• Great articles on other sites
  • RSS Great articles on other sites

  • Blog, Telecommunications - Written by on Friday, April 4, 2014 16:16 - 7 Comments

    Why broadband is too important to be left to the private sector


    blog Remember how earlier in the week we hosted several discussions on Delimiter about Australia’s telecommunications regulatory environment and how it could have been set up differently? Remember how so many readers whaled on University of Canberra academic Michael de Percy and I for merely suggesting that it was feasible (in fact, normal, in global terms) for the private sector to do most of the heavy lifting for broadband provision, with governments normally helping out by subsidising rural areas? Yeah, good times. Well, for balance, today we present the opposing view.

    Vox Media in the US has recently published a fascinating interview with Susan Crawford, former Special Assistant to President Obama on Science, Technology, and Innovation Policy. In it, Crawford expresses a view very similar to that taken by the Australian Labor Party — that the development of broadband is too important to be left to the profit-focused private sector. A sample paragraph:

    “This is a very expensive thing to build in the first place — much like the highway system also very expensive to build. As a profit-making company what they’re going to try to do is focus on those areas where they feel they can get the highest rewards, and those are often the richest neighborhoods. They’re going to leave out less wealthy areas and places that are more remote. But we’re one country and every American needs this access just the same way every American needed a telephone line.”

    The popularity of Labor’s all-encompassing NBN policy in Australia coupled with Australians’ love for big government means that Crawford’s view, if expressed down under, would be quite mainstream. However, in the US, where free market capitalism is very much the order of the day, Crawford’s views come across as quite revolutionary — almost taboo — in that the advisor is calling for the US Government to strongly intervene in the telecommunications sector on a national basis, as Kevin Rudd’s Government tried to do with the NBN in Australia.

    As I’ve said before, I support Labor’s original all-fibre NBN vision, and I think it’s the best telecommunications policy Australia has ever had, although the implementation has not been ideal. However, I’m not naive enough to think that it’s the only way broadband in Australia can get upgraded. There are plenty of examples internationally, particularly the structural separation of BT in the UK, where a smart approach to industry regulation has also paid very strong dividends. In any case, Crawford’s view is an interesting one — and particularly coming as it does out of the United States.

    submit to reddit


    You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

    1. Brendan
      Posted 04/04/2014 at 4:42 pm | Permalink | Reply

      “However, I’m not naive enough to think that it’s the only way broadband in Australia can get upgraded.”

      It is not the only way, it’s just the only sane way. To match BT, or Chrous in NZ, then legislation changes would be needed to force Telstra separation, and the ACCC would have to reverse it’s infrastructure competition preference.

      Neither is likely to happen.

      Ironically, the current US situation is what could easily happen here; the logical conclusion as infrastructure owners consolidate further to gain market share and control of market.

      We may end up with Telstra, Optus and a third owner, made of the remaining infrastructure owners like iiNet and TPG.

      This is my just my opinion based on what has happened so far, and where this seems to be heading; there’s no advantage to being second, so each will be vying to sew up market space.

      Sure, that’s competition. But maybe not what was expected.

      Once the major first push out is done, market share pretty much becomes the only place left.

      • RBH
        Posted 07/04/2014 at 10:40 am | Permalink | Reply


        Your first paragraph is a good summary.

        And now for my philosophical musings:

        Competition is not a drop in panacea that always results in greater efficiency. It is a system that requires a mature, considered understanding and a respect for law if it is to provide those benefits. In a situation like Australia’s telecoms industry you have a prevailing culture that has evolved around an extremely dominant Telstra. We are constantly reminded that Telstra is champing at the bit to find markets in which it can dominate and charge the highest rates possible. If it can’t it simply isn’t interested and that is why it knocked back the first government request for broadband upgrade and then submitted a non-compliant bid the next time around. Now with Malcolm in power and the NBN dismembered, Telstra smells blood in the water and it has come alive again in regards to fixed broadband. There is nothing about the Australian telecoms landscape to suggest that healthy competition that best serves the nations interests will suddenly spring up out of the ashes of the NBN. I believe that having a period of time (10-20 years) of retail competition such as would have been the case with the original NBN would have fostered a better environment for wholesale competition to grow from.

        It has become a folly of government and in part this is a product of media to believe that everything can be done quickly. Wisdom lets you know when an important thing just has to go at its own speed. The NBN was and is one of those things.

    2. Bern
      Posted 04/04/2014 at 4:49 pm | Permalink | Reply

      I agree in many respects with the government-led approach.

      Mainly because broadband access has moved quite rapidly from being a luxury item, to a commodity, towards being enabling infrastructure that promotes economic growth and social well-being.

      The analogy with highways is apt. Left to the private sector, there would be some great highways – linking a select few cities, where traffic demand is great. Tolls would be substantial, too. The rest of the country would be stuck with substandard roads, at best, which would be heavily subsidised (if not entirely funded) by the government.
      Conversely, look at what the US achieved with the Interstate system. The benefits for economic growth have been substantial, and very little of it was privately funded.

      • Nexus789
        Posted 04/04/2014 at 9:08 pm | Permalink | Reply

        You can extend that to the building of the power system, ports and other infrastructure. The private sector would never build the Snowy Mountains power scheme.

    3. Nexus789
      Posted 04/04/2014 at 9:02 pm | Permalink | Reply

      A number of countries use sophisticated technology planning approaches and they identify having a high speed broadband network as key to national competitiveness and national productivity. Makes sense as it underpins collaboration, the value of information exchange and the creation of new business models.

      However, we don’t plan in Australia and our politicians are in a perpetual state of puerile adversarial conflict in terms of tearing down the other parties ideas even though they would be beneficial to the nation.

