Broadband Internet - getting the framework right

It isn’t surprising that we have the same problem in Australia.

In the aftermath of Telstra’s cancellation of their fibre-optic cable to the node plans, politicians around the country have been spurred into action. Queensland Premier Peter Beattie announced last month a broadband initiative for Brisbane, which, incidentally, offered Queensland entrepreneurs nothing they didn’t already have.

The West Australian government has announced $1 billion worth of funding for a broadband network across their state. In New South Wales, the government has announced plans for free wireless broadband throughout Sydney.

And Federal Communications Minister Helen Coonan, has announced a range of grand initiatives to deliver broadband to regional Australia.

Many of these plans are similar to the existing subsidies being trialled in rural regions around the country. Taxpayer’s money will be transferred to businesses and individuals who would prefer slightly faster speeds than are currently available.

Like the United Nations’ master plans, these Australian broadband plans are a mere bandaid to cover the real issues in economic policy.

The Australian government administers a regulatory framework which actively discourages investment in infrastructure by forcing entrepreneurs to share their investments with their competitors, at a price chosen by the regulator. Telstra’s reluctance to build a new network and have its control immediately handed over to the Australian Competition and Consumer Commission is understandable. This is a failure not of the private sector, but of government.

The obvious solution is to reform access regulations to encourage investment. Competition regulation which does not do so is regulation which holds back economic growth.

Grand government initiatives aren’t needed to encourage telecommunications investment. Entrepreneurs merely need to be granted the freedom to build on terms of their choosing. On this measure, the Australian government, not the private sector, has failed.

No comfort should be taken in the enthusiastic proclamations of plans and initiatives by politicians.

The lesson for rich and poor countries are the same. Get the frameworks right, and the rest will follow.