Today’s announcement by Kevin Rudd that the National Broadband Network (NBN) will be a public venture reflects a critical aspect of Australia’s economic situation.
Rudd and Conroy have both stepped on the private sector submissions as not meeting government requirements. The particulars of each submission notwithstanding, there is an underlying economic reason why none of them were likely to succeed in the first place. Telecommunications is an expensive industry, especially when infrastructure is concerned.
The Australian population is not large enough to make a globally competitive broadband network economically worthwhile.
Within a few hours of the announcement, comparisons were being drawn with international networks already in existence.
@andrewbarnett: Why is govt aiming for speeds that Japan, Korea, etc., had years ago? Is that all the technology allows?
@randomwire: Average broadband speeds (mb/sec): South Korea – 100, Europe – 24, China – 1 or in other words slow like a snail
The comparisons between the two situations are baseless and silly given the differences.
@Pollytics: South Korea: less than half the size of Victoria and a population density of 486 people/km^2. Let’s get a grip here folks.
This is a valid point, Korea is geographically small and has a much larger population at 48m compared to ours at barely over 20m. Building a high speed broadband infrastructure is not only easier to do practically, there’s also a much larger economic incentive.
The base cost of laying the cables for any kind of network here in Australia is enormous. Worse than this is that consumer expectation is, for the broader market, low and the demand curve not particularly attractive. Besides overactive face book users and chronic media downloaders, there just isn’t a major call for South Korean levels of broadband here.
This doesn’t mean that we should be happy with what we have, that would be disastrous as the global community moves into hyperdigitalism. What it means is that there are few incentives for private enterprise, operating on economic motivations, to undertake such a project properly.
I’m glad that Rudd and the DBCDE have decided to put this ahead through public expenditure and not private. The Government is open to pressures other than economics:
- Keeping up with the world technologically
- Providing for the population’s standard of living
- Lobbying by industry groups
- Angry twitterati upset that YouTube keeps dropping out.
A globally competitive broadband network and universal access to the Internet is an important social need. When Rudd describes Australia as a ‘Broadband Backwater’ he’s not saying it out of a desire for more cash – he’s genuinely concerned with getting this built for us as citizens.
The government should, however, have raised the bar significantly higher than 100mb/s. Given the expense and the current state of the art globally, it makes sense to go into this national upgrade with serious vigor. This is what is meant by ‘in for a penny, in for a pound’; If you’re going to do something crazy and ambitious, you may as well do it to its fullest.
It’s a positive sign that Rudd is able to pick the times when private enterprise is not the best option. This is especially important given that his political ideologies force him to choose wisely between the market and the broader context of ’society’ on a regular basis.
