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NBN will make us $3,800 richer

A government review into the benefits of the National Broadband Network by Deloitte has found the benefits of the network “will be worth around $3,800 in 2020, in current dollars”.

However, the benefits of a “digital economy” extend beyond monetary savings and include shorter travel times, greater employment opportunities and more online services such as healthcare. “Around two-thirds of these benefits are financial benefits, the rest are the equivalent monetary value of consumer benefits such as travel time savings and convenience of e-commerce”.

nbn

Source: Department of Broadband, Communications and the Digital Economy.

The ALP’s Anthony Albanese and Prime Minister Kevin Rudd were quick to acknowledge the report by saying, “this report demonstrates that the NBN will not only transform the Australian economy and improve our national competitiveness, but will also directly benefit every family in the country”.

Deloitte was given scenarios by the Department of Broadband, Communications and the Digital Economy to “highlight the financial and other impacts of high speed broadband”, these are some of the findings:

  • A full-time student less than 25 years of age studying from home will save at least $5,074 in 2020
  • A single person over 75 will save around $7,000 on medical expenses, travel savings and from living at home rather than in aged care.
  • A couple with no kids will save $9,673 on out-of-pocket expenses, travel time and teleworking.
  • A single income (self-employed) family with two kids will save $7,458 on business rent, increased revenue through online presence, work-related travel, medical appointments and improved education.

Despite the obvious benefits of the NBN, the Coalition will change the rollout of the network, making it slightly slower than Labor’s current ‘fibre to the premises’. Under the NBN households will receive fibre optic cable to premises enabling speeds in excess of 100mbps whereas the Coalitions ‘fibre to the node’ network, which will require Telstra’s (ASX: TLS) copper cable to connect to households, will reach speeds between 25mbps and 100 mbps.

Foolish takeaway

The benefits derived from the NBN will save money for both businesses and individuals. Under either governments network, Telstra stands to benefit although increased competition from rival ISPs such as iiNet (ASX: IIN) and M2 Telecommunications (ASX: MTU) will mean that Telstra’s margins will be tighter than they were with its pure copper network. However even if we see a change of government at this weekend’s election, the Coalition will need to meet with the company and create a new agreement – something that’s not going to be easy (or cheap).

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.

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