a need for face-to-face interactions. We are social animals and we want to continue to interact with each other.

“We are not going to be replaced in our jobs by robots.”

We still feel a need for human interaction despite the increasing convenience of online services.

‘IT’S A HUMAN RIGHT’

Another interesting change that’s emerged in the last few years has been people’s attitudes towards broadband.

Mr O’Mahony said people now appeared to consider broadband access as a “human right” in much the same way as they looked at phone and electricity services.

“They are not happy if they are not getting a high-quality service,” he said.

Now that many Australians were able to experience the difference between the old and new systems, Mr O’Mahony said their perceptions could vary about whether it had made a huge difference.

“Everyone has a different experience because they are coming from different starting points,” he said.

“A lot of people in outer suburban areas who had a pretty poor service would experience a big change. For those closer to exchanges in inner city areas, the change is likely to be less.”

Those in regional areas would also be more likely to benefit from things like online health consultations that those in the city would be unlikely to use.

When asked whether he thought it was a good decision to go ahead with the NBN, Mr O’Mahony said it was a difficult thing to assess, party because the vision for the project had changed.

“The NBN has been a very big project and I think it’s changed Australia and what we call the digital economy,” he said.

“But next year we will have a NBN that’s different to the one planned.

“Most of the digital benefits are accruing but there needs to be more work to get the remainder and make the most of the NBN investment.”

He said improving customer service for NBN users, growing the digital economy and increasing the IT workforce were priorities.

“The forecast need for the tech workforce is much bigger than the amount of people graduating with IT degrees,” he said.

ACS Australia’s Digital Pulse report released last week found an extra 100,000 technology workers were needed by 2024.

In the future, Mr O’Mahony believes there will be more smart home applications including remotely operated fridges, airconditioning or televisions. Voice technology such as Google’s Alexa will also be more widely adopted.

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