More broadband in Crikey and the ABC

I was on ABC Radio National this morning talking about, you guessed it, broadband. (You can listen to it here about 10 minutes from the end). Over the fold is a complementary piece in today’s Crikey.

Are broadband speeds really affecting business users?

We lag in broadband — how much is arguable — but we are no South Korea or Japan. Those countries lie at the top of the broadband waterfall. Australia lies in the wake. It is the most emotive picture in Australian politics.

But does it matter? What are we really missing out on? Do we need to spend billions of dollars of government money or allow Telstra a right to charge high prices to find out?

Perhaps. Government action is needed if Australia is missing out on valuable social goods — say, in education or health — or their businesses are losing their competitive advantage. It is not needed if the main applications are in entertainment — gaming or video downloads. Consumers might want it, but that doesn’t mean the taxpayer should fund it.

And how do we tell? Well, fortunately, other countries have spent the money to find out. All we need do is look at what they really have to see what we are missing out on and then we can decide if we need to follow. And when you look to South Korea and Japan, it is overwhelming that they are using it for entertainment and gaming; right on the private end of the spectrum.

And what about the business side? There is a real difference between hooking up every household and even establishment in Australia and ensuring that high-speed connectivity is available somewhere for businesses that really need it. If you are an export-oriented, creative design firm and you happen to not have that connectivity where you currently are, you need to move to it. Requiring the Government to hook every location up on the off-chance your business might need it is foolish. Australia has the capabilities to compete on this front. Its capital city CBDs have world-class broadband. The Star Wars movies were shot in Sydney with George Lucas sitting in Marin county. Our current infrastructure permitted that. Would wiring the whole country add much extra?

So, we should take advantage of the fact that others have spent big to be first and see whether catching up to them with a similar public investment is really worth it. The key political question is whether, once we know when and why we need high-speed broadband, we will get it when the decision is still controlled by a single entity, Telstra.

14 thoughts on “More broadband in Crikey and the ABC”

  1. Hooray! I am glad someone has finally spelt out the myth of >1mbit/sec broadband speeds. Most businesses dont need it, and those that do, can usually afford to get it – eventhough it is comparitively expensive here. But hey, we get electricty much cheaper than Japan and Korea.
    I totally agree that tax payers funds should not be spent to prop up an online entertainment industry. If there is a $ in it, (and there is) then the consumers can pay.
    The other worry is that wireless technologies are progressing so fast, (the everything in your hand device) that maybe we dont need the landline broadband speed rollout as much either. If Telstra remains pigheaded about this I hope wireless providers will circumvent much of their network.

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  2. Your complete and continual lack of attention and understanding of the interactive digital media industries, the convergence of education and entertainment, the development opportunities of interactive game-play, and the role that high speed broadband connectivity has to bring economic change to urban and rural Australia is simply astounding.

    Surely you have something new to say in the 5 months since your paper was published.

    The question is not if we need high speed broadband, but rather how are we are going to achieve it in a way which is fair and equitable to all users.

    http://www.newmatilda.com/home/articledetailmagazine.asp?ArticleID=2005&CategoryID=-1

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  3. Such myopic opinions. You have not allowed for as yet unknown new communication products and services. You are assuming that business services will remain frozen in 2007. That fast broadband has value only for private entertainment. Five years from now you will see how unimaginative that position is. I’ll send you an apology if I’m wrong. At 100 Mbits/sec minimum, I hope. If I’m right you will be sentenced to 24 hours at dial up speed.

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  4. When Telstra argues against the regulator you can be sure that self interest is at play. There are two real problems.

    First is Telstra’s near monopoly over infrastructure. The trenches, exchanges and local loop should never have been put into private ownership.

    Second is that the old model of call charging is completely inappropriate in a packet switched world. The sooner the tyranny of the long distance call is eliminated, the better for Australia’s business competitiveness.

    Integrating data and voice is the key. To those who think wireless is the answer, there isn’t enough bandwidth in the sky for wireless to become a mainstream technology despite Telstra’s advertising spin.

    The solution is to separate the infrastructure from Telstra so that genuine competition can arise. What political party would have the guts to take on Telstra in this way?

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  5. I had a look at http://www.xmedialab.com/ , and I saw games and digital video. I can see that being beneficial for education. But I can’t see that needing 100Mbps.

