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With hindsight, broadband vision will become clear

12 Aug 2013

The Sydney Morning Herald

By Kai Riemer

The government deserves to be commended on a project that may not deliver any tangible benefits in the near future but will potentially change our world, writes Associate Professor Kai Riemer.

When shown a telephone in the 19th century, US President Rutherford Hayes reportedly said "it's a great invention but who would want to use it anyway?" In 1943, the chairman of IBM is said to have predicted that there would be a worldwide market "for maybe five computers". In 1977, Ken Olsen, co-founder of Digital Equipment Corp found no reason to believe that anyone would want a computer in their home.

With the power of hindsight, we laugh at these observations from supposed "visionaries". Yet I fear we are repeating the mistakes of the past as we debate the value and make-up of the national broadband network. The differences seem technical but they are important.

The government proposes fibre cabling to the home (FTTH) while the Coalition proposal relies on fibre to the node (FTTN), where existing copper cables connect premises to the network.

No one doubts the much higher speed of FTTH, but we ask: does anyone really need the higher download speed to simply watch videos? How can we make an informed investment decision without a proper business case? Will it be possible to recover its cost? And why should the taxpayer pay for it, not businesses?

Just as with Hayes and the telephone, concerns about the broadband network seem reasonable. On closer examination, however, they reveal a fundamental lack of understanding of the nature of infrastructure technologies.

Infrastructure is not a tool. Tools solve a problem, they serve a specific purpose. Infrastructure should be flexible enough to enable manifold new forms of use over time. It is only when people begin using the technology in their everyday lives that new ideas and business practices emerge.

Infrastructure on the scale of the national broadband network is world-changing - it gives rise to new business models, forms of social interaction and ways of living. Think about power grids, transport networks, telephone connectivity, air travel, the personal computer, or the internet. These have enabled profound changes to the ways we work and organise our lives. Today, these changes seem self-evident, while the technologies have disappeared into the background as taken-for-granted parts of life.

But could the wide-reaching changes associated with many new technologies have been imagined from the onset? Not at all. The nature of infrastructure makes it impossible to predict the future. Simply projecting current ways of living onto the new infrastructure is likely to fundamentally miss the point, as history has shown.

Take electricity. Having had a modest impact on manufacturing initially, it was only after power generation was centralised and physically separated from the factory floor that we saw a flurry of innovation that gave us mass production.

What does this mean for the broadband network? First, we need to recognise that only FTTH is a truly game-changing infrastructure. The key to understanding its novelty is not download but upload speed, which is much higher than with FTTN.

Naturally, this does not feature prominently in the debate since we are accustomed to seeing broadband in terms of download speeds. And what are we going to do with this massive upload speed anyway? We do not know yet. It might allow better teleworking initially. This might have an effect on road congestion, work-life balance and maybe the make up of our suburbs.

In one way, critics are right. Few people need the broadband network today. Then again, no one needed the telephone, cars or personal computers at the time. But could we live without them today?

We have no way of knowing what a world where the network is a normal part of life will be like. Hence, no one can put together a business case for it in all seriousness. Indeed, infrastructure of this kind should not be required to make its own money. It is the benefits that will flow from the innovation it unlocks that matters to government.

Finally, why should the taxpayers pay for this infrastructure? Because the business community will not embark on a project where the business case and profit streams are unknown. The infrastructure will simply not be built.

Investments in game-changing infrastructure should be one of the core responsibilities of any government. The government deserves to be commended on a project that may not deliver any tangible benefits in the near future but will potentially change our world.

Associate Professor Kai Riemer is chairman of business information systems at the University of Sydney business school.

First published in The Sydney Morning Herald




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