commentary Getting broadband to everyone in Australia should be a major concern for businesses and government.
I mentioned last month a recent OECD report scoring a number of countries on rural and regional broadband coverage. There's been renewed interest in the topic as debate over privatisation of Telstra resurfaces. It seems a pre-requisite for selling the rest of Telstra is an improvement in rural services, including broadband access.
So why's this of interest to the majority of Australians, who are (finally) able to benefit from some form of broadband access, typically cable or ADSL? Firstly, because Australia is increasingly a knowledge economy, competing against other knowledge economies. Australian Bureau of Statistics figures show manufactured exports and services exports both rising faster than the rural and resource commodity exports, reflecting a "long-term pattern of increasing sophistication in the nature of Australia's exported goods and services". Exports of information and communications technology (ICT) services generated AU$2.5 billion in 2002, a small but increasing percentage of total exports.
Access to broadband is one of the key elements that affect national productivity. Cisco has been busy lobbying governments -- and anyone who will listen -- about the need for government to foster an effective national communications infrastructure. Similarly, Microsoft's submission to a Broadband Advisory Group (BAG) inquiry stated: "Growing evidence suggests that a failure to address Australia's slow uptake of broadband will result in a significant loss of economic opportunity for the nation." It quoted a report by the Allen Consulting Group warning of the negative impact of the lack of affordable broadband access on employment. In early 2004, the AC Neilsen Broadband Barometer found that 55 percent of metropolitan small businesses had broadband compared to only 20 percent of non-metropolitan small businesses. The report also found that the city-country small business broadband gap is widening.
Australia's aging population (who are encouraged by the government to continue working) and a desire to spread an increasing population outside of existing cities also dictates a need for a much greater reach of our communications infrastructure. By the end of 2002, DSL was available to 73 percent of the Australian population. However, in October 2003 only one fifth (1000) of Telstra's exchanges were DSL-enabled, with the remaining 4000 only upgraded based on the commercial viability. In other words, unless Telstra can realise a profit from DSL-enabling an exchange, it's not going to happen.
So DSL has just about reached the limit of its coverage, other than the few communities that can show enough demand to justify an ADSL service. Cable won't be going much further either -- after a frenzied roll-out by Optus and Telstra in the '90s, the returns don't justify any further coverage. One Telstra executive at the time routinely began presentations with the joke that "either everyone in Australia is going to have access to a cable, or half of Australia will have access to two cables." Not surprisingly, exactly half of Australian households have access to two cable options, and the other half none.
The good news is that a number of emerging technologies may finally bridge the urban/rural gap. A Melbourne-based telecoms wholesaler has licensed a new Wi-Fi technology, which provides data, voice, and video services at speeds of up to 70Mbps using a combination of CDMA and WiMax technology.
New prospective entrants Unwired Australia and Personal Broadband Australia (PBBA) plan to offer wireless broadband to up to 75 percent of Australia's population using licensed spectrum. Although the initial markets are major cities, Unwired Australia holds spectrum licences for around 95 percent of the Australian population.
The Federal Government announced a number of initiatives in the last couple of years, yet for all the rhetoric about rural service levels, while Telstra owns the national infrastructure but is measured by it's profitability and share price, there's still a long way to go.
Oliver Descoeudres is marketing manager at network IP/Internet network infrastructure builder and solutions provider NetStar Australia. He can be contacted at email@example.com or on 02 9805 9759.
This article was first published in Technology & Business magazine.
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