    For example, Fire Department 3, is a computer game, but also simulates a very real scenario. This approach could help in future to train people for all kinds of jobs, where they must respond to scenarios that are not easy to stage in real life. A further advantage is in letting people who are geographically distant from each other, experience teamwork and get to know each other. However, there is no indication that it needs more than a 512kbps Internet connection to play in online teams.

    As far as practical examples go, I have yet to hear someone say, “I am trying to create digital video as a home-based entrepreneur/artist/developer/etc, but my Internet is too slow.” Perhaps I’m just not looking hard enough.

    But I have noticed that, out and about in the suburbs where I live, the only thing people want Internet above 512kbps for is downloading TV shows.

    The progression of Internet technologies has taken us from 300bps to 1mbps and beyond. In the days of 300bps dial-up, Internet speeds were a serious deterrent to trying to transmit anything more than a few words in real-time. There was a desire to be able to transmit pages of text in a matter of seconds. With today’s Internet, we have achieved the wishes of the 1980’s. This blog took a split-second to load on my computer.

    Our current uses of the Internet are still largely based on text and relatively narrow data streams, such as Internet games. The application of the Internet to video has largely been in replacing and improving the broadcast television model.

    If we look at broadcast television, yes, it is amazingly useful for education. Specialist educational programs, news, current affairs and documentaries have far more benefits than simply entertainment. But all these applications can be, and are, delivered under 512kbps. For example, Google News, blogs, the New Matilda website, and Wikipedia. Youtube has benefited me personally by demonstrating processes that are best expressed in video, and are harder to learn about via text. All under 512kbps.

    David does make an excellent point that we really have no way of predicting what the world will throw at us in 2007, 2012, and beyond. My contention is that, based on previous experience, we may not need this.

    I will use the analogy of a book store I once worked at: the manager installed high-speed “gigabit” (1,000Mbps) networking in-store, in order to future-proof for as-yet unknown applications. This investment was made several years ago, but those cables still serve nothing more than glorified cash registers. Perhaps we should leave the huge investments until we have some idea of what the actual purpose of that investment is?

    Setting out some practical examples where ‘decent broadband’ is necessary would really help my understanding of this issue.

    As for using virtual reality simulations to manage pain in children, there is a lot of anecdotal evidence to support this idea. Many parents know that all we have to do is plonk little Timmy in front of the telly, and he’ll stop complaining pretty quickly.

    Joshua, on a housekeeping note, when I post a comment here, will I get an email when someone posts further comments?

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  6. Pat, I had a similar issue and wondered if these applications really needed the highest speeds. Ironically, I couldn’t test that as I have the highest speeds!

    In addition, if education is the value, are these really going to happen at home or at school. One would think the latter. In which case, we need to hook up schools which is a cheaper and more publicly worthwhile objective than hooking up everyone. (Also, why do games have to be hosted over the Internet and not on local networks?)

    It is very interesting to me that folks see broadband as a black and white issue. Either you are for it or against it. My only point has been (a) let’s make a proper case rather than just say ‘look they have it so so should we’ (ie., tell us how many schools in South Korea and Japan have adopted education gaming and how are they doing) and (b) let’s make sure we are spending public money wisely, ie., not on stuff that is of pure private benefit. I love TV (more than you can imagine) but I don’t expect to receive a government subsidy.

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  7. Some interesting comments on this in Crikey today.

