Dynamic Business

The Rudd Government’s commitment to build a high speed National Broadband Network has become a hot talking point in recent months, with plans to revolutionise Australia’s digital infrastructure. Brad Howarth explores the benefits and what it will mean for business.

Whether the Rudd Government’s commitment of $4.7 billion to building a high speed National Broadband Network (NBN) was much of a vote catcher is hard to say, but it set the scene for a pitched battle between the two groups wanting to build it: Telstra and a consortium of seven telecommunications companies called Terria, whose members include Optus, Macquarie Telecom,  iiNet and Internode.

The goal is to build a network that will provide download speeds of 12 Megabits-per-second or greater to a minimum of 98 percent of Australian homes, at a total cost estimated between $10 billion and $15 billion. It will be Australia’s largest single infrastructure investment.

In some parts of the world the deployment of high-speed broadband services has been carried out as the result of a Government directive for greater speed (such as in Korea). In many others they have been built on a commercial basis, usually involving the delivery of internet-based television services (known as IPTV). No such proposals have been outlined for the NBN in Australia, which will be regulated to provide open access to all service providers.

What are the benefits?
But the questions that remain unanswered are exactly what it will be used for, and where will the benefit be for business? According to the veteran telecommunications analyst Paul Budde, the answers require an element of vision.

“Why build roads and bridges?” Budde asks. “Over the centuries infrastructure has proven to be very important for economic growth. And you do need some leadership, and a vision, to understand how to move forward. Rather than trying to think what people are going to do, give them the tools and let them experiment themselves. That is basically how the whole internet got started.”

Budde points out that with manufacturing disappearing from the Australian economic landscape, it is up to knowledge-based industries to provide much of the nation’s growth. “And the infrastructure for a knowledge-based society clearly is broadband.”

Australia lagging behind
According to figures released by the OECD, in December 2007 Australia ranked 16th in terms of the number of broadband subscribers per 100 inhabitants, with 4.83 million households connected. While this figure is frequently used to paint a picture of Australia being a laggard in terms of broadband adoption, there is also no conclusive evidence of a direct link between broadband uptake and the economic performance of a nation.

However, Budde does point to a link between broadband usage and technology leadership generally, with high-tech countries such as Sweden, Finland and Korea all ranking higher in broadband usage than Australia. “What we see is typically that the countries that are moving first are the countries that are becoming the technology leaders,” Budde says.

The chairman of the Terria consortium, former NSW Treasurer Michael Egan, likens the NBN to the rollout of the electricity network in the last century, and points to the resulting economic benefit to those countries where the public sector became involved in connecting up every home and business.

“Most small businesses do not want to stay small, and even if they do, they are going to have to have access to the world’s best technology,” Egan says. “And nobody knows what that means in five, ten or 15 years time. I couldn’t have conceived the services that we have now 15 or 20 years ago.”

Leveling the playing field
The new network will also level the playing field for businesses that are currently badly serviced, not just in regional areas, but in the so-called black spots in metropolitan areas that cannot receive high-speed connections.

“There are businesses that you simply cannot establish in a country town, because you need modern telecommunications and access to broadband, and it is just prohibitively expensive. So it is holding back a lot regions.”

According to the e-commerce strategy manager for Terria consortium member Macquarie Telecom Hosting, Denis Rowe, numerous new business services will open up as a result of universal high-speed services. He says many companies will be better placed to use software-as-a-service (SaaS) applications, which are delivered over the internet. The most famous of these is the customer management software from US company Salesforce.com.