19/08/2010 - 00:00

Good broadband an economic imperative

19/08/2010 - 00:00

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Timely action on broadband is vital for the nation’s economic future.

HIGH-CAPACITY broadband is an imperative, not an option, for Australia. We have a window of opportunity in the next five to seven years to join the world’s leaders in providing the telecommunications infrastructure that will underpin our economic future.

If we fumble the decision now we finish up an also-ran. High-speed networks have become the key to competitiveness. Connectivity is now productivity.

In the world in which the next generation of Australians will be competing for a livelihood, jobs, knowledge use and economic growth will gravitate to those societies that are the most connected. Countries with the best networks will find it easiest to amass, deploy and share knowledge in order to design, invent, manufacture, sell, provide services, communicate, educate and entertain.

During the past 30 years with few exceptions, Australian governments, of all complexions at all levels (national, provincial and municipal) have greatly underestimated the significance of the information and communications technology sector of the economy. At best the industry has simply been taken for granted.

With the National Broadband Network we at last have a government that gets it. Opponents of the NBN have found it difficult to look beyond rocks and real estate as the engines for economic growth. Ironically the rocks and real estate section of our economy today depends heavily on the quality of its information services made possible by modern telecommunications networks.

During the past decade, while numerous other countries moved to invest heavily in the high-speed infrastructure for the broadband economy, we in Australia squabbled over who should own our national carrier and how it should be controlled via regulation.

The ICT revolution, which was well under way by the end of the 1980s, started to have a direct impact on how we learn, where and when we work, how we communicate, how we take our recreation, how we market, buy and sell things and how we organise our lives.

This period of dramatic change also featured the emergence of new industries and organisations and the demise of many traditional organisational structures. None of us understood all the implications at the time but we were experiencing a very basic paradigm shift; from market place to market space, from passive media to interactive media and from closed networks to an internet-worked world.

By the early 1990s the quality of telecommunications infrastructure had been identified as one of the critical criterion determining where and when corporations made decisions about relocating business activities or simply investing in new operations.

Normally, issues such as political stability, availability of skilled workforce, raw materials, transport infrastructure and the cost of labour were the determining factors in such decisions.

The basis of the now famous ICT revolution of the 1980s was a matter of speed, cost reductions, energy requirements, miniaturisation and reliability. The speed of calculation and recall improved at a phenomenal rate. Cost reductions were quite extraordinary and made it possible for small businesses, schools and householders to own computers.

From 1985 to 1995, the volume of voice line activity around the globe grew from 15 billion minutes to 60 billion minutes. Of perhaps greater significance was the use of a global telecommunications system designed for voice traffic to transmit data. As a foundation plank of the digital revolution, in the US in 1997, for the first time the volume of data traffic surpassed the volume of voice traffic. That happened in Australia in 1998.

The demise of distance as the key to the cost of communications turned out to be one of the most significant economic forces shaping the past 20 years. The cost of transmission became virtually location independent.

The unit cost of trans-Atlantic telephone traffic between 1960 and 1995 was a classic illustration. In 1960, the estimated cost of a trans-Atlantic telephone call was $US4.60 per hour. By 1990 that cost was approximately seven cents per hour and by 1995 it was approaching one US cent per hour. It is interesting that charges for long distance calls remained in place for many years after this technological breakthrough.

For more than 100 years after the world’s first telephone call in 1876, bandwidth was not an issue of any significance for residential connections because traditional telecommunications infrastructure was designed and built to handle voice traffic. With the switch from the use of analog to digital technologies in the 1980s, the flow of data traffic increased dramatically.

Also during the 1980s, optical fibre technology moved beyond the laboratory to the telecommunications industry. In most advanced economies the volume of data traffic surpassed the volume of voice traffic by the late 1990s. Internationally, the public gained access to the internet with the launch of the world wide web and the Mosaic web browser in 1993-94.

Fifteen years later the internet has become an indispensable communications tool and information resource for businesses, governments, community organisations, individuals and families. During this first decade of the 21st century the proliferation of broadband access to the internet has changed business practices, consumer behaviour, the nature of entertainment, types of employment and the basics of education and research and health service delivery.

By 2008, more than 180 economies worldwide had launched broadband services. Globally the number of subscribers had surpassed 500 million (including fixed and mobile broadband subscribers).

We are involved in a race for economic survival. The roll out of FTTP (fibre to the premises) and a fully-fledged commitment to speeds of 100 megabits per second and more is a massive engineering task. Apart from the plumbing job, if we effectively harnesses the potential of the new network Australia will gain significantly in terms of: global competitiveness; increased productivity; a major stimulus to innovation; the online content revolution; the transformation of health and education service delivery; its capacity to achieve a low carbon future; and greatly enriched opportunities for community development.

The federal government’s initiative to hard wire the nation is the most significant infrastructure undertaking since WWII. It is inevitable that some people who lack the vision, comprehension and the necessary courage will be detractors.

Let us hope they will be a significant minority. John Forrest’s government would never have constructed the Kalgoorlie pipeline and the Chifley/Menzies administrations would never have constructed the Snowy River Scheme if those initiatives had had to pass the over simplistic short-term tests involved in classic business plan analysis.

• Mal Bryce is chairman of iVEC and former deputy premier and minister for economic development and technology.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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