Fraudband

A recent study by the Organisation for Economic Cooperation and Development (OECD) ranked Australia’s broadband access as 23rd out of a list of 32 developed countries, and last for download speeds. A separate report by the Swiss business school IMD, ranked us 42nd out of 55 for internet affordability. Australia’s broadband network deserves Fairfax boss David Kirk’s description, ‘Fraudband’.

The need for speed

The internet keeps this country connected and communicating with the world. It’s vital for development of new industries, existing businesses, stock trading, banking, education and, of course, websites like Actnow. And it’s also important to us—the new techno-savvy generation where even my cat has a MySpace. As the world takes off down the information superhighway, we are being left behind.

It’s time for an upgrade, but for companies to build new networks they need to be assured of profit. Stretching out a network to reach everyone in a country, which has on average only two people per square kilometre, is expensive and complicated.

Playing monopoly

Fed up with the current network, Telstra ran a website poll asking, “Who do you think is blocking high-speed broadband for Australia?”—97% answered "Telstra".

To provide you with normal phone services, companies like Optus have to rent the lines from Telstra. Telstra has an unfair monopoly—it doesn’t have to rent lines and can raise the rent to its competitors. That’s where the Australian Competition and Consumer Commission (ACCC) steps in. It ensures Telstra charges a reasonable price for use of its copper network.

The proposed new network is called ‘fiber to the node’ (FTTN). It’s super-fast and state-of-the-art, but it won’t stretch to your home. To carry the signal from the local exchange to your home, normal copper wires are used. These wires are owned by Telstra.

There has already been a hard fought battle between Telstra and the ACCC over what constitutes a ‘fair’ price. A FTTN network, no matter who builds it, will rely in part on Telstra’s lines and a new battle over that network has already begun.

Telstra says that it’s in the best position to build the network, but hasn’t started because of concern the ACCC will force it to lower prices too far. The ACCC and all the other telcos disagree violently and each side is putting money where its mouth is and its mouth where its money is. The result is advertising, and lots of it.

And now consumers are stuck in a propaganda war filled with jargon which we don’t understand and might easily fall for. If at the end anyone charges a higher price, it will be consumers that end up paying it.

Who’s doing what?

When Labor announced a proposal for a national $5 billion broadband plan in March, the government was caught out. But, three months later, it caught up with a plan of its own.

The two plans are very different. Labor will go into partnership with Telstra to build a fiber network that will reach 98% of us with super-fast speeds. The government will then own half the network, giving it some control over prices. If Labor does win the upcoming election, there will be a mix of plans because the Coalition has begun its rollout.

The Coalition will look into who should build a fiber network for the cities and then pay $1 billion more for a slower, but cheaper wireless network in the bush. It hopes to reach 99% of us with a mix of high to average speeds. Some National Party members, such as outspoken senator Barnaby Joyce, are annoyed, because this will result in slower and less reliable services in the bush. The Coalition’s plan may also result in unnecessary duplication of some of Telstra’s current network.

Broadband out back

Both major parties claim that broadband in the bush should be as fast and cheap as broadband in the cities. It sounds good, but it’s impossible, and they know it. Extending high speed internet to 5% of the population in remote communities is incredibly expensive. It could end up costing more than reaching the other 95%. Labor’s plan will be faster for the bush, but cost more and miss 2% of the population. The Liberal’s plan will be slower in the bush, but only miss 1%.

John Howard claims that he will deliver the same level of service in the bush as in the city, but even some of his senators don’t believe that. Liberal Senator Judith Adams supports the plan, but knows that services in the bush and in cities won’t be comparable: “I was asked was I happy with a second-rate service going to the bush, and I said as far as I was concerned, it was like anything else.”

How much will we pay?

How much is it to use this new system? The details for either political plan are thin on the ground but Telstra’s projected pricing puts the cheapest plan at around $60 a month. That’s far too much for the average consumer.

Given that taxpayers are expected to foot some of the bill for the network, it’s only fair that we should be able to afford to use it. That’s why we need the ACCC to be stronger than ever, and for the government to stand up to Telstra and any other company.

We should be frustrated

A national broadband plan should have been implemented months, if not years ago. The technology was there and other countries were doing it, but neither party had even considered the issue. The election has spurred them into action and broadband is shaping up to be an important issue. It’s about time. Let’s get a move on before Australia becomes road-kill on the information superhighway.

How do I know this?

2007, ‘Fairfax boss denounces fraudband’, The Age, 8 March www.smh.com.au/news/technology/fairfax-boss-denounces-fraudband/2007/03/07/1173166799046.html  

Alberici, E 2007, ‘Liberal Senator: rural broadband will never be as good’, The World Today, 27 June www.abc.net.au/worldtoday/content/2007/s1956670.htm  

Best J, ‘Telstra versus ACCC, G9 consortium: Timeline’, ZDnet, 22 June www.zdnet.com.au/news/communications/soa/Telstra-versus-ACCC-G9-consortium-Timeline/0,130061791,339278963,00.htm  

Marris S 2007, ‘IMD report scolds Australia’, news.com.au, 11 May www.news.com.au/business/story/0,23636,21709154-462,00.html  

Philipson, G 2007, ‘Getting up to speed on broadband’, The Age, 10 July www.theage.com.au/news/perspectives/getting-up-to-speed-on-broadband/2007/07/09/1183833430548.html  

Winterford, B & Douglas, J 2007, ‘Govt takes issue with CEDA report’, ZDNet Australia, 10 July. www.zdnet.com.au/news/communications/soa/Govt-takes-issue-with-CEDA-report/0,130061791,339279758,00.htm  

T4 2007, Tell the truth Telstra, www.tellthetruthtelstra.com.au  

Telstra 2007, Now we are talking, www.nowwearetalking.com.au/Home/Page.aspx?mid=288  

And a thankyou to my secret industry insiders ;-)