What does the National Broadband Network hold for small business?

The NBN will reduce costs and open up revenue generating opportunities for small and medium-sized businesses.

Many of today’s most dynamic businesses are the ones that recognised early on the great potential of the web – to generate cost savings, to provide information instantaneously, to deliver greater flexibility to employees and, of course, to open up new markets not just in Australia, but right around the world.

The benefits flow straight to the bottom line. Domestic online retail sales, for instance, are predicted to almost double to $33.3 billion over the next five years.

However there remains a curious hesitance about the web among Australia’s small and medium-sized enterprises. This condition manifests itself in the latest MYOB Business Monitor. According to the survey, two thirds of SMEs don’t have a website at all.

Yet these same companies in the very same survey demonstrate that they are not ignorant of the benefits the web can bring. The vast majority (62 percent) use internet banking. More than half (57 percent) of business owners agreed with the statement “the internet is a critical channel for marketing and promoting our business”. And those companies with a website said they were more likely to report increased revenues than those without.

More trouble than it’s worth?

All of which begs the rather fundamental question: If small businesses recognise the benefits of the web, why aren’t more racing to get online? What is holding them back? The reality is that for many businesses, access to the internet can be more trouble than it’s worth.

Outside the major cities the signal is often slow and the service unreliable, particularly when it comes to uploading information. And even if you’re one of the fortunate ones who is able to access high-speed broadband, that can be an expensive exercise. Not only is access to affordable and reliable broadband a problem, research by Sensis has found that some businesses are concerned about security, a lack of skills and the cost of going online in the first place.

Australia has the fifth most expensive broadband in the OECD and last year we slipped to 18th out of 31 nations for fixed broadband penetration. Just as we’re slipping behind our international peers with an ageing telecommunications infrastructure, within Australia all these different factors are contributing to a widening divide between those who are online and those who are not.

Fortunately the National Broadband Network has been designed to overcome these obstacles. NBN Co is building a network that will deliver a ubiquitous nationwide broadband service right across Australia. The vast majority of premises (93 percent) will receive fibre optic broadband capable of offering speeds of up to one gigabit per second.

But no matter what technology you use to receive the NBN; be it fibre, satellite or fixed wireless, the same basic service of 12 megabits per second will be available to all, regardless of location and at the same wholesale price.

In many parts of the country it will mean an immeasurably better service than many people receive today. For those three percent of remote Australians accessing broadband via satellite, broadband will be up to 12 times faster and deliver up to 20 times the broadband capacity currently available.

Households, schools, hospitals and businesses will purchase their broadband products from retail service providers: telcos, ISPs or maybe even a supermarket or a utility company, all of whom will compete to offer a range of services using the NBN. This competition will inevitably raise awareness and usage across all business sectors and communities.

But it’s not just about faster speeds. The NBN also raises the prospect of new revenue generating opportunities coupled with considerable cost reductions, for instance, by:

  • lowering travel frequency and duration by using video conferencing;
  • increasing flexibility for workers allowing high bandwidth home-based access for operations and administration;
  • reducing the need for bricks and mortar stores in high-cost CBD areas as online B2B and B2C transactions increase in frequency;
  • providing access to high quality video-based interactive training and professional advice; and
  • access to cloud computing applications – why buy expensive pieces of accounting software or a hard drive for storing files when you can access programmes and services “stored” on the web?

It will also cut the cost of reaching potential new customers and reduce inventory costs with the ability to access just-in-time delivery. The NBN will also open revenue opportunities through immediate access to new and distant markets with the capacity to showcase products and services in high definition video.

Through an online presence on the NBN, businesses can expand their “opening hours” to 24 hours, seven days a week. The benefits will be felt nationwide but nowhere will they have greater impact than in rural and remote areas.

The British academic Dr Tim Williams and a number of regional development agencies see the NBN as a catalyst to rejuvenate the bush. Fast broadband, they suggest, could help end decades of depopulation and instead spur a repopulation of regional areas and an overall strengthening of society.

I know from my own experience of living in a country town that first rate transport links plus a good high school plus decent health services plus robust broadband connectivity all add up to a sustainable local community. If businesses with an affordable, reliable connection are able to flourish in rural and regional areas, they will be able to compete with their metropolitan counterparts and attract workers seeking a cheaper cost of living away from big cities.

Unlike other technologies available today, the NBN will provide a more reliable service with fast internet speeds that will remain constant no matter the location or the number of people using the network. The reliability of the NBN will mean that many businesses – large and small – will for the first time be able to consider using broadband for services that demand high reliability.

It’s for these reasons that the NBN represents a critical upgrade not just to Australia’s communications infrastructure but the ability of Australian enterprise to thrive and prosper.

- Kevin Brown is Head of Corporate Services at NBN Co Limited.

For more information about what the NBN will mean for your business, see Leighton Jenkins blog.