The National Broadband Network.

Another day, another multi-billion dollar proposal to stimulate the economy and conveniently distract everyone from the shambles of a proposal that was the Great Firewall of Australia. The newsbots are in a flurry about this one and with this being right up my alley, I can’t help but throw my few cents in ;). So let’s take a good look at this proposal and see what it will mean for Australia, the public at large and of course, Senator Conroy.

Australia is about average when it comes to broadband penetration with the majority of our users on ADSL, some on cable and the rest on some unknown connection (usually satellite or 3G wireless). This is quite comparable to many other countries and the norm seems to be the majority on ADSL with only Japan and Korea having a large representation of customers with fibre/cable speeds. What this proposal aims to do is to bring fibre connections to 90% of all homes in Australia. By my estimates with approximately 8 million households in Australia that will mean fibre speeds to about 7.2 million houses, with 800,000 left in the digital dark age. Whilst this is still a very aggressive target to meet you’d still be pretty annoyed if you were one of those 800,000 homes that was left out. Hopefully the extra fibre being run everywhere will also spur others to upgrade the DSLAMs in local exchanges for those poor people who are left out.

The current proposal is signalled to run for about 8 years. Now anyone in IT will tell you that a time frame like that for a project in this field will inevitably be out-dated by the time it is completed. Using Moore’s Law as a basis, we would see that the average computing power would have increased by about 16 times, with data rates and storage capacities following suit. If this kind of project is to be undertaken the network must be scalable with newer technologies, otherwise it will be useless by the time it is implemented. Whilst they haven’t described what kind of fibre technology they’re going to be using I would recommend single-mode fibre which should scale up to 10Gb/s, allowing the network to not be outdated the day it’s switched on.

I rejoiced when I heard that the whole thing would be government controlled, hoping to avoid the catastrophe that Telstra has become. However it became apparent that the initial investment from the government will be $4.7 billion with the rest to be raised from private investors. Once the network is complete they will sell down their holdings in the company, thereby releasing all control on it. I don’t think I have to make it anymore clear that they are basically creating a monopoly on the network by allowing this one mega-corp to own all the infrastructure instead of the government. Unless there are strict provisions in place to ensure that other ISPs will be able to tap into this network and use it fairly, we’ll just end up with yet another Telstra who won’t have much incentive to be competitive, let along co-operative with others.

Overall for Australia this proposal is mediocre at best. Whilst I applaud the idea of upgrading Australia’s broadband and making us a market leader in terms of broadband penetration the way Senator Conroy is going about it is, as usual, confused and misguided. When it was obvious that his attempt at a fibre to the node was not going to win him the right amount of political points he turned his attention to the Internet Filter. Now that filter is dieing on the vine he’s taken the $4.7 billion that was allocated for the new broadband network and tried to make it look like ten times more by saying that investors will make up the rest. Maybe he is just trying to make everyone think that they’re dreaming….

Luckily it appears that the IT community is remaining sceptical, as it should with any that Conroy proposes. Triple J’s Hack program ran an excellent show yesterday exploring the new proposal and even, interviewing the man himself. Conroy is awkward at the best of times but when he was confronted on the issue of the Internet filter and the new broadband network, he seemed to hit a few brick walls:

Senator Conroy: We said if the trial shows that this cannot be done, then we won’t do it.

Interviewer: And what’s the definition of cannot be done? What would be the acceptable amount to slow the internet down?
Senator Conroy: Well now your asking me to preempt the outcome of the trial.

Interviewer: No I’m not, you’ve got to have an understanding of what’s a pass and what’s a fail. You can’t wait ’til the trial finishes and then look back and decide how your going to measure the outcome.

Senator Conroy: Well actually that’s how you conduct a trial. You wait to see what the result is and then you make a decision based on the result. If the trial shows that it cannot be done without slowing the internet down then we will not do it.

I’m not sure I can comprehend what he thinks a trial actually is. If you follow the scientific method you’d know that first you formulate a hypothesis, establish the test, formulate the thresholds for successful/unsuccessful and then perform the test. You don’t make up your pass/fail from the data, that’s just bad science. I once defended Conroy as just a figurehead for a bad idea put forth by Labor to win votes, now I’m sure that isn’t the case.

An amazing idea that was twisted and contorted into something that will at best, create another mega-monoply on Australia’s telecommunication network. It seems no one will listen to George Santayana:

Those who cannot remember the past are condemned to repeat it.

