The NBN alone does not guarantee a strong “digital economy”



blog If you listen to the rhetoric emanating from Australia’s political sector, especially the Australian Labor Party, you’d no doubt believe that the construction of the National Broadband Network alone was enough to guarantee that Australia will develop a strong local technology startup culture, similar to that found in Silicon Valley in the US, or in other locations internationally such as Tel Aviv in Israel. However, as one of Australia’s most experienced startup mentors and commentators, Sandy Plunkett, writes in Business Spectator this week (we recommend you click here for the full article), this simply isn’t true. Plunkett writes:

“Innovative industries are as dependent on government policy intervention to foster success (or at the very least, not get in the way of it) as they are on industry big and small to make it happen. Policy leadership has to connect old and new economy transformation potential by creating “joined up” portfolios of expertise in innovation, skills and productivity. That means re-thinking industry linkages and political portfolios.”

One of the first things the Government needs to pursue in this area, as Minister Assisting for the Digital Economy Kate Lundy wrote on Delimiter this week, is reforming the employee share scheme program for Australian startups. However, there’s a bunch more steps that the Government can take to improve things here, such as further tax incentives for local technology companies and venture capital and angel investors, supporting startups hubs in major cities, working on building a startup culture into our educational institutions and more.

As Plunkett notes, one of the most under-rated tasks will be building acceptance of a culture of failure; most startups fail, after all, and this needs to be a normal part of the innovation process. There is no doubt that Australia’s technology startup scene is exploding right now, but there’s a lot further to go.


  1. “The NBN alone does not guarantee a strong “digital economy””

    Agree with this completely. It is however undoubtedly a strong foundation on which a robust digital economy would be formed.

    This goes for either version of the network too – while it’s no secret I am a strong supporter of the current FTTP model, the alternate FTTN model is still an elegant solution that would significantly improve on what we have now.

    It’s all the rest that has to go on top of that foundation that will matter the most.

    • I’d agree if the coalition had better upload speeds,even to the detriment of downloads

  2. >This goes for either version of the network too.

    But not to equal degrees. Technological services for things like streaming, cloud storage, remote backup, etc rely heavily on having sufficient bandwidth (often up AND downstream) to be usable. One version provides this, the other clearly does not.

    • With respect…both solutions offer significant improvements in upload AND download. Certainly, FTTP is a far better technical solution – (and is my preferred solution by quite a margin) – but that is not to say that the alternative FTTN solution offers nothing.

      I don’t want the FTTN solution – (not by a long shot) – but it’s disingenuous to say it doesn’t offer improvements in upload speeds.

      How do cloud services work in Australia now – without either solution in place?

      • Because the use if them is strictly limited to the tasks that can actually be performed. That’s the point of difference – It’s not about being able to use tools a bit faster on one network, it’s about being able to make use of certain tools and technologies at all, which simply won’t operate below a given level of performance.

        The Turnbulls of the world will say there aren’t significant numbers of applications outside 4k streaming that simply won’t work over 25mbps, but again that misses the point – no one in Australia is going to even consider developing applications, technologies and portals that can take advantage of really high speeds like 100mbps and higher when the market for them is so limited. FTTH changes that by making the market 93% of the country, essentially ubiquitous across metropolitan and even decently populous regional communities. FTTN means such ideas, such ambitions and projects are dead before they’ve even been articulated.

        • Look, I’m not disagreeing at all…I’m just saying that low upload speeds does not preclude the use of cloud services…

          …but we’re getting away from the premise of the article, which is about building the ‘digital economy’ – and either solution is better than we have now, and therefore either solution would help the growth of the digital economy.

          There’s no doubt in my mind that the FTTP model would help it more than the FTTN model – but as Renai is trying to point out, having an ‘NBN’ – (of any flavour) – is not all you need to build a ‘digital economy’.

          • I am not accusing you of it. I am sure you know it’s a crock of shit.
            But it really bugs me when politcians start claiming that speed isn’t needed because there is no application for it. Well duh! Very few people are stupid enough to produce an application that relies on something that doesn’t exist. Be is network speed, CPU power, memory, storage. They have all been a limiting factor on application development.

