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Broadband or Fraudband: Have we dropped the ball in terms of telecommunications infrastructure?

Mal Bryce *

Thinking beyond the boom, there is a much underestimated and poorly understood economic imperative for Western Australia's future. This is the need for serious high speed Internet networks which can only be delivered by Fibre Optic Technology to the home and all business premises. Current connection speeds being offered to households, businesses and government agencies in Australia are tantamount to Fraudband. On telecommunication systems that were designed for voice traffic: i.e. the telephone, copper cables and ADSL technology have and still do govern to a large extent what can be done on the Internet and how long it will take.

Everyone who played a pioneering role in the development of the Internet Industry in Australia 15 years ago realised that bandwidth would be the ultimate limiting reality. Shrewd heads in many parts of the world woke up to this reality and decided to act. While Australia has spent a decade arguing about who should own our national carrier, many of our trading partners and international competitors have implemented plans for serious broadband. In our immediate region, countries such as Japan, Singapore and South Korea have stolen a significant march on us. A contract decision is imminent in Singapore to basically hard wire the island which will deliver a minimum of 100Mbps (megabits per second) to every home.

Western Australia needs a similarly farsighted commitment to build Fibre to the Home and the workplace (FTTH). This contrasts with fibre to the node (FTTN), which has dominated debate in Australia. FTTN relies on wireless transmission to cover the last mile between the fibre network and individual homes and businesses, hence the limit of 24-30 Mbps. A national program for FTTH is probably four times the cost of FTTN in terms of capital dollars but would supply unlimited speeds.

Having attended the Intelligent Community Summit in New York in May, I believe it is vital that Australians realise how sadly our communities are slipping behind in international terms in respect of our access to high speed networks. Rupert Murdoch has described this situation as a 'national disgrace' and James Packer suggested it was simply embarrassing.

We need contemporary public policies at the national, state and municipal level if we are to allow all Western Australians to share in today's telecommunications revolution and for our state to fully utilise the power of one of the key economic engines of the twenty first century. Long term sustainable economic growth, quality jobs, superior health and education services, the viability of regional, rural and remote communities and our basic international competitiveness depend upon dramatic improvements in speed, quality and the build-out of true high speed Internet networks.

This is not simply the responsibility of the Federal Government.

Worldwide, numerous cities and hundreds of communities are being hard wired, as a result of initiatives involving a combination of national governments, provincial and state governments, municipalities and telecommunication companies. There is a race on and neither Perth nor the state of Western Australia is in the starter's hands. Fibre Optic Technology to the home will fundamentally change our economy and is the infrastructure that can deliver us an exciting and creative future beyond rocks and real estate.

A great deal of research has been done and reports are numerous which demonstrate the transforming impact of seriously high speed bandwidth on eCommerce, eResearch, eGovernment, eLearning, Tele-health and Tele-medicine and Telecommuting. eResearch is now only just emerging at our main universities and the CSIRO.
Such vast amounts of data need to be processed (e.g. for nanotechnology and bioinformatics) and transported that gigabits of bandwidth are a starting point.

With Telehealth and telemedicine, bandwidth hungry applications involving high quality moving images simply don't happen without serious bandwidth. The top end of eCommerce involving large amounts of complex data and high quality moving images also must have serious bandwidth. Worldwide interest is now focussing on the nexus between next generation bandwidth and sustainable business activity, especially carbon emissions management.

The Rudd Government's current National Broadband Network program for fibre to the node guaranteeing speeds of 24 Mbps is but a down payment on our future.

As long ago as 2003 the eminent Professor Reed Hundt (former chairman of the US Federal Communications Commission) defined a seriously hard wired community as one which provided speeds of 10-100Megabits at home, 1-10 Gigabits at work and wireless all around. According to ABS data for the December quarter 2007 there were 7.1million connections to the Internet in Australia; including households, businesses and government agencies. Of those, 2 million were still using dial up access and a further 1.6 million have access at speeds of up to 0.5Mbps. Slightly more than a million have access at speeds of up to 1.5 Mbps. One million have access at speeds up to 8Mbps and 1.3 million only, enjoy speeds in excess of 8Mbps. Entering the Gigabit age can only be achieved via ubiquitous fibre optic coverage.

Based on submissions to the federal government's Broadband Advisory Group inquiry in 2005, the estimated cost of hard wiring 97 per cent of all Australian homes was $21-$25 billion. That is an investment of approximately $1000 per person in Australia. Because of our unique geography, the figure for Western Australia could be in the vicinity of $3-$3.5 billion. Estimates such as this require careful investigation and justification. It is important to appreciate that such a program could take anywhere from 5 to 7 years to complete. No single agency of government or telecommunications carrier could be expected to fund such an initiative.

For the timid and faint-hearted among us, it is important to point out that the roll-out of very high speed telecommunications physical infrastructure is only the first half of the long term challenge facing us. The critical bit to follow is the content development, skills development and training programs that are essential to enable Western Australians to harness the power of this technology. This aspect of the challenge is all too often disregarded as soft infrastructure of secondary importance.

Hon Dr Mal Bryce is a Senior Fellow of the Australian Centre for Innovation (University of Sydney) and Adjunct Professor of Public Policy at Curtin University

July 27th 2008

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richard_bone Says: 23:14 30/07/2008
This is a fantastic article. Australia MUST establish a high quality broadband network because our ICT industry cannot globally compete on labour costs, instead we compete via innovation. Having established that, the broadband take-up figures highlight the real problem. While 28% of Internet users are stay with dial-up and a further 22% accept 0.5Mbps there is not the commercial "demand" to justify spending $25 billion on such a network. Who will buy it? For my family of 4 it will cost $4,000. At 10% ROI and 10% diminishing asset value that's nearly $70 per month and that's before support and network operations. Likely market price for such a service would be near $100 per month but only 50% of Australia's current Internet user-base are prepared to pay for over 0.5Mbps. The bottom line is that the commercial sector is unlikley to fund such a network without considerable support. The NBN with Federal government support is making a good "down payment". If the States helped with the other half of the network we would have our world-class network, and at a price that was affordable for all.
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