    Simon Hoyle writes: Re. “Are broadband speeds really affecting business users?” (yesterday, item 4). I sometimes wonder about economics. Take the argument over who should pay for building real high-speed broadband infrastructure in Australia. “Consumers might want it, but that doesn’t mean the taxpayer should fund it,” Joshua Gans, professor of economics at Melbourne Business School, says. Aren’t taxpayers and consumers, very largely, one and the same people? And, there’s simply no way the diagram you published yesterday could possibly be the diagram that Malcolm Turnbull will not release — it contains way too much detail for the $10 billion so-called “policy” to have been based on.
    Adam Paull writes: Professor Gans dismissing Australian business’s need for “real” broadband misses a vital point… The economic benefits of high-speed broadband to rural centres would be enormous. Australia has become a city-centric country — if you don’t live in the big smoke, you basically don’t have access to decent jobs, higher education, medical facilities, transport, etc. As a country boy myself, I was living in the city before the ink was dry on my final HSC exam, as was the vast majority of my fellow classmates. The exodus of the rural youth over the past few decades have created an enormous city-country chasm — to the point where some country towns are dying while cities are struggling with overcrowded trains, clogged roads, choking fumes, ridiculously high living costs, water supply problems, etc, etc. Broadband availability to struggling rural areas is the first piece of the puzzle to addressing that imbalance. People will have the option of moving to more tranquil, less expensive areas while still being able to do work over the internet. Businesses will be able to move some or all of their operations to cheaper regions and bring employment opportunities to the bush. There’ll be fewer cars on the road, more space on our trains and buses, less demand for city housing … all enormous social and economic benefits (unless you own a block of flats in Sydney of course). Broadband should be seen as an essential public utility, just like water, sewage, electricity and phones (remember it was the taxpayer who funded the original copper network, not Telstra) and the Federal Government should start digging the trenches tomorrow. If we build it, we’ll control it, and we won’t be at the mercy of a narrow-minded, profit-hungry phone company. Oh, and just for the record: George Lucas was sitting comfortably in Moore Park, Sydney, during the shooting of the last two Star Wars movies — it only looked liked he phoned it in…
    Kevin Cox writes: Joshua Gans suggests that we do not need high-speed broadband because the economic case has not been made. Here are a few back-of-the-envelope calculations that suggest that there is an economic case on productivity of existing tasks alone. I spend 50% of my time working from home and 50% from a CBD site. Both sites have ADSL broadband. All my correspondence is done by email, I use online service providers for most office tasks, I use search engines several times a day, I communicate with Skype and do all financials online. None of these are advanced applications requiring massive amounts of Internet speed, yet each day I waste at least 30 minutes waiting on slow or broken down broadband. My calculations are based on detailed timing and my estimates are probably low because I do not take into account the lost time on unnecessary task switching. The delays and outages are getting worse not better as the software and systems I use are increasingly dependent on high speed broadband and not slow speed ADSL and with every day the delays get worse. If I am typical of 1,000,000 workers in Australia (and I suspect there are more than that) and if my productivity is 5% lower than it could be and if each office worker costs a company about $100,000 a year then the loss caused by slow broadband of communication delays and outages in this area alone is $5 billion each year. Slow broadband is costing Australia immense amounts of money already and we do not have to wait for the economic case of future applications to justify high speed broadband today.

    First, are consumers and taxpayers the same? Sure, expect that lots more people consume than pay tax. So Simon, you think that all goods the people buy should be equally provided by the government. What about those who pay tax but can’t broadband?

    Second, Adam, this is in fact the Telstra point. (see http://www.economics.com.au/?p=836). If that is true and will be solved by this massive subsidy then great.

    Also, watch the DVD extras. During the non-shooting stages of Star Wars production, it is clearly being done over the Internet. And the shots are being moved across the Pacific to. No one should toy with me on Star Wars facts!

    Finally, Kevin has a sensible approach. Just one question, what ADSL do you have? I am assuming that you have paid for the best quality of offer at home given the passive productivity gain you expect, right? So you are willing to pay up to $8333 per month and assume that there are a million others willing to do the same. Wouldn’t that justify private investment in the network? Why aren’t we seeing that anyway? And is that the gain they got in South Korea and Japan?

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  8. I, like Kevin, spend a lot of time waiting for websites to load.

    The bookstore is getting better and better as an analogy. In fact, staff complained that the computers running the cash registers were slow and outdated, so they were replaced with (then) high-end PC’s. The cash register software still ran slow. You know why beefing up those front-end computers didn’t solve anything?

    The issue wasn’t the front-end computers. The delays were happening in the poorly-designed database server software.

    Most of the time I spend waiting for websites to load is while their database servers grunt, strain and chugg, cooking up the page for me to view.

    Then it takes somewhere between 10-200ms for it to hit my computer. Upgrading our consumer Internet connection certainly isn’t going to magically improve faraway web servers, so it isn’t the solution to our problems.

    However, Kevin does make an interesting point about reliability (“slow and broken down broadband”). Personally, I have Internode ADSL, and the only time we lose Internet connectivity is when Telstra’s copper gives out. Is unreliability a big issue in the wider broadband user community?

