Rudd&squo;s broadband network could worthwhile -- if it works | Herald SunRudd's broadband network could worthwhile -- if it works
UNTIL this week, planning for a national broadband network was based on "fibre to the node".
This would have involved installing brand new optical fibre for part of the network, but used Telstra's existing copper wires to run the last few hundred metres into homes and businesses.
The cost would have been around $15 billion.
But the new plan announced by Prime Minister Kevin Rudd this week is for a "fibre to the home".
It will cost nearly three times as much because it means running fibre optic cables to more than eight million homes and businesses around Australia, at a cost of several thousand dollars per home.
It's a huge expense -- with a large part of it coming from the public purse. So what are we going to get for our money?
First, it will put almost all Australians on a level playing field. Ninety per cent of homes will now be able to receive a guaranteed broadband speed.
With today's DSL technology, by contrast, the network is a patchwork quilt. Many Australians can get decent download speeds -- between 10 and 20 megabits per second -- but many others cannot. Quite a few cannot receive DSL at all.
Second, the broadband speeds available on the new network will be much higher, offering a guaranteed 100Mbps. By contrast, in June 2008 more than half of all DSL subscribers took speeds of less than 1.5Mbps.
Third, because the government's new network will duplicate the existing
Telstra network, there should be a tremendous boost to competition. Every home will now have a choice of at least two suppliers.
In fact, the choice will be even greater because the government's network will be wholesale only -- meaning that a wide range of retail telephone companies and internet service providers will use it to deliver services.
In turn, that will mean the lowest possible prices -- and the greatest possible rate of innovation.
By contrast, today's broadband competition is weak and Telstra dominates the market. That has allowed it to hold back Australian broadband. For example, until 2006 it capped consumer DSL speeds at 1.5Mbps -- even though its network was capable of much faster speeds.
So Australians can expect much higher speeds and much more vigorous competition than at present.
That will drive substantial economic and social benefits.
The economic benefits will come because of the productivity boost from low cost, high speed communications being available to almost every business and household.
In the 1950s the US Government invested in a national freeway system -- which let businesses distribute their goods much more cheaply. Economists estimate that this drove nearly a third of the annual productivity improvement in the US economy in the '50s.
We can expect similar productivity benefits from the broadband network. For example, you can download a two-hour high definition movie in a few minutes -- so video on demand services will quickly replace the neighbourhood video store.
The social benefits will be just as profound. With ubiquitous high speed broadband, we can expect the "telecommuting" trend to accelerate. More and more people will be able to enjoy a sea change or tree change -- while working and doing business online. That does already happen in Australia -- but much less widely than it could because in many areas the necessary broadband services are simply not available.
Widely available broadband will also mean cheap videoconferencing wherever you are -- in turn giving a huge boost to distance education.
If every student can readily participate in a lecture using a cheap computer and camera attachment, using high speed broadband to connect, then universities and TAFEs will be able to greatly expand their distance education offerings.
Telemedicine also promises great benefits. With every doctor's surgery, every specialist's rooms, every pharmacy and pathology lab able to connect to a widely available, high speed network, patient information such as scans and X-rays will be exchanged digitally in seconds.
That will mean cost savings -- and major benefits in patient convenience.
So if the government's ambitious plans are realised, Australia's broadband landscape will be transformed -- but more importantly, there will be major economic and social benefits as a result.
There is huge amount of work to be done before that can happen.
There are also some crucial questions for debate. Do we really need fibre to the home rather than fibre to the node? Should government be such a large stakeholder? Will the enormous investment in the network bring acceptable commercial returns?
If the network is built, we can be sure it will have profound consequences we can only begin to imagine.
* PAUL FLETCHER is the author of Wired Brown Land: Telstra's Battle for Broadband and the principal of telecom consulting company Fletchergroup. He was previously a director at Optus and before that chief of staff to Howard government communications minister Richard Alston.
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