Government tries to solve NBN puzzle with more government

Who knew back in 1901 that by giving the Commonwealth the power to deal with “Postal, telegraphic, telephonic, and other like services”, we’d be in this mess 110 years later?

In October last year, NBN Co and government officials briefed Gungahlin residents on the local NBN rollout, but they had very little to say. Most people wanted to know the big things: Who will get access to it? Where will it be deployed? When will this happen? How much will it cost? Instead, NBN Co rattled on about sharing the future via the NBN, to think of the possibilities, and not dwell on the facts.

Approaching a year later, and with NBN’s Gungahlin rollout imminent, the big questions still haven’t been answered by NBN Co or the federal government. The release of the House of Representatives standing committee on infrastructure and communications report yesterday had this to say about the communications problem:

To date, much of Australia’s public debate around the NBN has focussed on relatively narrow issues such as pricing structures, technology options and governance issues. During the inquiry, the Committee perceived a growing appetite for a broader public discourse around what benefits the NBN could enable across Australia’s economy and society (Chapter 10, p, 245).

Rather than fix the problem, the “Labor-dominated” committee has found, after fluffing off any arguments which challenge the very design of the NBN governance model, that the solution is to talk more about the benefits of the NBN.

Citizens still want to know the big questions about NBN: Who will get access to it? Where will it be deployed? When will this happen? How much will it cost? None of these questions have been answered. Citizens are still treated with contempt and asked to “imagine the possibilities”.

Australia’s communications industries have always suffered from politics. Since the early days, we’ve been told how fabulous our communications infrastructure is when clearly we haven’t stacked up well against other advanced economies.

The only way to fix the NBN’s woes is to get the industry out of the hands of politicians and let it deal with market demand – it really is that easy.

The litmus test to check when the politicians are further enough away from the industry is just as easy: when a telecoms company CFO resigns, the event won’t even raise Malcolm Turnbull's eyebrow. In the meantime, government is the problem, not the solution.


Photograph: Copyright © 2007 Michael de Percy, taken in Canberra, 16 April 2007
_____________________________________________________________

Australia still lags Canada: State of the Internet

Despite intense political interest in the state of Australia's broadband infrastructure, four years on since the Rudd Government won the 2007 federal election (with broadband featuring heavy in the ALP's policy platform), not much has changed: Canada is still leading Australia in broadband access and speed.

Average Connection Speed

Canada has a decentralised telecommunications market, dominated by regional monopolies. However, there is significant competition between platforms, particularly ADSL (traditional telecommunications carriers) and HFC (cable television providers). A major difference is that the regulatory system enables greater access to  address anti-competitive practices, especially for smaller competitors.

Average Peak Connection Speed

Meanwhile, politicians insist on making imprecise comparisons between Australia and New Zealand, as Malcolm Turnbull did at his recent National Press Club address. The latest Akamai State of the Internet figures demonstrate that  comparing Australia with New Zealand is hardly inspiring:

Broadband speeds in Australia versus New Zealand

As two of the most similar countries in the world, Canada and Australia provide a unique comparative study for political scientists, enabling the adoption of Mill's method of difference to find the underlying cause of different outcomes. A key difference is the extent of decentralisation in Canada's communications industries.

High Speed Broadband Adoption

According to the latest Akamai State of the Internet report, Canada beats Australia on all measures of broadband adoption.

Broadband Adoption >2mbps

To prove the point, the only measure where Australia beats Canada is in the adoption of "Narrowband" - connections with speeds of less than 256kbps - which is hardly an enviable position. Enabling competition by freeing up the market from federal control is the only solution. When the NBN is completed in 2020, this will remain a short-term fix.

Narrowband Adoption

Mark my words: the underlying problem of political control of Australia's communications infrastructure will be back to haunt us at the next evolution. Indeed, it has happened repeatedly throughout the history of Australian telecommunications policy. The following is from the report of the Royal Commission into Postal, Telegraph and Telephone services of 1910:

The result of unduly curtailing expenditure was pointed out repeatedly by the Department, and the required provision was made on the Estimates, but was reduced by the Treasurer. The longer the reconstruction is deferred and the longer installation of a new system is postponed the more expensive the work becomes, on account of extensions made to the old system. Construction methods were found to be practically the same as in 1901, as the Department claimed it had been impossible to improve these methods since that date, although the adoption of improved methods would obviously have tended towards economy.

100 years on and communications infrastructure is still used as a "policy lever" to be pulled every time politicians need a boost in the polls. The trouble with the NBN, despite the obvious advantages in the mid-term, is that the new and improved policy lever is an investment of such staggering proportions that it will be difficult to pry it from the hands of those who wish to continue to play politics with this important infrastructure.