NBN: The paths we didn’t take & why

This article appeared as "The NBN’s the culmination of 150 years of cock ups" on The Punch, 19 May 2011: http://www.thepunch.com.au/articles/the-nbns-the-culmination-of-150-years-of-cock-ups/

Wednesday’s announcement that the NBN finally made it to the mainland was good news for the many Australians who have deplorable access to broadband services. But why did it take so long?

Simple: Australia’s communications policy-makers are bounded by a centrally-controlled, single-solution approach that has been around since the time of the telegraph. This model leaves no room for innovation, encourages contractors to artificially inflate prices, and stalls whenever a skeleton can be found in the closet of the head honcho of NBN Co.

When the Canadian Samuel McGowan brought the telegraph to Victoria in 1853, his plan to become a telegraph entrepreneur was thwarted by the Victorian government’s decision to rollout the telegraph network as a public monopoly.

Not long after, James McGeorge ignored the South Australian government’s declaration that only the government could own and operate telegraph networks. McGeorge had captured the market, causing ‘the immediate revenue’ from the government’s duplicate network to be ‘infinitesimal’. McGeorge’s reward for being innovative was to have his network forcibly purchased by the South Australian Government and subsequently dismantled to prevent further competition.

Fast-forward a century and a half later, and not much has changed. Backed by its constitutional mandate for communications policy, the federal government has opted to address Australia’s broadband woes by deploying another monopoly. Just like the telephone, radio and television technologies with which, despite popular sentiment, Australia was also a developed-world laggard, it has always been the same: Do nothing for years and then try to ‘catch-up’ using public money when the problem becomes obvious.

Recent events have revealed the downside to the centrally-controlled, single-solution approach. Instead of rolling out high-speed broadband to Australian citizens, NBN Co has been embroiled in a series of scandals such as contractors charging over-inflated prices and NBN head honcho Mike Quigley caught up in a drama that really has nothing to do with NBN Co. In the meantime, the announcement that the NBN has finally reached the mainland via Armidale is only good news for the handful of people signing up to trials via the NBN.

If a decentralised approach had been adopted, none of these dramas would have been so newsworthy as to take the focus away from the real issue: giving Australians access to broadband worthy of their status as some of the richest people in the world. This begs the question: Why is broadband so bad here?

It is easy to blame Telstra, and many do. But Telstra didn’t create itself, it was created by the federal government. The blame should go where it is due. But is it enough to engage in short-term blame-storming to find the answer? Enter serendipity.

McGowan brought the telegraph to Australia from Canada and he also brought a copy of the legislation that enabled the telegraph to be deployed. But he wasn’t able to bring the decentralised policy approach that has enabled Canadians to be at the forefront of broadband technologies and the associated services years ahead of their Australian counterparts.

Solving Australia’s broadband problems requires a longer-term view which is hard to fathom through a short-term lens – what worked in the past doesn’t work now. But our institutions aren’t capable of letting go of communications policy as a lever for political goals, even though these goals are no longer congruent with the brave policy agenda that opened Australia’s protected economy to global competition some 30-odd years ago.

Australian policy-makers on both sides of politics must let go of the social-democratic past and forget about trying to provide the same level of service to everybody. Given the snail-like pace of the NBN’s deployment, by the time everyone gets access to high-speed broadband it will be time for another government-controlled monopoly to rollout the next communications innovation.

It is now common knowledge that when governments intervene in markets, they invariably create false market conditions which often end badly – the roof insulation scheme is an obvious recent example. Focusing on competition through a variety of approaches to the deployment of broadband technologies through a variety of government and industry players would have avoided the problems facing NBN Co right now.

Regardless, with a century and a half of policy-making experience focused on centrally-controlled, single-solution approaches to deploying communications technologies, Australia will be hard-pressed to adapt to the inherent complexity of the information revolution that is happening whether Australians have access to high-speed broadband or not.