The NBN’s Big Contradiction

For proponents of the NBN, the primary benefit rests on a theory that broadband is the type of infrastructure whose future value is inherently unknown but historical experience with similar endeavours (the Snowy, roads, railroads) provides support for forging ahead. The idea is that by providing it, innovators will work out how to make good use of it.

But the NBN as it is currently evolving is enshrining a monopoly and, indeed, literally ripping out other competing infrastructure all in the name of order. The ACCC has legitimate concerns and though should have much more.

But this exposes a contradiction. If the primary benefit of the NBN is the flow from innovation and that innovation requires chaos, open system and experimentation, then the current implementation of the NBN is anathema to all of that. You can’t have it both ways. Either you want the NBN and its innovation or you don’t.

And by the way, if you want historical support on the notion for information infrastructure you need to commit not to control read Tim Wu’s, The Master Switch. It’s probably the best book I have read all year.

10 thoughts on “The NBN’s Big Contradiction”

  1. Schumpeter cites examples of new combinations that lead to innovations. One is exploiting a new resource. The NBN with its lower cost per Gb will provide an abundant resource; cheap Gigabytes. Innovators will look for ways to substitute cheap gigabytes for more expensive other resources, such as labour hours.


  2. I’m not sure I see any contradiction. The really interesting innovations on internet are emergent services that arise from co-operating endpoints (email, web, voip, social media). The interconnecting infrastructure has completely different commercial and innovation dynamics.


  3. Joshua,

    There is an analogy to the iPhone here that you are overlooking. The approval process and operating platform for iPhone Apps is essentially regulated by a monopoly and yet the innovation that that monopolistic platform has spawned is incredible. Sure, there are now competing platforms but the innovation was there before any of these competing APP platforms got up an running and the competition between the competing platforms now doesn’t seem to be greatly increasing the amount or rate of innovation.

    Also a Government does not need to own infrastructure to restrict content or use, it can simply legislate to make certain uses illegal regardless of the supplier.


  4. Apple uses the “walled garden” to maximize their organization’s capture of profits from the various Apple product lines.

    The Apps – and other items – are complementary to their consumer products. And they exist to enrich one company. Essentially that is the basis for contesting the monopoly that the government seeks to give the NBN. Have memories of the public service company formerly known as Telecom (pre-Telstra) gotten short, or grown fonder, with respect to their perceived level of innovation and service quality?


  5. DP,

    To be honest, service quality from Telecom wasn’t that much different from Telstra and in the bush I think it was better pre privatisation. Also, the copper system is degenerating and optic fibe should be easier to maintain.

    Sure, Apple use the apps to complement and enhance the product, but the innovation comes from the medium and is driven by users of the medium – the fact that Apple regulate the gate hasn’t limited that innovation greatly. The NBN is no different. Provided there is ready access to the medium at a reasonable price, it is the additional capacity in that medium which will facilitate innovation which until now, has been limited by line speed.

    Even putting innovation aside for a minute, the productivity improvements from the NBN will be considerable, just by having a bigger pipe. The minutes (and sometimes hours) saved in download and upload times for large files shared between clients, particularly graphics files, and the enhancements that cloud computing can provide will produce imediate productivity gains just using existing applications.


  6. DavidN
    Not one that will deliver equivalent speeds to rural areas anytime soon or at competitive prices – unless it is heavily subsidised by the Government. At any rate, what most people view as broadband at the moment is ADSL or ADSL2+ and that is already a monopoly.

    The private sector would only roll out real broadband beyond the metropolitan area if it was subsidised and the Gov’t is unlikely to get any direct returns on this (considerable)investment. At least the NBN will eventually pay for itself.


  7. I don’t see why rural areas should have cheap 100 Mbps internet, anyway. To be honest, I’m happy with my current internet.


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