Why I don’t want the NBN
I haven’t said much about the NBN as I consider it a sideshow to the online censorship debate. We have a government that wants to control what we see online, it wants to log all our online activity AND it wants us to pay for a network to make all of this happen at lightning fast speeds. Eh? What? I understand they’ll need massive pipes to spy on us but that doesn’t necessarily make the NBN a good thing.
To be honest I haven’t gone over the detailed plans of the NBN, mainly because it is a distraction in this election. I don’t want a network subject to the above snooping and major privacy invasions. It’s like making better roads so the storm troopers can knock down your front door. You may think I sound a little over the top here but even the document detailing plans to log all your activity online which was acquired under FOI, was 90% censored.
The Internet & the free market
I do have a fundamental problem though, with Governments interfering like this in a market. The Internet, is the free market in it’s purest form. It is estimated that Google had somewhere between 500mil – 1bil users before it advertised. Have you seen Facebook advertise anywhere? If they do I haven’t seen it. The point is, if a service works well for it’s users online it will thrive. If some one builds a better mouse trap the crowd will flock to it. Look at what’s happened to Google wave this week. It wasn’t intuitive or clear what the benefits were so no one used it. There are no impediments online. The barrier to entry is low. There are no govt subsidies or grants that will give you an advantage. If if your service is better people will use it. Unlike many of our offline industries.
I understand those who argue that’s why govt needs to step in to help creativity thrive. At what cost though? Whilst I have been an ardent advocate of higher network speeds over the years, I don’t think passing the cost onto people who don’t need or want it is a good idea. I spoke at CEDA in 2001 with the then CEO of the AIIA Rob Durie. We were both outlining the case for broadband. Back then we were 19th in the world for net access speeds. We have since slipped. However to artificially push an upgrade on the market whose cost has to be shared by those who may not need it, doesn’t seem like a good idea to me.
Why we’re in this narrow band mess
Telstra
There are two main issues as I see them with broadband in Australia. Firstly, we have a network owned by a monopoly created from the public purse. Telstra. For a long time Telstra virtually controlled Internet access in the wholesale and retail markets. ASIC has issued more than one notice on them for anti-competitive behavior. Senator Kate Lundy bought me lunch in 1999 and at the time I expressed the view, like many others, that Telstra should be broken up into retail and wholesale. It’s a bit hard now the egg has already been scrambled.
What I’d like to see though is something like Telstra spin off it’s network. Sure you still have a monopolised network but at least other retailers get to compete on a level playing field. The existing Telstra shareholders get a 50% share in the float. The govt stays out of the spin off. I’m sure there are far more considered ideas by better business brains than mine but I believe there are options.
WiMAX
The other problem is what has happened with Wimax in Australia. In 2005 I spoke at mobile content world conference in Sydney. I remember talking to @mpesce who was also speaking at the conference about the lack of speakers presenting on Wimax. He was also a little surprised to say the least. In the previous week at Comdex in Las Vegas, Intel had demonstrated 74mbps over a (reportedly) 500 mile radius. Also in 2005 the Howard Government auctioned off the spectrum to a single company, it hobbled the roll out and development of Wimax in Australia. Whenever a government restricts entry into a market through licensing it stifles, competition, innovation and creativity. Look at the industries of TV, radio, newspapers etc. In Britain you still have to have a license to own a television. Imagine if you had to have a license for a computer. We would not have the web, iPhones or digital music etc etc. Have you seen how much variety they don’t have on the telly in Britain?
Intel has now partnered with a new company to roll out Wimax in Australia. A five year setback in an industry subject to Moore’s law is very unhealthy. India this year, will have 800 million people with Wimax coverage. Basically 80 % of the country with high speed access. This company is advertising speeds of between 1mbps & 7mbps for 140 RS/month. That’s $2.80USD per month. Id love to know if that is common from my Indian friends. If it is, something is very wrong with this picture.
But a hard wired connection is better right?
