Aussie broadband to make a trillion in 2050

Aussie broadband to make a trillion in 2050

Summary: By 2050, ubiquitous high-speed broadband will generate around $1 trillion in revenue and reverse Australia's productivity decline, according to a new report commissioned by IBM Australia.

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By 2050, ubiquitous high-speed broadband will generate around $1 trillion in revenue and reverse Australia's productivity decline, according to a new report commissioned by IBM Australia.

IBM managing director in Australia and New Zealand, Andrew Stevens .
(Credit: Luke Hopewell/ZDNet Australia )

Speakers at the launch of A Snapshot of Australia's Digital Future to 2050, in Sydney yesterday, blamed any reluctance to embrace high-speed broadband, as embodied in the National Broadband Network (NBN), on fear, a lack of perspective and a lack of leadership.

"We were, quite frankly, a little frustrated by [the NBN debate] and by the lack of vision," said Andrew Stevens, IBM's managing director in Australia and New Zealand.

"Being amongst those people who were over the horizon, in terms of confidence in the economic impact of this, we thought we should actually do some quantitative and qualitative research to prove our confidence — or, to disprove it."

The report, produced for IBM by international strategic forecasting firm IBISWorld, positions high-speed broadband as "the new utility", comparing it to the utilities that underpinned previous transformations in society — such as the water- and steam-driven mechanical power utilities of early industrialisation, and the electricity grids and telephony systems of later industrialisation.

"In the Infotronics Age, information communications technology (ICT) — in the form of computers, telecommunications, broadcasting equipment and software — led the new utility sector from the mid-1960s to the mid-2000s," the report said.

"The second stage turbo-boost has now arrived, in the form of digitisation (displacing analog), broadband (cable, fibre and wireless) and advanced software (learning systems, search engine capabilities and more to come). It will prove a productivity fillip to industry, as did electricity and telephony in the second half of the industrial age. It will facilitate the creation of new products and new industries, and, as always, it will benefit individuals and households, as well as industries."

IBISWorld estimated the expected revenue of this new age utility in 2012 as $131 billion (3.3 per cent of Australia's total revenue, of just on $4 trillion).

"By 2050, this could be expected to rise to $1 trillion (in constant 2012 price terms)," the report said.

The report's author, IBISWorld founder and chairman Phil Ruthven, said that, given these figures, we shouldn't be scared by the NBN's construction costs, which he puts at $37 billion.

"If you look at the sunk cost of all telecommunications today — that's Telstra and Optus, and everybody else — it's $70 billion. Now, the NBN's meant to be spent over seven years. Divide [the NBN costs] by seven, you've got roughly $5 billion a year being spent," Ruthven said.

"I regard that as a depreciation allowance only. We should not be scared by $37 billion ... Is some of that going to be waste? Probably. But so is every project, anyway ... I'm not here in a sense to be overly defensive about NBN, except to say that perspective says it's not a lot of money and we shouldn't be blown away by that."

The other main benefit of the NBN, said Ruthven, is that it gives us the chance of getting to gigabit-per-second speeds and higher, "and that's not easy to do with wireless, yet".

"I think whether the NBN makes a very high return on shareholder funds really doesn't matter all that much. Because in the final equation, it is a government utility at this stage, and it's the benefits that flow from it, rather than the exact return on the NBN, that I think we should be looking at," Ruthven said.

According to David Kennedy, from analyst firm Ovum, political attitudes to high-speed broadband have changed dramatically in the last five years.

"Five years ago, there was no plan for a broadband utility in this country," Kennedy said — a situation Ruthven described as "very scary".

"Now, both sides of politics are committed to a national wholesale-only broadband utility. The only disagreement is a squabble over the technology mix," Kennedy said.

For IBM's Stevens, the big surprise from the report was not only the breadth of impact from the new utility, but its depth and significance.

"At a time when people seem to be focusing only on the time between now and the next election, I think our contribution here is — I hope it's this — that we see a roadmap out some forty years from now," Stevens said.

"You do need someone to lead us, and I think at the moment we've got too much management and not enough leadership there. I think our ability to encourage society to embrace the future is not there to the extent that it should be. It's almost as if we've been made fearful."

Topics: IBM, Enterprise Software, Telcos, IT Employment

About

Stilgherrian is a freelance journalist, commentator and podcaster interested in big-picture internet issues, especially security, cybercrime and hoovering up bulldust.

He studied computing science and linguistics before a wide-ranging media career and a stint at running an IT business. He can write iptables firewall rules, set a rabbit trap, clear a jam in an IBM model 026 card punch and mix a mean whiskey sour.

