Rudd-con DIY broadband plan

The Commonwealth Government has announced a bold and visionary project to replace our nation’s ageing telecommunications system with a digitally robust optic fibre network. It is a scheme that is being touted as Australia’s largest ever infrastructure project, requiring major investment by both government and private enterprise to the tune of about $43 billion.

Let us not delude ourselves with the panacea of optical-fibre optimism just yet. While the broadband plan is a long-awaited and well-debated project many will argue that despite being a much-needed booster for the economy, the 25,000 jobs it will provide over eight years is of little consequence to the larger unemployment rates expected from the downturn.

Significantly, at the core of this plan are three fundamental truths that are being overlooked as well as one obscure potential outcome that conspire to further threaten privacy and civil liberties in Australia as well as our economic and national security.

First, we must recognise that Australia is becoming more reliant on high-speed telecommunications so government, business and households can transact, communicate, entertain and interact locally and globally. The speed with which our demands for information technology and communications access are expanding will soon outgrow our infrastructure’s capacity and capability to deliver.

There is no doubt that something needs to be done, and full credit to the current government for acknowledging what the previous one dusted under the carpet. However, a large proportion of critics has claimed the Government’s solution is redundant even before the first cable is laid. Comments like “too little, too late” or “too old, too soon” are making headlines. It is hard to disagree.

Just like its copper predecessor, even optic fibre has a finite capability and lifespan. Only 10 years ago a common dial-up connection offered speeds of 14kbps to access the information super-highway, while today we expect 56kbps as a minimum and DSL speeds of between 512kbps and 1.5Mbps are seen as the standard for the contemporary mega-media highway. It is, therefore, easy to predict that by the time the final cable is connected in nine years time, the highly acclaimed 100Mbps connections will be barely sufficient to appease our addiction to the terabyte-highway.

Therein lays the second, poorly calculated, assumption; that it will only take eight years to roll out high speed optic fibre into every household and office and that it will come in on budget. The Snowy Mountains Scheme aside, the record of Australian governments in completing major infrastructure on time and on budget is not good.

One can only guess at the millions of kilometres of cable required for this initiative and the speed with which it must be laid and connected, let alone how the project will be adequately funded through successive governments and a myriad of unknown economic and political hurdles.

The government is like the renovator who, unhappy with the proposals and quotes received from the experts, instead choose the DIY method. We all know how easily that can end in tears, heartache, financial ruin and divorce. This leaves the house unfinished, sold at a bargain price to some entrepreneur who simply walks in, tidies up, puts on a coat of paint and resells for a major profit.

The proposed $43 billion budget is to be partly funded by a government cash injection of $4.7 billion with up to 49 per cent of the remaining project owned by private enterprise. An issue of Government Bonds is anticipated to cover the shortfall of about $20 billion. When it is finished the project will be sold-off in a privatisation even larger than the T2 float. At this point, the new monopolistic National Broadband Network Corporation will want to start recouping its money from subscribers and our reliance on this new corporate beast will give us no choice but to pay-up.

With currently eight million internet subscribers (Australian Bureau of Statistics, 8153.0 - Internet Activity, Australia, Dec 2008) (covering government, businesses and households) nationally, the cost of this project is an average of $5,375 per subscriber. This figure doesn’t consider the additional investment by private enterprise or any losses resulting from movement of revenue away from traditional telcos as subscribers, for example, ditch the pay-per-call model in favour of the free Voice over IP (VoIP) options associated with their new ISP packages. Telcos will simply become ISPs, leasing bandwidth and reselling it to consumers.

The final truth is that the privatisation of critical infrastructure only serves to increase costs for consumers as the new commercial enterprise has a natural desire to chase greater profits. One needs only to look at the existing PSTN to understand that the majority of us are paying high monthly line rentals for old copper infrastructure that should have been well and truly paid off by our forefathers. Or take banking where the cost has gone up, but service down - we now pay the banks higher fees while we do more of our banking online or via ATMs. The same applies to privatisations of public transport, bridges and highways. The list is endless.