            Yes, the NBN does not make the digital economy, but it does enable it. In 2020 on though… like other systems that don’t supply enough capacity, wharves/shipping is a recent one for example, it can be a bottleneck. This is where I don’t agree with FTTN. Yes, it’s good, it’s an improvement, it will give us years of more than enough bandwidth… them bang, brick wall, no cost effective upgrade path, long delay as it’s replaced with what is being rolled out now, and FTTN becomes what ADSL is now.

          • The digital economy is not just about a type of fixed line infrastructure build, nor is it just myopically concentrating on one key aspect of that build being upload speeds because it is perceived as the ‘gotcha factor’ in the debate against Coalition FTTN.

            The ‘digital economy’ certainly does not solely rest on fixed line upload speed aka FTTP, it can also be about increasing 3G and 4G wireless footprints, taking wireless speeds beyond 4G, increasing Wi-Fi speeds and coverage, increasing satellite speeds, and enhancing copper based FTTN VDSL beyond its current capabilities.

            The one definition upload FTTP speed cannot be taken in isolation as being the most important factor in a digital economy over all the others.

  3. I think the antifailure culture (and potentially lifelong legal and financial ramifications) are the most damaging to a successful startup culture emerging. If you want to learn to be a great artist, you paint and draw and sculpt and screw it up again and again until you find the right balance, the right technique that allows you to achieve in your work what you see in your head. It can take decades of practice (essentially gradual improvement through continuous failure) to start to get it right.

    That’s how we learn and improve. But there’s no scope for this in business unless you’re so large you can afford a potentially costly R&D department. Startups can’t exist under Friedman free market capitalism – the rules need to be relaxed, they need protecting and nurturing. The cost to the economy of supporting Startups that go nowhere is miniscule, with potentially massive pay offs if they prove successful.

    But without support, nurturing and vast disincentives of failure at least cushioned (if not removed), we will never develop a significant startup environment that taps even a fraction of the creative talent available.

  4. The NBN properly implemented – at least FTTH (not FTTN which is barely better than wireless – likely worse!) – is only a first step. It would help in connectivity – creating a virtual critical mass of skills and resources where none exist locally.

    A major problem is the severe lack of a venture captalist culture in Australia. Startups in the USA are fostered by venture capital, often fail and rarely succeed – but the rare successes are enough to give an exponential payoff (compared to investment).

    Unfortunately, the culture of business, government and investors in Australia is to focus more on the past (mining, gambling, car industry, …) rather than the future. Speculation in shares rather than investing in new products and services.

    We still have a lot to learn about how to foster technology investment, development and product and service industries.

      • How about you back your reply up? Or at least talk about what you know?

        I typically can get better than 6Mbps on old Telstra wireless and presumably double that on the newer one!

        From lots of recent reports in, for example Gungahlin, – most ADSL and ADLS2+ users can barely get 1 Mbps ( See: “This means a 4 megabit per second connection quite often delivers below 0.5 megabit per second. There has been times where I have experienced download speeds of 0.03 megabit per second speeds (30 kilobits per second).). Common to have modem dial up speeds.

        FTTN will barely get speeds I was used to (at work) some 20 years ago. I would be surprised to see 10Mbps unless you were close to the node with good copper (good luck with that!).

        Thanks to John Howard and Telstra a pilot broadband project in Palmerston in Gungahlin was cancelled almost 20 years ago – think how ahead Australia would be with broadband if this short sighted backward looking had not prevailed.

        So FTTH is the only real guarantee of speeds substantially better than wireless – FTTN is a expensive copout!

          • You probably mean the “Gungahlin Broadband Project” scrapped by Telstra because of John Howard (and Telstra’s) lack of vision (at least into the future!):

            Of course I am well aware of that – whenever I was in Gungahlin I had to deal with slow bandwidth and inaccessible broadband as a consequence of Telstra’s short sighted decisions in how infrastructure wasn’t provided properly,

            But that is kind of irrelevant – Telstra used short cuts like pair gain/RIMs in many new suburbs throughout Australia. So Gungahlin is a perfect example of when infrastructure is not up to date. Especially considering it is a recent suburb!

            Copper is last millenium technology! Telstra should have been hauling fibre in the 1990’s.

            Anyway, FTTN (or even FTTC) is a short term misguided attempt at a solution. Fibre is faster, uses less power (light!), and is bandwidth expandable (e.g. wavelength-division multiplexing: Copper degrades and would form a bottleneck in FTTN systems … shared amongst 10 or 20 households you would have that factor of 10-20 or more (on top of speed attenuation) to apply to a supposed 20, 50 or 80Mps (download) – and lets not even consider the poor upload speeds of FTTN! QED.