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15 comments
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  • Someone should email this article to Malcolm Turnbull haha!!
    Mark S-8ff5e
    • Malcolm will no doubt identify this as another example of corporate conspiracy. Duty bound as he is to toe the party line and oppose everything created by an illegitimate government.
      johnnyringo-86db9
  • "Because I think there's been so many naysayers out there suggesting we don't need it, which is it a bit like saying 'dirt roads were quite adequate 50 years ago, who needs a sealed road and a four-lane highway?'"

    WTF is this about dirt roads, sealed roads and highways!?!?!? Comparing broadband to roads is sheer MADNESS! Doesn't Phil know that before roads there were no roads?

    ;-)
    Hubert Cumberdale
    • No the inter webs is more like a series of pipes...
      Jingles-8366c
    • ;-) HC
      Beta-9f71a
  • to think you can estimate the revenue of a broadband network is crazy!!! It is not possible to estimate the return on an investment of fiber, it is too complicated and there are too many unknown variables...and of course a study initiated by IBM is going to show positive implications of the network...you can't trust studies that are funded by the public sector yet alone private enterprise. Secondly, to think that there is going to be a need for this network in 2050 is the most crazy thing I have heard in my life. Do you think that at the speed this digital revolution is going, this fiber network will be obsolete in 20 years max, and maybe 10 years min. No-one will be using this network in 2050!

    Don't get me wrong I think this network is a great idea but you need to be realistic IBM, you are the ones that will benefit most out of this.
    michaels123123
    • "to think you can estimate the revenue of a broadband network is crazy!!! It is not possible to estimate the return on an investment of fiber, it is too complicated and there are too many unknown variables"...

      I actually agree... Yet, the opposition want and say a CBA can be done... curious.

      "Do you think that at the speed this digital revolution is going, this fiber network will be obsolete in 20 years max, and maybe 10 years min. No-one will be using this network in 2050!"

      So actual fibre which can do 26tbps will be made redundant by some yet to be invented super something?

      To sort of quote, err you - "to think you can estimate some unheard of broadband network will make fibre obsolete is crazy!!!"

      And if you think it will be 5G, 6G or whatever, here's what Ericsson reckon...

      http://www.dnaindia.com/money/interview_there-will-be-no-5g-we-have-reached-the-channel-limits-ericsson-cto_1546408
      Beta-9f71a
    • "you can't trust studies that are funded by the public sector yet alone private enterprise."

      Except the ones that say FttH is a bad idea???





      "Secondly, to think that there is going to be a need for this network in 2050 is the most crazy thing I have heard in my life. Do you think that at the speed this digital revolution is going, this fiber network will be obsolete in 20 years max, and maybe 10 years min. No-one will be using this network in 2050!"

      Great. This is perfect timing then, the NBN pays itself off before that 20 years is up and we then use the funds to pay for what ever magical thing you are thinking of that will make "this fibre network" "obsolete".





      "Don't get me wrong I think this network is a great idea"

      No you don't. This is just a phrase people like you like to use in these NBN debates to make themselves sound pragmatic and objective. You don't fool me.





      "IBM, you are the ones that will benefit most out of this."

      That's funny, why just last year Turnbull was saying "Google is an NBN conspirator". Isn't that strange how everyone who is in favor of the NBN will benefit from the NBN? Could it be that in actuality everyone will benefit from the NBN regardless and there are just some who deny it? No, that is far too logical...
      Hubert Cumberdale
    • "IBM, you are the ones that will benefit most out of this."
      Well, if they do, then that means that a lot of their corporate customers, to whom they supply services and infrastructure management, will be using it, which means that it will have an extremely good chance of being paid for quickly.

      Now if IBM is thinking this would be a good thing for them, that means it would be a good thing for all the other services and infrastructure providers, like HP, Fujitsu and Dell.

      I know you were probably trying to make out that IBM was only being self-interested, but you neglected to think about what the consequences of the self-interest were - a highly successful NBN!


      "you can't trust studies that are funded by the public sector yet alone private enterprise."
      Who can you trust studies from? Dismissing a study merely because of who does it is
      stupid. One has to look at the details of its creation, criteria, methods, implementation and reasoning to really be able to judge the merits of a report.

      Self-interest is NOT a valid dismissal criteria if the report is based on solid grounds and method.

      You have shown NO reason why it cannot be valid, other than largely dismissive, and non-fact-based, phrases.
      Patanjali
    • @michaels123123
      Why don't you do a bit of research before making comment on a site like this?