    4. Paul Grenfell
      Posted 05/04/2014 at 9:59 am | Permalink | Reply

      The Post office.. Pmg, Telecom etc. Were built successfully by the Govt. Not private enterprise. I really don’t understand the hate for Govt built infrastructure. We wouldn’t have national roads, rail , power if we left it up to private enterprise.
      Crazy logic. Let the govt build the ftth nbn and quit stalling..

    5. Johnathan Nguyen
      Posted 12/04/2014 at 11:25 am | Permalink | Reply

      The basis infrastructure, are we better off today than 20, 30 years ago ? I don’t see so. Nothing wrong with capitalism but extreme-capitalism kills, and it’s the fact. Look at tiny roads being “poorly” built in new estates by private developers, local community services being neglected or unreasonably charged with silly fee since councils run as a profit centre, electricity billing nightmares, telecommunication service SLAs, and now the proposed privatisation of Medibank, the list just goes on and on…….. It’s fine by me to let Qantas or similar Government controlled services fall in the hands of private corporations but I for any moment cannot digest how extreme-capitalism is allowed to get in the way of services like NBN, road and transport, electricity. Sure, extreme capitalist would love to see NSW RTA, VIC Roads run by private corporations too. Or is extreme-capitalism in fact the only way ahead for Australia ?

    Leave a Comment


  • Get our 'Best of the Week' newsletter on Fridays

    Just the most important stories, one email a week.

    Email address:

    Follow us on social media

    Use your RSS reader to subscribe to our articles feed or to our comments feed.

  • Most Popular Content

  • Enterprise IT stories

    • Super funds close to dumping $250m IT revamp facepalm2

      If you have even a skin deep awareness of the structure of Australia’s superannuation industry, you’ll be aware that much of the underlying infrastructure used by many of the nation’s major funds is provided by a centralised group, Superpartners. One of the group’s main projects in recent years has been to dramatically update and modernise its IT platform — its version of a core banking platform overhaul. Unfortunately, the $250 million project has not precisely been going well.

    • Qld’s Grant joins analyst firm IBRS peter-grant

      This week it emerged that Peter Grant, the two-time former Queensland Whole of Government CIO (pictured), has joined well-regarded analyst firm Intelligent Business Research Services (IBRS). We’ve long had a high regard for IBRS, and so it’s fantastic to see such an experienced executive join its ranks.

    • Westpac dumps desk phones for Samsung Android mobiles samsung-galaxy-ace-3

      The era of troublesome desk phones tied to physical locations is gradually coming to an end in many workplaces, with mobile phones becoming increasingly popular as organisations’ main method of voice telecommunications. But some groups are more advanced than others when it comes to adoption of the trend. One of those is Westpac.

    • Ministers’ cloud approval lasted just a year reverse

      Remember how twelve months ago, the Federal Government released a new cloud computing security and privacy directive which required departments and agencies to explicitly acquire the approval of the Attorney-General and the relevant portfolio minister before government data containing private information could be stored in offshore facilities? Remember how the policy was strongly criticised by Microsoft, Government CIOs and Delimiter? Well, it looks like the policy is about to be reversed.

    • WA Govt can’t fund school IT upgrades oops key

      In news from The Department of Disturbing Facts, iTNews revealed late last week that Western Australia’s Department of Education has run out of money halfway through the deployment of new fundamental IT infrastructure to the state’s schools.

    • Turnbull outlines Govt ICT vision turnbull-5

      Communications Minister Malcolm Turnbull has published an extensive article arguing that the Federal Government needed to do a better job of connecting with Australians via digital channels and that public sector IT projects needn’t cost the huge amounts that some have in the past.

    • NZ Govt pushes hard into cloud zealand

      New Zealand’s national Government announced a whole of government contract this morning for what it terms ‘Office Productivity as a Service’ services. This includes email and calendaring services, as well as file-sharing, mobility, instant messaging and collaboration services. The contract complements two existing contracts — Desktop as a Service and Enterprise Content Management as a Service.

    • CommBank reveals Harte’s replacement whiteing

      The Commonwealth Bank of Australia has promoted an internal executive who joined the bank in September after a lengthy career at petroleum giant VP and IT services group Accenture to replace its outgoing chief information officer Michael Harte, who announced in early May that he would leave the bank.

    • Jeff Smith quits Suncorp for IBM jeffsmith4

      Second-tier Australian bank and financial services group Suncorp today announced that its long-serving top technology executive Jeff Smith would leave to take up a senior role with IBM in the United States, in an announcement which marks the end of an era for the nation’s banking IT sector.

    • Small business missing the mobile, social, cloud revolution iphone-stock

      Most companies that live and breathe the online revolution are not tech startups, but smart smaller firms that use online tools to run their core business better: to cut costs, reach customers and suppliers, innovate and get more control. Many others, however, are falling behind, according to a new Grattan Institute discussion paper.

  • Blog, Enterprise IT - Jul 5, 2014 13:53 - 0 Comments

    Super funds close to dumping $250m IT revamp

    More In Enterprise IT

    Blog, Telecommunications - Jul 5, 2014 12:12 - 0 Comments

    What should the ACCC’s role be in guiding infrastructure spending?

    More In Telecommunications

    Analysis, Industry, Internet - Jun 23, 2014 10:33 - 0 Comments

    ‘Google Schmoogle’ – how Yellow Pages got it so wrong

    More In Industry

    Blog, Digital Rights - Jun 30, 2014 22:24 - 0 Comments

    Will Netflix launch in Australia, or not?

    More In Digital Rights