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Broadband Leadership: the Quantum Leap Method

March 3, 2011 - 2 Comments

By Howard Baldwin, Contributing Columnist

There is a country whose east and west coasts border on major oceans. Its major cities dot its coastline, while its internal areas, while populated, could accurately be described as “flyover” zones. It takes about six hours to fly coast-to-coast.

Its government is making the single largest infrastructure investment in the country’s history, investing $43 billion over eight years in order to connect 90+ percent of all its homes, schools and workplaces with broadband services over fiber-optic cable with speeds up to 100 megabits per second, 100 times faster than those currently used by many households and businesses.

Which forward-looking nation committed to this bold goal?

The country in question is Australia — and yes, it’s a significant investment. By comparison, the broadband investment allocated for the U.S. stimulus was $7.2 billion. The sharp contrast in government strategy is noteworthy, because it profiles two very different attempts at reaching the same fundamental objective. One that’s focused on advancement via a major leap forward, the other on small incremental steps in the right direction.

Good Intentions, Backed by Meaningful Investment

Australia’s National Broadband Network (NBN) is designed to not only link the vast majority of the country’s population, but targets the other 10 percent as well with next generation wireless and satellite technologies that will deliver broadband speeds of 12 megabits per second.

Not too many years ago, I spent more than a week visiting Australia’s major cities, talking to IT executives about their challenges. One consistent theme that came up for the isolated continent: the executives felt they had to be more technologically creative than their counterparts in other countries in order to thrive within its borders and prosper beyond its borders.

The Australian NBN Co is a shining example of this attitude. The fact that Australia even has a “minister for broadband” is as well.

Financed initially by government bonds, the NBN will be built and eventually operated on a commercial basis by a company “established at arm’s length” from the government. The government expects the creation of the NBN to support 25,000 jobs each year (37,000 at the peak of the project).

That said, not everyone in the nation is impressed by the project’s potential.

“The question is whether the huge extra cost of mandating that every home in Australia be connected to fibre optic cable is justified. Millions of Australians can already achieve fast broadband speeds over networks currently in place, and we know today’s speeds will increase rapidly over coming years,” wrote Malcolm Turnbull, Shadow Minister for Communications and Broadband (the “shadow” term indicates he’s a member of the political opposition party).

Even the OECD has expressed concern that its monopolistic structure could stifle technology. In response, Communications Minister Stephen Conroy said, “When somebody invents something faster than the speed of light, which is the science that fiber works on, that’s going to be a pretty exciting day. I look forward to that day.”

As the government noted in its initial news release about the project, “Given the productivity gains associated with this investment, the full benefits will continue to flow for decades beyond the completion of the project.” Who knew what DARPA’s investment in the Internet would reap?

Widespread broadband deployment across Australia will enable its business and IT executives to combine their creative, competitive mindset with superior infrastructure. NBN will do what networking technology has always done — replace physical distance with digital proximity, shrinking the world and increasing Australia’s chances for global success.

What’s the government policy in your country — is it a quantum leap towards the final objective, or is it more cautious?

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  1. I don't think a national broadband company is good for the US as I believe it will run current providers out of business as a result will cost millions of jobs as providers will seek to downsize due to a loss of subscribers.

    • @Matt, thank you for sharing your point of view. FYI, in the case of Australia they're actually counting on a net gain of jobs -- not a loss. However, depending upon how a similar plan was implemented in the U.S. market, there's the potential for some incumbent service provider job loss (perhaps in the thousands). I worked at MCI during the early years, and once AT&T Long Distance was introduced to the realities of a truly competitive market, they had to lay-off numerous waves of employees (totaling thousands) -- in an attempt to reduce their bloated operating costs. That said, once the company had fixed some of their legacy monopoly business practices, and dramatically improved efficiencies via organizational re-engineering, they seemed to benefit from the experience of the restructuring. My point: disruption of the status quo can sometimes result in short-term pain for a few, but it also can ultimately deliver long-term gain for all stakeholders in the marketplace.