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It seems to me that too many people have focused government attention on intervening in the supply of broadband facilities. Let’s face it, it is easier to look at a dozen or so suppliers to gather information and figure out who should receive a cheque to help direct their investment in broadband facilities.
On the other side of the equation, it is hard work to stimulate demand. But this is precisely where our efforts should be focused, as was recommended by the recent report [pdf, 700KB] from Berkeley Research Group.
A series of stories are coming out of Australia that reinforce the need to focus more attention on broadband demand, rather than supply.
Our friends down under are realizing that the $40B National Broadband Network (NBN) needs to do more than just install infrastructure. An editorial is questioning the business case and another article indicates that many homes being offered free connections still aren’t signing up for service. In fact, a majority just don’t get it.
The preliminary indications are that the NBN could be a field of nightmares—what if you build it and nobody comes? The lesson is that infrastructure is a necessary, but insufficient prerequisite for a digital economy. At some point, we must turn our minds beyond the electrons.
According to CRTC figures, there are around 8 million Canadians who don’t have broadband. Consider that one in five Canadian households does not yet a computer. How many of these households are likely to subscribe to broadband?
Improving broadband adoption doesn’t need government intervention in the plumbing end of the business. Service providers are investing plenty of money to make sure the pipes are in place.
What we need is help in getting more people to drink from the broadband faucet.
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I don’t profess to be an NBN expert, but my understanding is that you don’t really need to know about the NBN in order to use it. The NBN is intended to replace all sorts of communications infrastructure. Once it’s in place, there won’t be any further need for POTS wires to the home, or cable TV connections, or anything of that sort. If a household wants a fixed-line telephone, or some kind of video on demand service, they’ll get it over the NBN. They don’t even need to know that the service runs over the NBN.
We don’t need to create demand for broadband. Broadband is not a service: it is a medium for services. If you build the NBN, it’s not the customers that will come, it’s the service providers—especially those who were not in a position to roll out their own infrastructure (i.e. everyone but the incumbent telcos). If it’s done right, the arrival of the NBN should be accompanied by a glut of new information, entertainment, and communication services, all of which use the NBN as infrastructure. It is those things which will attract public demand.
A large part of the reason the Australian government is investing in a nationwide FTTP network is to bring the dominant telco, Telstra, into line to create a more genuinely level competitive playing field. Telstra still controls the vast majority of last mile connections and has proven itself to be pretty adept at leveraging the competitive advantage it inherited as the former monopoly provider.
Australia also has some significant geographic challenges - a huge and sparsely populated landmass with increasingly overcrowded cities clinging to the coast. The NBN has the potential to create significant new business opportunities in rural and regional areas that currently suffer from relatively poor infrastructure and declining employment opportunities. Providing world-class service to these areas requires a cross-subsidy, which is also part of the rationale behind the project.
Much of the criticism of the NBN is of a partisan nature, including that from the vehemently anti-Government Murdoch broadsheet, The Australian. The benefits from a national infrastructure project like this are likely to be felt over a period of decades and will likely result in innovations that are yet to be imagined. They are therefore not necessarily easy to define in a cost-benefit analysis.
I think it’s also too early to be making judgements about likely take-up based on a very small number of towns in regional Tasmania that are part of the first phase of the project.