ISPs unprepared for ending of rural subsidies

commentary Some of Australia's regional Internet service providers have been having a few anxious moments in recent weeks.

In one sense, their concerns are understandable. After all, the Broadband Connect government funding that they had been using to build rural broadband networks suddenly ran out this month -- leaving them high and dry without a drop of gas in the tank.

A replacement program has not yet come online, and when it does, the money available won't be as good as they're used to.

Seeing such a situation, you would expect these companies to start making some noise -- and they have, banding together for a trip to make their plea before the highest authorities in the land in Canberra.

However, your writer wonders why these ISPs weren't better prepared for the demise of the Broadband Connect individual subscriber funding subsidy.

Although the scheme ran out of cash a little early, it was due to finish up at the end of June this year in any case. The office of Communications Minister Senator Helen Coonan made this point when it told The Sydney Morning Herald last week that the ISPs were well aware the subsidy would be wound down when it got to a certain level.

In addition, Coonan has for 12 months now been making it plain the fundamental nature of the AU$878 million Broadband Connect package would change as it evolved from the old Higher Bandwidth Incentive Scheme (HiBIS).

This time last year, the Minister said she was considering setting aside substantial blocks of Broadband Connect for large infrastructure projects, rather than continuing to divvy the money up on an individual subscriber basis. That change is now well progressed, with the Minister planning to soon announce who will pick up that bulk funding.

Also, it's not as if the federal government has left the ISPs in the lurch, pitching in an extra AU$20 million to meet existing Broadband Connect claims, and pledging easy entry into a replacement subsidy program -- the Australian Broadband Guarantee.

All of this means the question needs to be asked -- were these ISPs so dependant upon government funding that they couldn't weather several months alone until the Broadband Guarantee started to kick in?

Even if you don't take these specific circumstances into account, however, there are dangers in relying on government funding for your business model.

A change of government in an election year could wipe out your ability to keep yourself afloat.

There's no harm in getting a government handout when it's available -- just as long as you have a backup plan if the feds change their mind.

What do you think of the government's actions in closing the Broadband Connect individual subscriber subsidy? Fair call or are Coonan and her department not in tune with regional needs? Drop me a line directly at renai.lemay@zdnet.com.au or post your feedback below this article.