Sure optic fibre to the home will always be better than a radio signal (Wimax) . In 2005 Intel funded the Wimax license winner Unwired, with $37mil to roll out a national Wimax network. They were spectacularly unsuccessful but $37mil compared to 45 thousand million dollars, which is the cost of the NBN, seems utterly ridiculous. How many Wimax transceivers could be bought for that?
Scrap the NBN
So do I want large tubes for my interwebs? Of course, not at that cost though. Governments, of whatever persuasion should keep out of it. I know a lot of my Net industry mates are drooling at the speeds the NBN is promising but I’d ask you to take a closer look at why we’re in this mess in the first place and ask yourself if more Government interference is the answer?
{ 7 comments… read them below or add one }
I wholeheartedly agree with you Jim. I think a lot of people forget that when the government is paying for it, that actually means we are paying for it.
Jim this idea is terrible on so many levels. Starting with the cost. I noticed the other day that an IT project management professional stated in the Australian that this 43 Billion is just the tip of the iceberg, as this types of Massive projects tend to blow out in costs. He stated that it would more then double. That is frightening.
Too many people look at the NBN and what it is – (or would be) – in completely the wrong way. Many feel that NBN Co should be treated as a business from go to whoa – and that would certainly be one angle. Yes – on any scale, the NBN is expensive. Depending on unforseen factors, it could go beyond the oft touted $43B mark. I certainly don’t see it doubling. The recent deal with Telstra significantly reduces the initial startup costs of this network, as great swathes of infrastructure suddenly exist without having to be provisioned anew by NBN Co.
After the initial cost, NBN Co will absolutely have to make money, no question – but return the startup cost of $43B? People look at like that $43B has to come back in a timeframe similar to normal business models. This is not a “normal” business model.
We build billions on new freeways in this country – and never do we expect that spending to be recouped. It is not expected. This money is spent with a view to increasing economic activity around those freeways. A $650M ring road has recently been completed around my city – on the basis that its mere existence will provide more than $650M of benefit to the local economy over the life of the road. We the local ratepayers are not expected to “repay” that money.
The NBN is a freeway. $43B is a LOT of money – unquestioned – but over its life – (and lets be honest, we can measure this in DECADES) – will it provide $43B of benefit to the Australian economy? Absolutely.
There are flow on benefits also.
For example, large numbers of people for whom telecommuting would not have been a consideration in the past will suddenly be given that as a real option. Many more people working from home, even a few days a week, means less people driving on the road – (environment benefit, lower road maintenance costs, pressure off already crowded and failing public transport systems). If people aren’t on the roads as much, there are less accidents, less road trauma, and this reduces costs for the struggling health system in this country. I’m sure there are many other ways you could extrapolate the very existence of the NBN to effects on other parts of the economy.
With the NBN you absolutely have to look outside the normal “box”. In the old Australian economy, the NBN is ridiculous. In the economy the NBN would create, it will be crucial. And if we don’t transform our economy away from one that relies on the “sheep’s back”, as it is often described, we will slip so far behind when every other country does this, we’ll be nowhere.
I certainly agree our network needs improving and have been arguing that point for years. I fear this will become a white elephant as it has not been driven by the free market but by politics.
You say you’d like to see Telstra spin off its network, so we’d have a single owner of the cabling infrastructure that everyone can use to compete on a level playing field.
Isn’t that pretty much the situation that the NBN is offering? Except with modern fibre to 93% of the country, rather than telephone cabling?
And I’m not clear why you think it would be better for this infrastructure to be owned by a private company and run for private profity, rather than treated like electricity, water and roads: vital public infrastructure that everybody needs.
Electricity & water are private in Victoria. Transmission & retail
If the Government had any interest in building the NBN we would already have it. The NBN will eventually be done by the private sector we have already seen the introduction of ‘ADSL 2′ and other technologies starting to turn up under the free-market.
Australia can never match Europe or even the United States for internet connectivity. It just is not economical which is one of the reasons so many companies keep their servers overseas. We have a huge landmass and a small population to pay for it. The Government is only going to waste taxpayer money on the NBN, as it becomes more economical the private sector will introduce it.