4 Comments

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  1. I actually think it’s a positive step in the right direction. Sure, there are concerns about creating another mega company, but consider that when Telstra (telecom) was formed, the internet hardly existed as an idea. A new, relevant, visionary, public/private company armed with hindsight might be exactly what the country needs. Apparently 15-20% (not sure on this) is the maximum stake any 1 company can have. If true, being a wholesale network it will promote some great competition in the private sector.

    In regards to Conroy, Rudd talked up a broadband upgrade in the lead up to the ’07 election (one the reasons I voted labor), so who knows how much influence Conroy has had on this. I wouldn’t let contempt for Conroy get in the way of supporting an ambitious, long overdue upgrade.

    p.s. 1st comment? 🙂

  2. I agree that the idea is sound, however there are a few too many gotchas in the proposal that stop me from giving unconditional support. I’d much prefer the government to own the infrastructure rather than another megacorp. At least that way it can be treated as a utility rather than a commodity, which would lead to more competition and stop anyone having a stranglehold on the market.

    Once the company is fully privatised there’s no stopping any company buying up a whole lot of shares and mounting a take over. There’s nothing stopping them from colluding either, well apart from anti-monopoly legislation.

    Rudd talked up a broadband upgrade which was primarily based around Fibre to the Node, not this proposal that Conroy has created. The government could have financed the entire fibre to the node project, but not fibre to the home. That’s where the private investment stuff comes in, and it wasn’t part of the original proposal.

    I’m all for bringing Australia in line with other broadband enabled countries; I just don’t like the other costs associated with Conroy’s proposal.

    And yes congratulations on the first comment on my blog! 🙂

  3. Interesting post dave. Though your chronology is a touch off, as the NBN was decided back on Jan 21 by the Government (http://www.smh.com.au/opinion/when-the-pms-biggest-decision-was-up-in-the-air-20090410-a2sd.html), so they havn’t specifically switched from the filter to the rollout, both policies have been proceeding slowly.

    I’d disagree with you about the privatization concerns too, as its quite possible to have private companies run some monopoly services without it necessarily being anti-competitive to those who use or re-package such services (the NY Stock Exchange comes to mind). But rather I have a different question:

    The net it seems is rather like the telephone in a lot of ways. It creates lots of content that has interpersonal value (ie blogs like this, lolcats, joke emails etc) but little of market value (Amazon and e-bay are well known for how rare they are, rather than the industries they participate in). So given the government is spending up to $43 billion of tax payer money on the rollout (in the worst case scenario of no private investment) is there a way to assess what financial benefit such a policy could offer ?

    Rudd has suggested $37 billion over the 8 years, major productivity gains, and 1/4 of a % of GDP per year extra growth. But i’m not sure how to break down such numbers or demonstrate to skeptics that this is wise economically, as much as it is socially beneficial to this country.

    So how do you go about demonstrating the financial benefit of the internet to a country. It seems so obvious that it is worth it to me and I’m sure most online users, but if the Govt is picking up the tab, it has to do better than gut feeling. Since you’ve already put up some numbers on the cost of a filter, i was wondering about your thoughts for the benefit of the NBN?

  4. To clarify, that was my point. They haven’t actually switched anything, they’re just trying to distract us from the failure of the Internet filter with a glorious NBN.

    Again, I should probably clarify why I think the NBN should not be privatised. The problem with such infrastructure is that it doesn’t make much sense for a private company to own it for the reasons that you’ve provided. I believe that the Internet and the related infrastructure should be classified as essential services. I.E. they are something that people require for the their everyday activities, has little to no commercial value due to the large investment and long payoff and would cause problems if controlled by a private monopoly. The stock exchange is not the best comparison due to the fact that it was built by private companies for private companies, whilst the NBN will be used by the public at large.

    It’s tricky to assess the financial benefit of such a policy due in fact to the intangible nature of many of the benefits. Initially the benefits will come from lower unemployment (I’m sure you can put a dollar figure on that) and the rush of businesses that try to take advantage of the new network. Over time the benefits move more towards the services that then would be available to consumers such as HD TV over the Internet and On-Demand services. Additionally more international businesses might look more seriously at Australia when the network is in place as they could then set up regional offices without having to put up with terrible Internet services for those sites, again another intangible benefit.

    I think you can see where I’m going with this. A lot of these are intangible benefits but somehow everyone still wants faster Internet. Keeping up to speed with other developed nations does a lot for someone politically (as we saw with the Space Race) and that’s primarily what this proposal is aimed at doing. Sure if Rudd doesn’t manage to hold onto his leadership until this is completed it will be hard for him to take credit but since he’s willing to risk that it shows that he sees the benefits of this long term proposal.

    You may have given me another topic to blog about this week 😉

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