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EDITORIAL- 30/9/2010: NBN – THE SOVIET MODEL WON’T HELP US - OR OUR FILMMAKERS

By Andrew L. Urban (with comment by Simon Britton)

Before the collapse of the Soviet Union and its command economy, there was a quip doing the rounds to illustrate the failure of command economies to meet consumer needs. How come there are frequent toilet paper shortages in Moscow when in New York there is always just the right amount available? The answer of course is that the market delivers toilet paper to meet demand pretty accurately.

Our concern at Urban Cinefile is not the delivery of toilet paper but of good quality broadband – as demanded by a variety of consumers, ranging from high end industry, research and medical users to the suburban seniors looking for garden supplies in their area – and all in between, including home entertainment customers. We have been calling for a significant improvement in Australia’s broadband service for years, usually citing Korea, where consumers enjoy fast and easy access. But in all our discussions about this issue, we never once attacked the Government for failing to provide the service. We always wanted Telstra – and the industry in general - to get it done.

Why we care about broadband at Urban Cinefile is to do with its potential for Australian filmmakers as an alternative distribution model; to get their works in front of audiences in remote and regional Australia, for example, in places where screen culture has not and can not penetrate otherwise. (As well as all metro areas, of course.) We also care about broadband delivering our own services, trailers and such, and what we COULD do to assist filmmakers in their goal.

"we argue that the NBN is a colossal mistake"

Now we argue that the NBN is a colossal mistake. Take it as read that we concur with the many, multi-faceted criticisms already aired in the media, but the real and fundamental issue is this: Government monopoly is not the way to deliver high end digital services in a modern economy. The second but equally big negative is the Government’s track record implementing major programs: abysmal. Given that record and that the NBN is one of the largest single networks ever built on earth, we can expect the NBN roll-out to falter - without significant help from, say, Telstra. The sublime irony would not compensate for the extra cost and the waste.

Government does have a role in rolling out quality broadband services across Australia, but not as the provider; its role is to enable, not to replace the private sector to do it – competition and consumer demand should be at the heart of the program.

There are various ways Government can ensure its policy objectives are met in all areas of telecommunications and other services, ranging from taxation tools to cost underwriting and rebates where high cost regional services can be effectively delivered.

By Treasury’s latest warnings, “..implementation of the NBN also carries significant risks, including financial risks for the public balance sheet and risk around competition and efficiency telecommunications and related markets.”

The bad policy that gave birth to the NBN is compounded by technical shortcomings in the plan (according to our sources of information):

Contention: Today, every ADSL service with 20Mbps has a contention ratio of around 20:1 (more for some carriers). That means you share that 20Mbps with 20 other people. It will be a very long time before all households get 100Mbps of actual bandwidth. Not for several decades at current carrier equipment rates of evolution. The Core can not and will not be able to handle that sort of bandwidth. The 100Mbps or 1Gbps is only the speed from your house to the exchange. From there to the Internet, you will get the same speeds you get now. The Core of Australia’s network is already fibre (many times over). And even so, we still have high contention ratios. Providing fibre to the home just means those contention ratios go up.

Wireless: The 4G wireless standard is specifically being developed for data, and will deliver 100Mbps bandwidth with much higher reliability (yes, the same contention issues apply as mentioned above). Zero cost to the tax payer.

DSL: New DSL technologies will emerge; 15 years ago we had 56k dial-up. Then 12 years ago we got 256k ADSL, then 8 years ago 1.5Mbps ADSL2, then 5 years ago 20Mbps ADSL2+. There are already new DSL technologies being trialled that will deliver over 50Mbps on the same copper we have now. Zero cost to the tax payer.

Cable & copper: Fibre optic cable has a maximum theoretical lifespan of 25-30 years when installed in conduit. Over time, the glass actually degrades. But when you install fibre outside on overhead wiring (as will be done for much of Australia’s houses, except newer suburbs with underground wiring), then the fibre degrades much quicker due to wind, temperature variation and solar/cosmic radiation. The glass in this case will last no more than 15 years. So after 15 years, you will have to replace most of it, whereas the copper network will last for many decades to come. Fibre is not the best technology for the last mile. That’s why no other country has done this.

"a combo of copper, fibre optic and wireless delivery would serve the entire country better than an all fibre optic service "

So it seems that the Coalition’s policy (as badly, incomprehensively outlined during the election campaign) is right; a combo of copper, fibre optic and wireless delivery would serve the entire country better than an all fibre optic service – and it should be a Government supported and encouraged business opportunity for the private sector, where ROI disciplines would produce better service at lower prices.

Another downside of a high cost service (as the NBN will surely be – one way or the other) is that it reduces the consumer’s willingness to pay more - for things like Australian online content.

Comment on this article:
Simon Says*

I'm not qualified to comment on the technical issues, even though I read all the opinions avidly. On my reading, the jury is out on the absolute best way to deliver high-speed broadband to all Australians.

My broader reading of the whole NBN project is that we are very fortunate to even have the hope of a unified, coherent national network. Having the country's best and brightest minds focused on a national communications infrastructure project like this, at such a crucial point in the communications revolution, is a golden opportunity for content creators. I totally agree with Andrew on the NBN's potential to destroy the massive barriers to distribution that content creators face in this country.

We are one of the few countries in the world that has the national will and the resources to even attempt a project like this. Not surprisingly to me, one the best-wired countries, Singapore, got that way via a government-led fibre infrastructure project. And very sobering to reflect that they had it all done by December 1998! [Andrew: Singapore tiny place; 687 sq kms; Sydney is 1,580, Australia is 7.6 million sq kms.]

Anyway, if I were a betting man, I would punt on the NBN eventually being delivered as a hybrid network, regardless of who does the wiring-up. It seems that the technology is moving too fast to believe otherwise. [Andrew: my fundamental issue is whether the wiring up is done by Government or private sector…]

Andrew's comments about infrastructure taking money away from content is to accept on face value. To make a crude analogy, if the government decided to complete a different infrastructure project like a high-speed rail link between Melbourne and Sydney, would they cut funding to Screen Australia? Or does he mean that the cost of the NBN will cause the price of broadband to the consumer to rise, thus lowering their spend on screen content online? [Andrew: households see broadband service and its content as coming from same bucket of disposable income, I would think.]

If the latter, I would point to the drastic drops in the price of content that have happened in the US recently. Who knows how low they will be in five years time - if you believe Chris Anderson, it could be free. [Andrew: Australian content price can hardly drop; there isn’t one at present.]

Win, lose or draw, it's going to be a wild ride for content creators in the next few years.

*Simon Britton is a screen content strategist. Before starting MediaWave in 2008, he researched emerging business models for the monetization of online screen for the AFTRS Centre for Screen Business. He is a Board member of the Australian Screen Institute (AFI) and of The MediaWave Expert Group, which comments on issues that affect screen content creators.

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