In an exclusive interview with the [Sydney Morning] Herald, Mr Hockey identified the government’s $36 billion national broadband network as the Coalition’s big political target this year.
The broadband network was by far the biggest off-budget initiative ever seen in Australian government, Mr Hockey said, referring to government programs that have not been accounted for in the federal budget. The broadband network is treated as a government asset and not as a budget item.
The Opposition’s official position on the NBN is well known, frequently being the subject of door-stop interviews by Opposition leader, Tony Abbott, and more lengthy and considered statements by Malcolm Turnbull.
Hockey’s comments offered a more nuanced position, attacking the fiscal classification of the expenditure, but the Opposition would do well to pay more attention to broadband issues outside the limited horizons of Canberra politics. It’s clear that many countries see broadband communication infrastructure as an asset not an expense, an investment for future prosperity.
South Korea and Singapore has been cited on this blog as societies and economies that are rapidly being connected to broadband in the same way they became connected to telephones in the 1960s and ‘70s. Singapore plans to have a 100mbs service to every household by 2015 and Korea is not far behind. Both use fibre optic cabling.
And broadband connectivity is not far behind in the rest of Asia. Nations we somewhat condescendingly referred to as third world countries are not being left behind, as those who foresaw a permanent digital divide have feared.
At the CommunicAsia2011 Conference in Singapore last June, a British telecoms analyst Oliver Johnson, presented a paper that detailed “the factors that could see fixed broadband household penetration in markets such as China, the Philippines and Vietnam surge past the 50 per cent mark by 2020”. That is much the same time as the NBN is expected to be operational Australia-wide, if future governments of either side of politics remain committed to it.
Oliver Johnson is the CEO of Point-Topic whose website identifies the company as “a leading resource for broadband market data and analysis”. Certainly, located in Grey’s Inn Road, it is close to the heart of the financial and legal district of the City of London.
Johnson told me that “in theory the figure of 50 per cent was for all Asian households, with penetration much higher in most markets”.
He said that given the urbanisation of much of Asia (often over 50 percent, in some cases as much as 80 or 90 per cent), the roll-out of fixed line services will reach one in two Asian homes by 2020.
However, there would be gaps. In countries like Indonesia and Vietnam much of the countryside presently lacks telecommunications infrastructure and, though there are programs to roll-out fixed line infrastructure, the programs won’t be completed in less than 10 years.
“Essentially the challenges are not so much how to deliver ever-faster broadband services in urban areas but how to provide services across whole countries,” Johnson said. In these circumstances, he saw a mix of technologies would need to respond to local needs. Wireless technologies riding on 3G, and then 4G mobile telephone facilities with satellite or fixed line back-haul from local concentrators held significant promise ahead of the fixed line roll-out to the home, he said.
These 3G and 4G solutions would only approach wired broadband speeds if the cell sizes were kept down because the more users of the service, the slower it ran. According to Johnson: “While it’s a good solution to get people access to the Internet and some of the application enabled by broadband, in a perfect world you would want to give them higher speed that 3G or even 4G can offer.”
Johnson also saw a continuing role for ADSL technology on existing and planned copper networks in Asia, linking concentrators set at the limit of range for high speed ADSL to hubs and using microwave solutions, WiMax or other forms of wireless solutions to extend the range of the ADSL lines, building out from population centres.
But there is the question of who pays for the roll out, especially in countries where the average income is measured in dollars a day for many citizens. Key factors shaping growth in a national broadband market, Johnson said, were gross national income, the growth of urban populations, national regulatory environments and the spending plans and policies of governments in the region. The continued growth of China and India would have a flow-on effect throughout the region.
Some comfort can be taken from the UK experience, where the initial broadband roll out lifted the nation’s gross domestic product by 2 percent, increasing the tax base, and making more people more productive. In fact, Johnson said if that 2 percent increase had been taken and used to ‘fibre-up’ the UK, it would have paid for the roll-out, and any further increase in GDP would have been free.
However, the less mature industrial economies of Asia present differences, especially difference of priorities. But, according to Johnson, “if you want to increase your revenues as a government, giving your people access to broadband is a very good way of doing it”.
He sees broadband development as a joint private-public sector project. The private sector develops profitable markets in denser urban regions, and governments support the extension of services to new geographies. “Some markets are at risk of being left behind and will need some central intervention to avoid that outcome.”
But the problem of cost remains for many Asian countries. Broadband connections yield benefits: a boost in the GDP, health, education and entertainment, but the front-end cost of wiring the nation before the benefits can flow is huge. So where does the initial injection of capital come from? Johnson had no particular answer, but said the countries that find the money will benefit a long way into the future.
Something is possible for Australia. The planning and implementation experience we are gathering in the NBN roll-out has export potential, comparable with the engineering experience last century’s great infrastructure project, the Snowy Mountains hydro-electric scheme.
So when politicians add up the benefits of the NBN, let’s consider, too, the knowledge we can sell, or perhaps give to our Asian neighbours, to help them cross the digital divide. That way, Mr Hockey’s $36 billion can be discounted by the contribution to overseas aid.
Dr Vincent O’Donnell writes the weekly column March of the Moguls that appears in Screen Hub and produces Arts Alive, the national arts and culture current affairs radio program. He is an honorary fellow of RMIT University School of Media & Communication, and the University of Melbourne’s School of Historical Studies.