What if Bell Labs is Right?

The Dominion Post reported on Monday this week that a Bell Labs report has assessed that the current investment in New Zealand of $3.5 billion in rolling out fibre for telecommunications will produce a benefit of nearly $33 billion in 20 years.

If we accept this at face value, what major telecommunications company would fail to make this investment, and why would the Crown need to be an investor?

About these ads

2 thoughts on “What if Bell Labs is Right?

  1. Benefit of $33b to whom? The owner of the fibre, or the economy as a whole? If it’s the former, then sure. If it’s the latter, then you’re asking the wrong question. How much of that $33b economic benefit would accrue to the fibre owner? The government may consider it worthwhile to be an investor, because it will be able to clip the ticket on all that additional growth, so may make a “profit” in terms of tax take increases that otherwise would have been lower, and may well exceed the outlay over the medium term in a way that a private sector investor may not.

    • The Dominion Post article says only “economic benefits” and reports that it includes “consumer surplus”. Readers who can supply more details are welcome to do so. The rest of your comment correctly observes that profitable commercial projects increase government tax revenues, but does not address the point that they accrue even if the government does not invest.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s