Communications Day – 02 September 2010
Australia’s broadband future hangs in the balance
With election results still trickling in over a week past election day, it is still unclear which party – the Liberal or incumbent Labor will emerge in power. The months and weeks leading up to the election were fascinating on many levels – but let’s just focus on one very significant issue – the National Broadband Network.
Hotly contested, Labor’s $43 billion National Broadband Network would provide 100 megabits per second broadband access to approximately 93 percent of the population.
Currently Australia has – for the most part – slow and expensive Internet service. In conjunction, the NBN plan calls for a boost in broadband investment for businesses with hopes that it would directly support economic growth during the rollout.
The other side of the aisle, the challenging Liberal party wants to scrap the plan in favour of a $6.3 billion, privately run alternative.
All eyes in the broadband industry are waiting to see which side – and with them their broadband plan – will win out. Well we’re still waiting as the parliament remains hung while each side hope to sway Independents over to their side.
While we wait, let’s look at the issues:
- What is the $43 billion based on and is that an appropriate level?
- Who should build it? – and operate it?
- What return on investment can Australia expect from its broadband investment – be $43 or $6 billion?
- Will broadband investment result in a platform for innovation, competitiveness and growth that could propel Australia into a hotbed of technology and development?
These are important questions and no matter the party affiliation, taxpayers should be told how their money will be used – and what benefits and outcomes to expect.
Unfortunately, there has not been much discussion on the two most important aspects of this debate: how individual businesses, organizations and households would use the new broadband capacity – and what the economic or social impacts will be. Without that understanding there is no meaningful economic case, let alone business case, for investing in such a network. The economic case is the most important as many of the economic and social benefits are ‘off-balance sheet’ to the telcos.
Support and urgency for high-speed and high quality broadband connectivity gets lost without this critical information on utilization and quantified impacts – information that should be part of any due diligence. For example, if looking at a certain hospital – are they using remote diagnostics, electronic patient records, etc. – and should they be if they don’t? For businesses, if their utilization of e-solutions and Internet-enabled business practices is not at par with their global competition … what share of business can they expect to win in a globally competitive economy?
The community return on investment (Community ROI) needs to be understood because it is the only way that governments can justify using public monies to build broadband networks.
Explanation of current versus future demand for broadband is based on the utilization of e-solutions. When investing, you need to identify and understand the gaps between how e-solutions are currently being used versus how e-solutions can and should be used to maximize economic and social benefits. It is business 101 – you identify the need, you understand your customers and then you build your product or service to address the needs of the customers you want to target. This approach is taken when building the hardware that makes-up broadband networks, but this approach seems to be put aside when those broadband networks are being designed and planned.
Just like roads, high quality broadband networks enable economic activity and social services whose benefits far exceed the initial investment.
Whichever party forms the majority, they need to approach high speed broadband network investments focused on the demand-side (current and future) with the understanding that they are building infrastructure that serves all sectors of a modern economy. To realize these productivity and competitiveness benefits, Australia needs to act decisively and quickly. The opportunity cost of broadband infrastructure being hostage to politics will be borne by the Australian people.