Benefits of the NBN go beyond the individual

15 September 2010

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National Broadband Network
National Broadband Network

The debate surrounding the National Broadband Network has confirmed that it is among the most dramatic points of policy divergence in this election. It's a choice between a relatively frugal, business-as-usual, hands-off policy from the Coalition and an expensive government monopoly with dramatically faster, almost universal broadband.

Telecommunications and media policy are traditionally difficult areas. There is the often alienating technical jargon (megabits per second, ADSL and so on), inconsistency in definitions (high speed can mean anything from 12 megabits to 1 gigabit per second), and technical concepts (such as the implications of the differences between wireless and optical connections).

More than confusing language, the impacts of new infrastructures have always been beyond and outside the technology itself. All the e's of eHealth, eLearning, eBusiness, on-demand entertainment, video conferencing and so on are activities opened up, but not determined, by the availability of data infrastructures. Today's policy choices become experience only years into the future. With complex specifications, competing interests, and high stakes, it is no wonder then that there are many examples of stuff ups.

The story of Australia's national satellite could be invoked here: Aussat, which traced a notoriously convoluted oscillating orbit between private and public control. It was established as a national initiative after some encouragement from media boss Kerry Packer, but after difficulties in funding, and being judged by commercial standards, its national value was often overlooked. It was ultimately privatised as part of the package that formed Optus. Is this a lesson for the NBN? Maybe not, as it is perhaps not the best example to use. Aussat satellites have relatively low transmission capacity, and its customers were big institutions, such as broadcasters, the aeronautical industry and telcos.

By contrast, net use has become a wide-spread, everyday activity. The Bureau of Statistics counts more than 9 million internet subscribers: more than half the population are users (and using is more than watching a broadcast signal). With so many sharing the pleasures of access, and the frustrations of low speeds, the appeal of better broadband is very widespread. It seems likely that many people will have an intuitive understanding of the benefits of an improved network, if not for the nation, then for their own experience.

A more appropriate morality tale is the roll-out of cable infrastructure in the mid-1990s. The Aussat spin-off Optus aspired to compete with Telstra for phone calls. So rather than use satellite to deliver Pay TV, Optus and Telstra decided to roll-out new cable. This resulted in the current legacy of two incompatible, inadequate and incomplete networks that send a mixture of pay TV, telephony and cable internet. These wasteful duplications of basic infrastructure, far from showing the value of competition, show where competition fails. This legacy has helped keep Australian broadband costs high and speeds low.

The benefits of universal high speed broadband will be more than individual. If companies, governments, universities and so on can assume that most people can use high definition audio and video, exchange large files, and so on, each can build services that make use of these capacities. Speed measurements can best be considered as threshold points below which particular applications become infeasible. If most households had access at 100Mbit/s, new and unanticipated uses of the network infrastructure are likely to emerge. New businesses become possible. For example, the first phase of broadband were crucial to the emergence of sites such as YouTube and Facebook. Without a certain threshold of network speed, and the always-on connectivity that enable users to become involved with social media, these platforms, which have become industries, would not have emerged.

Fast broadband could be a disruptive technology, with network effects opening up competition to traditional incumbents and supporting new sectors altogether. Reliable and fast broadband connectivity will change conditions in many information industries. Broadcasters, cable television providers, video rental companies and telephony currently rely upon their control over spectrum, proprietary networks or real estate to maintain market dominance.

The Coalition's more cautious and laissez faire policy will probably appeal to many of these incumbents. Their policies will not as quickly produce a critical mass of users who can would sustain new business models and justify innovative services. With a slower speed of development, the opportunities for new and innovative businesses will be weakened, as international competitors take first mover advantage to establish global brands.

The proposed alternatives to the NBN bring to mind another recent regulatory failure. Digital television began in Australia in 2001, but by 2007 only 28 per cent of households were watching it. This weak popular uptake was entirely due to legislation that handed the new platform entirely to existing broadcasters. They could digitally simulcast their analogue programs without any competition for eight years. This protectionist response to technological change has done no favours to viewers, or to potential innovators in content or services.

Without the NBN we return to the same historical pattern of regulatory mess in Australian media policy, where the roles and interests of governments and corporations becomes intermingled, and the status quo is preserved. At least so far, unlike most earlier cases, the broadband debates appear to be relatively free of involvement by prominent media moguls.

The justification for the NBN returns to the argument of natural monopoly. Government is best placed to provide the basic infrastructure for the internet because this position is a natural monopoly. If multiple players try to create this service it will be inconsistent (serving only profitable markets), less efficient (with parallel private infrastructures duplicating similar or incompatible services), and more expensive (we ultimately pay for all of these).

However, in taking up the role of infrastructure provider, this government has also adopted a paternalism that has politically alienated the group that would otherwise be the NBN's strongest advocates. The mandatory internet filter policy aims to restrict Australian internet users' access to sites that are refused classification. Critics of the plan are unconvinced that the filter will actually achieve these goals. They are suspicious of the unaccountable censorship powers that it will give current and future governments. The politically expedient outcome would emerge with an ALP victory, and the Greens holding the balance of power to support the NBN, but knock out the internet filter.

Dr Chris Chesher is senior lecturer in the Digital Cultures Program at the University of Sydney. This is part of an ongoing series of articles by Australian academics on key issues during the election campaign.