Tuesday, 17 June 2014

Despite NBN, Australia still lags behind the OECD average for broadband

© Depositphotos.com/@lightsource
The focus on broadband in the 2007 election, followed by the formation of NBN Co in 2009, means that we are now fast approaching seven years since Australia's poor international performance in broadband penetration appeared large on the policy radar. 

But how much difference has it made?

By June 2013, after cumulative losses by NBN Co of $1.8 billion, cumulative expenditure by NBN Co of $2 billion, and an administered investment in NBN Co by the Department of Broadband, Communications and the Digital Economy (DBCDE) of some $3.4 billion (not to mention a great deal of pre-existing programs and other initiatives to market and promote broadband and later NBN - see Note 1), Australia remained below the OECD average for fixed-line broadband subscribers ranking 18th in the OECD with penetration at 25.6%. Conversely, Canada ranked 11th with penetration at 32.8%.

Back in June 2007, when broadband was well and truly the political issue of the day in Australia, Canada was ranked 9th with 25% penetration, with Australia ranked 12th with about 23% penetration. At this particular time, Australia was ranking above the OECD average (Note 2). Scratch the surface and look at price, speeds and download limits, however, and the picture is significantly gloomier.

One of the most interesting aspects of Canada's broadband policy approach has been the government's insistence on "forbearing" from regulating the industry and using targeted measures where required (such as the Broadband Canada: Connecting Rural Canadians strategy - see Note 3).

The policy of forbearance has ensured very little government involvement in the industry since the election of the Harper government in 2006. Nonetheless, Canada has extended its lead over Australia in fixed-line broadband services. Organically.

Industry Canada state the government's policy clearly and succinctly:
"The provision of broadband service is a private enterprise not regulated by government"
Then Fairfax CEO David Kirk hit the nail on the head way back in 2007:
"I think it's usually about market structure and regulation rather than technology or government policy"
Of course, people only really heard him mention "fraudband". Nothing about markets or regulation.

So what difference have seven years and billions of dollars of public money done for broadband in Australia? Regrettably, not a lot. Or to put it simply, it has enabled Australia to catch up to where Canada was when Australians first realised they were suffering from "fraudband".

Notes:
  1. NBN Co and DBCDE Annual Reports, 2009-2013.
  2. OECD (2008) Broadband Growth & Policies, p. 25. However, Australia ranked 17th in 2006 and 16th in 2008, so the 2007 figure does not reflect that Australia was below average in the years before and after the election. Neither does it show how the ACCC was reporting Australia's broadband as 200 kbps before this role was dropped. See my earlier article here.
  3. Broadband Canada (archive)

Creative Commons License Except where indicated otherwise, Le Flâneur Politique by Michael de Percy is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Australia License. Based on a work at politicalscience.com.au. Background image ©Depositphotos.com/ @redshinestudio