NBN – the key is not ‘superfast’ but ‘economic reform’

My promotion of high-speed broadband – in Australia and also in NZ, USA, UK, NL and the UN – has been geared towards a trans-sectoral approach.

That means that it is not sufficient to simply say that the network is there and that the services will now develop – active government policies are then needed to direct the other sectors to start using the digital infrastructure for those services and access to an open network needs to be made available on a genuine wholesale basis.

This means that money must be reallocated towards the digital economy. In Australia active e-health, e-education and smart grid policies are now in place, all aimed at directing these sectors to use the NBN.

This has not been the case in countries quoted in the report: Superfast: Is It Really Worth a Subsidy?.

That report argues that the social and economic benefits of high-speed broadband networks are oversold.

I agree that to simply roll out a broadband network and then hope for those applications to arrive is not working, and will never work. Also, these trans-sector services typically require a national approach.

 Korea, for instance, has now recognised this and has set up a Presidential Committee for e-government, the specific aim of which is to develop policies that will see those sectors using their high-speed networks. To the same end the Prime Minister of Australia has now added Digital Productivity to Minister Conroy’s portfolio.

Another important element here is that having high-speed broadband only in a particular areas (islands) is not going to stimulate other sectors to use that network for what in general are national services.

What the Superfast report clearly shows is that if those policy decisions are not made such a network can indeed become a white elephant.

Most examples used in the report look backward and use research that is sometimes a decade old, and not based on the open-network and new trans-sector rules. Obviously developing an FttH network on the principles quoted in the report will not work.

If you want to do what Australia is doing you will have to come up with radical changes such as structural separation and trans-sector policies. Without that the NBN would be a total failure.

What the report fails to acknowledge is the new paradigm that is now emerging – not just in Australia, the USA and Europe, but even in countries such as Rwanda.

In order to achieve those social and economic benefits the national infrastructure must be used on a utilities basis; otherwise it will either be too expensive for those sectors to use the network, or the services will become too expensive for the users. None of the cases cited in the report are based on an infrastructure that has been developed along those principles, and so it is no wonder that new applications are not developed.

That is why the structural separation and the NBN Co utilities-based approach are so important.

In relation to smart grids – of course it would be ridiculous to roll out an FttH network for that purpose. But if such a network is in place the incremental costs of using it for smart grids are lower than they would be if the utilities were to build their own telecoms network. In Australia, where the utilities’ networks have one million points (eg, sensors) that require communications, it makes no sense to build one communications network for broadband and a separate one for smart grids. The NBN has separate rulings for utilities based M2M requirements.

Regarding healthcare, the key is that we are building a network for the future. And we are building one that links not only hospitals and health centres, but people at home.

Australia already has a shortage of 15,000 nurses, and this situation is not likely to improve in the future.

At the same time we have an ageing population and chronic disease is the fastest growing category of illness. If we want to address the future problems in healthcare we will need to start looking for other solutions, and e-health will certainly play a key role. It is perhaps hard to supply precise data on this but very few would argue against it.

At such a time vision becomes important – national leaders in the past have shown similar vision in relation to the building of infrastructure. Because of the inexact nature of the new paradigm it makes perfect sense for governments to step in and assist in building infrastructure. Isn’t that one of the key roles governments have performed over the last 2,000 years (dating back to the Roman roads)?

Other examples in the report indicate that some of these services can be delivered over current infrastructure, such as copper networks and HFC networks, and this is most certainly true. But reference is also made to the large number of users who are attracted to it. Obviously these services will grow, and at a certain point in time it will be necessary to upgrade – a possibility that is not rejected by the report. So why continuing ongoing investments in copper, while it is widely agreed that eventually these networks need to be upgraded to fibre?

We also discussed this situation in the ITU/UNESCO Broadband Commission for Digital Development and the conclusion was that there is no silver bullet. Each country will have to find its own way, and existing technologies, including wireless, can play a key role.

But if fibre is in fact the end solution; if a visionary trans-sector-based plan is created; and if such a rollout is going to take ten years anyway; then doesn’t it make sense for some countries who can afford it to say let us do this strategically, rather than on an ad hoc basis – let us develop a national plan?

True, with the GFC especially, it is hard to see Ireland, Greece or Portugal doing this at present. The Asian countries are doing it, but they are basing it on a rather different economic and political model. Australia has combined the Asian model with a more direct link to a trans-sector approach.

Should others follow Australia? Most certainly not. But in the same way that Australia is learning from other countries involved in rolling out broadband, others can learn from Australia, and they can develop their own model, choosing what suits them from the experiences and information that are available elsewhere.

The report is correct in that there is no business case for building national high-speed broadband simply to replace telephony, entertainment and Internet. And if you are going to build it with other social and economic benefits in mind and you do not develop good policies to make that happen, again there would be no business case.

The NBN in Australia is placed within the context of social and economic reforms and that is exactly where it needs to be positioned. It is a facilitator and catalyst for transformation and this is widely acknowledged by the UN, OECD, World Bank, USA Government, European Union and many others. It would be hard to argue that they are all on the wrong track. However, to achieve those reforms a range of wide-ranging policies in relation to all those sectors needs to be developed and implemented.

Only with such a comprehensive approach will those benefits be realised.

Paul Budde

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