Monday, September 10, 2007

Do we really need broadband handouts?

We’ve supposedly got cheap and standardised networking components that can allow countries to leapfrog generations of technology. We’ve got concepts like user-generated infrastructure where shared connections are being tied together to form one global hotspot. Competition between not only service providers but also different technologies should be bringing affordable and fast communications to everyone.

So with all of this at our disposal, why does it sometimes seem that we’re regressing to a time when governments took the lead in providing communications infrastructure? Even in the most capitalist country in the world they’re calling for government intervention and more funding to improve the US’s poor showing in the broadband rankings.

Has the market really failed so spectacularly that the only way to get communications infrastructure rolled out is for governments to throw money at the problem?

The regression to government-led infrastructure is not confined to the US, however. In Thailand, for example, the rate of regression is probably world-class. A recent proposal was for the state-owned TOT to take control of all of the country’s networks, pool them together and then lease it back to the access providers.

It’s the sort of suggestion that makes you check that the date isn’t the first of April, and unfortunately it’s a suggestion that’s still on the agenda somewhere. It’s about the only time that it seems an advantage that the country is in a state of legislative paralysis.

When it comes to throwing money at the problem, however, Australia would seem to be leading the pack. I think most of the world doesn’t realise just how much money both sides of government are talking about giving out to build broadband. The incumbent government is offering $600 million for regional broadband, while the opposition says it would provide funding of some $4.7 billion if elected. Those are serious sweeteners.

There’s nothing wrong with governments having the goal of attaining world-class infrastructure. I just wonder if the paybacks will be as good as they’re expecting. Obviously the thinking is that the country will be more competitive as a result of blanket broadband coverage. Would be interesting to measure though. You could also argue that it’s just ensuring that everyone has equal access to digital entertainment.

Many people seem to agree that pervasive and super-fast broadband connections lead to economic growth. I’d like to see the data to back it up. If places like Stockholm, Paris, Hamburg and others now have widespread access to 24Mbps connections and higher, in some cases 100 Mbps pipes, have the citizens or businesses in those places become better off financially? Or do they just have better movie collections?

As well as serious studies into the economic flow-ons of superfast broadband, I’d also like to see another type of study – whether funding or regulatory reform is the best way to improve infrastructure. For example in the U.S., there are many who would argue that the problem lies with the power of Big Telco. Their lobby armies ensure that the vested interests of the big players are protected.

Similarly, in developing countries like Thailand it’s often the regulators that are stopping infrastructure from being built. But if they would allow outside competitors to enter the market, and allow new technologies like WiMAX and so on to flourish, they could probably have world-class infrastructure in a relatively short period of time. And all without the government having to open the public purse.

Let’s applaud the goal of wanting to have world-class infrastructure. But let’s also see if world-class competition and regulatory policies are a better way of delivering it. – Geoff Long

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