      If you had, you would learn that fibre is future-proof for at least 50 years and probably 100 years.
      To upgrade a fibre link, you simply change the equipment attached at each end. By doing this researchers have already achieved 26 Terabits per second. We are only just at the very beginning of exploring the massive potential of fibre.
      By saying it will be obsolete in 20 years you have exposed your ignorance and made a fool of yourself.
      ITenquirer
  • In the late 1990's, before it lurched into its disastrous foreign ventures, Telstra was spending between $4B and $5B a year in capex on new mobile networks and upgrading its fixed network and IT systems. It was a programme of continuing improvement in products, service levels, operating costs and capacity to meet growth. In the early 2000s the capex budget was savaged to offset successive multi-billion dollar write downs on the foreign ventures. Reduced capex also helped disguise declining margins in the short term. For example, fibre-to-the-node was in the plans in the late 90's to reduce copper network maintenance costs and to improve data services. All this was cancelled. Operating costs climbed instead of reducing, service levels declined and Telstra lost opportunities on innovative revenue earning products.

    So, as we all know, the chickens came home to roost, the hen house collapsed, and the shareholders were buggered. It is only the leniency of the government that salvaged the situation for the Telstra shareholders by allowing a much better NBN deal than Telstra deserved. The taxpayer has to make it up in a more expensive NBN

    The NBN is an essential catch-up investment that Telstra should have started making ten years ago. Now it is a national responsibility.

    Malcolm, show Mike some respect and help him get on with the job.
    Grazzha
  • I think something should be pointed out here. We are building telecom2 or Telstra2 here.
    WHAT REASON will NBN fix your phone when it breaks? Why will they provide good service as a wholesaler! Given there is no competition.
    I was alive in the days when Telstra didn't care about their customers. Why? Will NBN care about their customers. If you fine them it doesn't matter. They will simply increase their fees next year, where else will you go?
    WE ALL HAVE SUCH SHORT MEMORIES!
    michaelsaunders
    • michael, what is it that you don't understand about what you don't understand?

      It'll be the service provider you sign up with who is responsible for the standard of your access. This is no different in principle to the current situation where endusers sign up with a service provider who is buying wholesale capacity from Telstra.

      You then say 'I was alive in the day when Telstra didn't care about their customers.' You may be overlooking the fact that those customers were forced to deal with the CSP component of a vertically integrated monopoly, and got treated accordingly.

      All service providers will be using the NBN platform with equal access, and they will all be competing with each other on price, capacity and service.
      anonymousI
    • I think that Michael has a valid point here although I don't agree with it entirely.

      Certainly we can criticise Telstra on a thousand counts for poor service. Certainly we can argue that competition at all levels helps service improvement. But has selling off public infrastructure worked in any other situation? Obviously, no. Power, water, airports, public transport, prisons, etc, have all been total failures - even with the "best" of Chicago School free market models. Not a single success model anywhere in the world. No new investment, reduced quality of service, higher costs and Macquarie style upfront fees sucking out the life blood before the first breath. And do we have competition? The winner is ... wait for it ... another private monopolist. (And maybe a rapturous politician for just a nanosecond.)

      Back to Telstra, they must be given some credit for their struggle to improve service to their poor old rusted-on customer base. On the other hand, Internode, iinet and TPG, for example, have managed to provide excellent end-customer service as retailers of Telstra wholesale services, as demonstrated by many surveys.

      If Telstra had played its cards right, it might have demerged its networks 10 years ago (including mobiles) into a wholesale infrastructure provider and a value-added service provider. No temptations then to "invest" in China. Shareholders and customers would have been much better off. But, of course, board and executive hubris was the insurmountable obstacle.

      Bugger the shareholders ... and the customers ... and the taxpayers.
      Grazzha
  • Dear michaels123123 and all the other idiot morons who think the NBN will be obsolete in X number of years,

    WTF do you think makes up the internets major and minor backbones, and What do you think has been connecting international networks for decades?

    Here is a hint, it's fibre!

    Fibre links have been in use for more than 20 years, in that time there has been no technology that has even come close to providing the speed and capacity that fibre offers.

    If you want to upgrade the speed and capacity of those fibre links then you replace the equipment at each end of the link ergo the only thing that will become redundant is the equipment at each end of the links as newer and better tech comes along that increases the speed and capacity of those fibre links thus making better use of an existing link.

    So your arguments that the network will become redundant is pure BS and is nothing more than an ill informed opinion that ads no value tho the NBN debate. So please STFU and stop trying to argue that the NBN will become redundant in X number of years because it wont, and your arguments are just plain wrong!
    Jingles-8366c