          • ‘Anyway, FTTN (or even FTTC) is a short term misguided attempt at a solution.’

            So why are Telco’s the world over still rolling it out in 2013 and have plans to rollout it out well into 2015-2016? – keep in mind these Telco’s are rolling out both FTTN and FTTP. simultaneously.

          • Try what appears to be a reasonable exposition:

            and key points:

            “While in theory FTTN is a cheaper option, that only applies if it’s done by the incumbent telecommunications provider. ”

            “Remembering that the distance is the actual copper length (not as the crow flies), a typical FTTN system would deliver maximum speeds of less than 25Mbps, which is in line with the NZ experience of 13Mbps average.”

            and many of those rolling out FTTN & FTTC are incumbent (or otherwise related to incumbent) Telcos! But it is a stop gap measure! Now and in the future, we need speeds of 100Mbps or better.

            What do the experts say:
            e.g. Vint Cerf:

            “I am so envious that you have a government that is willing to make the long term infrastructure investment of this magnitude and of this type [in the NBN]. I will be pushing very hard for similar activities in the US but quite frankly you guys are way ahead of us…I consider this to be a stunning investment in infrastructure that in my view will have very long-term benefit. Infrastructure is all about enabling things and I see Australia is trying to enable innovation.”


    • How many residences do you know of that can always get a minimum of 25Mbps and up to 100Mbps on ADSL2+, which will be interesting to see as the average connection speed of ADSL2+ in Australia is around 8-9Mbps.

  5. Exactly! Theory and in practice differ – ADSL, Wireless and FTTN/FTTC are very sensitive to congestion issues (as well as infrastructure problems).

    Look at South Korea and other countries we should be aiming for:

    (Aside: I’ve regularly visited South Korea for the last 15 years and the bandwidth provided is generally accessible and routinely fast: 20Mbps is the minimum I’ve experienced in recent years! Will check again in a couple of weeks!)

  6. Hey everyone,

    FYI I will be deleting comments from now on on this thread which try and turn this thread into another FTTN versus FTTP thread. This thread is about stuff the Govt can do apart from the NBN … as should be obvious. It’s not about FTTP or FTTN. Keep it within these boundaries, please, or your comment will be deleted.

  7. Good point! We seem to have multiply tangented … 8-)

    The main thrust of my first comment was that we need to foster an active culture of innovation and interaction (like with this site I guess) amongst those with new ideas for startups.

    Of course venture capital is often the missing ingredient here! On recent visit to San Francisco and Silicon Valley I could just about feel the venture capital available … in Australia we are still in early days.

    Has anyone got some positive or at least educational experiences about getting a startup off the ground in Australia?

    I would like to follow that path but that is probably one of my current blindspots despite multiple decades playing with different sized computers (they are shrinking!).

  8. The culture and commercial backing is the most important aspect to creating an environment like Silicon Valley.

    The ability to fail and have it seen as another stage in the journey towards creating your own business.

    The availability of venture capital & commercial knowledge to help ideas get off the ground.

    As far as government policy it should not be direct subsidies as government track record is appalling at picking winners and it is best left to people who have their own funds at stake. The government needs to create an environment to attract these people whether it is through lower taxes, fewer regulatory barriers or other supporting facilities i.e. NBN.

  9. “If you listen to the rhetoric emanating from Australia’s political sector, especially the Australian Labor Party, you’d no doubt believe that the construction of the National Broadband Network alone was enough to guarantee that Australia will develop a strong local technology startup culture”

    Whereas if you listen to the rhetoric emanating from the coalition, Australia should not even be contemplating participation in the IC&T industry. The infrastructure of the 19th century was good enough for the 20th and should be good enough for the 21st as well.

  10. Actually trying to build and support an innovation culture was Whitlams major crime back in the 70’s. There was NO private start up funding for anything innovative or out of the ordinary and the business and financial sectors hated the government showing up their failure to comprehend the need.

    Yes they backed and funded start ups, some failed, some were doing well and showing great promise, Fraser and Howard shut that program down post haste and Australia lost some very valuable patents and research

    It would appear that the Conservatives are uncomfortable if research and innovation is not limited to medium and large companies by tax incentives etc, or at least established companies and investors having a major share and controlling interest.

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