    Joshua, how did you come up with $8,333 per month? I worked out that Kevin’s productivty boost would be worth a little over $40 per month per employee. ($100k per year, $8,333 per month. 5% = $41 or so)

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  9. Pat,

    Whoops, I was looking at the $100K per year but missed the 5%. So it was $5,000/12 or $416 per month. Still pretty lucrative for a broadband business, right?

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  10. Joshua,

    Saw your reply to my reply in Crikey and couldn’t let it go without corrections…

    Your original article said “The Star Wars movies were shot in Sydney with George Lucas sitting in Marin county.” This gave the false impression that Mr Lucas never set foot in Australia during its shooting – a fact I corrected in my Crikey letter as a final throwaway. This was incorrect – he was very much here in Sydney during the shooting of the two films. (I know because, apart from seeing him here in the same DVD extras you watched, I also bumped into him at Fox Studios)

    You then sneakily qualify your comment by talking about post-production, not shooting – but even then you get your facts wrong.

    Your reply said that the non-shooting stages of production were “clearly being done over the internet” – well you may have seen footage of George using a computer on the DVD, but you didn’t see him using the internet.

    Yes, George was able to sit comfortably in his Marin County office while watching work done in Australia – but this was done using an expensive, ultra-high-speed data connection, a network very different to the “internet” mere mortals like the rest of us have access to, and many times greater than what is considered “broadband”.

    Using remote control movie directing as a shining example as to what “our current infrastructure” can do is just wrong – the data link between Marin County and Sydney has nothing to do with Australia’s broadband network.

    Watch all the DVDs you like, but at least get the basic facts right.

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  11. The issue I was speaking to do was the one where it was being argued that NO DESIGN BUSINESS or BUSINESS for that matter, in Australia, could access high speed data transmission services. The Star Wars case demonstrates that that is not correct as they were able to do it. Opinion pieces have tight word limits and so nuances can’t fully be articulated.

    I’ll maintain that Star Wars is the clearest counterexample to claims of impossibility. The argument had nothing to do with mere mortals.

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  12. Yes, I concede you are correct – if Australian design businesses are working on US$240m projects like the Star Wars films, access to high-speed, dedicated data links are indeed possible… although it’s a bit on the pricy side and out of reach of most businesses would you not agree?

    But I repeat – this has NOTHING to do with the current broadband discussion, and NOTHING to do with internet technologies, and your attempts to link the two is just plain misleading.

    The benefits of a real Broadband network in this country are enormous, as I and other informed Crikey readers pointed out in the responses to your original article.

    It’s an important debate, which is why having so-called “experts” like yourself appearing in media offering opinions when you don’t seem to grasp the basic concept of what the Internet actually is, is most disturbing.

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  13. I must concur with Adam Paull and other posters here and on Crikey.

    There are enormous benefits to be shared by ALL Australians if high-speed data transmission is readily available. You dismiss the need for high speed data as being for “entertainment”, but fail to recognise the limitations that low-speed data places on many industries.

    High speed internet can provide better health care and services – doctors in capitol cities can view, advise and even remotely perform medical procedures in areas where no such expertise exists. Quality affordable video conferencing can reduce road and air travel, increasing productivity and reducing fuel emissions.

    The benefits for education in government, corporate and education facilities are enormous.

    The reality is, we probably don’t even KNOW half the benefits of universal high speed internet yet, and may never know if we don’t have access to it. Many real benefits will only develop once the technology is in place.

    Arguments saying “wait and see” are like waiting to replace a slow computer that’s impeding your work flow. You can wait forever, as your computer slowly gets so run down and over-taxed that it breaks down completely. But at some point, if you want to keep working, you have to bite the bullet and choose something. There will always be a bigger, better technology in the future.

    I work in the television post production industry, and we are regularly impeded by slow data transmission and unreliable service. The exisiting infrastructure is simply not coping with the demands of our fast-growing data requirements.

    Finally, I must also concur with a previous post about Star Wars. Lucasfilm has one of the largest data management facilities on earth, rivalling both Google and YouTube. The majority of high-definition data transmission between Sydney and California was exchanged via expensive satellite transmission. Sure, I’m certain they used conventional internet services for much of their administrative functionality, but to use this as an example of Australia’s internet capability is pure folly – you simply can’t compare a 6 month, multi-million dollar film production, with virtually limitless financial resources, to the ongoing needs of a small business, a school or a hospital.

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