Shadow Communications Minister Malcolm Turnbull has used the release of new broadband statistics to argue that the real inequity in Australia’s broadband market is the fact that lower income households cannot afford currently broadband prices, claiming that his rival Communications Minister Stephen Conroy needed to learn “Economics 101”.
Last week Conroy hailed the release of new statistics by the Organisation for Economic Cooperation and Development (OECD) as justifying Labor’s multi-billion dollar National Broadband Network project.
The report showed that Australia’s average broadband prices were expensive for low-speed connections compared to the rest of the world, and moderately expensive for higher speeds. “These OECD statistics are further evidence that Australia cannot afford to stand idly by with our ageing copper network and sub-standard broadband services,” Conroy said.
However, Turnbull wasted no time firing back — agreeing that Australia’s broadband performance was not good compared with other countries, but arguing the real issue was actually with respect to low income households.
“As the NBN Co Corporate plan shows, more than 70 percent of users will opt for speeds of less than 25mbps (p.129) with only a small movement up the speed chain by 2020,” Turnbull said in a statement. “For people purchasing lower speeds, prices are forecast to stay steady in nominal dollars (see p.101 and graph below) while people willing to pay higher prices will see their costs come down over time.”
The issue was important, Turnbull said, because “the biggest barrier to Australians taking up broadband is its cost”.
“ABS figures show that there is a disparity in access to broadband between households in major cities and households in remote areas — 75 percent compared to 62 percent (the national average is 72 percent),” said Turnbull. “But the disparity is much greater when household income is taken into account: 94 percent of households earning more than $120,000 a year have access to the internet at home compared to only 43 percent of households earning less than $40,000 have access to the internet.”
Turnbull argued lower income households were thus ‘subsidising’ higher income households under the NBN — who, he said, would likely be utilising their bandwidth to service their smartphones, casual gaming, video calling, online storage and IPTV activities, “presumably all at once to chew up that bandwidth”.
“Economics 101 tells us that state-owned monopolies are not the most efficient models to “drive competitive prices” as Senator Conroy assumes,” he said.
Image credit: Office of Malcolm Turnbull