Broadband: Why are we waiting?

Australia's ego got slapped about when its poor standing in the Organisation of Economic Co-operation and Development's (OECD) broadband rankings saw us in 19th position on the ladder.

Australia counter-slapped via the Broadband Advisory Group, questioning the methodology of the OECD data. 'The perception - that Australia is lagging behind other developed nations is pervasive.

However it raises questions about the mechanisms used to measure success and whether they collect the most useful information,' the BAG says in its own report.

While the OECD 'league table' provides a source of international comparison in terms of overall broadband take-up, it doesn't help to determine Australia's progress in relation to effective use and availability of broadband services in key sectors, BAG's report says.

'The Government should encourage the OECD to introduce mechanisms that measure the effective use of broadband and not merely take-up.'

Verbal stoushes aside, it's widely acknowledged that if harnessed properly, broadband could be a key driver of Australia's overall economy.

Accenture estimates next generation broadband could produce economic benefits of $12 billion to $30 billion per annum to Australia - assuming that broadband is adopted as universally as the telephone over the next 25 years.

A snapshot of some of the local broadband players shows they're more optimistic than a year ago. Dennis Muscat, MD of Pacific Internet Australia says the take-up of broadband in Australia has more than doubled in the past 12 months.

'The broadband market is one that's now attracting a lot of new ISPs, new players. We were one of the first in the market back in November 2000 and there was only three or four at that point in time. We now have 160 ISPs selling this product,' he says.

'Now if you define broadband as being both cable and DSL, you're looking at well over 400,000 broadband users in Australia.'

Optus says its broadband customers have grown 69 percent in the past year, to around 110,000 customers. Scott Lorson, marketing director for Optus consumer and multimedia, says the three drivers of broadband are price, convenience and content.

'We are now moving into the early majority stage of broadband take-up, as more dialup users become more sophisticated.' They are demanding faster and better Internet experience, he says.

AAPT says the Federal and State Governments are the biggest users of telecommunications services in Australia and together they spend $1 billion on communications every year.

AAPT's spokesperson says putting government services online encourages the take-up of broadband by the businesses and individuals who use those services. 'In terms of stimulating telecommunications industry growth and, in turn, economic growth, governments are tremendously important as customers just as they are as regulators and policy makers.'

Chris Dalton, project director of the broadband exchange initiative at the Service Provider Industry Association says the uptake of broadband is becoming sufficiently commonplace that people are no longer asking 'Should I move to broadband?' but 'When should I move to broadband?'

Netgear says that up until fairly recently, the local market was so far behind the rest of the world in broadband it was laughable.

Netgear's Asia-Pacific MD, Ian McLean, says while things have improved over the past six months, there's still a long way to go. 'There's a huge opportunity for the channel, because as broadband take-up does increase, it really drives the uptake of technology such as replacement tech, as well as the things you need to secure you on broadband, such as firewalls and security products,' he says.

Andrew Tolputt, analyst for ACNielsen Consult, says 15 percent of Internet households are using broadband, up from 11 percent six months ago.

He says the real growth is being seen in the SME market. 'Of the 77 percent of businesses that are online, 41 percent of those are using broadband -- almost double last year,' he says. 'A lot of this has actually happened under the radar, because a lot of small businesses are actually using residential products.' This is the reason there's a discrepancy with the ACCC's figures on broadband.

He says the ACCC gets it figures by asking ISPs the split between business and residential broadband users. 'The problem with that is the ISPs don't really have any way of telling whether it's a business user or not, because a whole bunch of small business use consumer-grade products.'

Generally there's more usage of residential products amongst small businesses than people are aware of, he adds.

Market inhibitors

Senator Kate Lundy, shadow minister for Arts, Sports and Information Technology, says lack of competition in the broadband sector is stifling growth, and has singled out Telstra and a gormless Government as the main culprits. She cites an OECD working party report that says
Telstra delayed the introduction of broadband technology in order to use its market domination to get a jump on potential competition.

Lundy quotes from the OECD Working Party report: 'Telstra's choice to launch cable modem service four years ahead of DSL is notable. As the incumbent, had Telstra launched DSL it would undoubtedly have had to make a wholesale offer available to competitors. On the other hand, by first launching cable, Telstra could meet any potential competition that emerged from other facilities providers using cable or DSL.'

In an email from Telstra, a spokesperson says: 'Broadband in Australia started to get some traction in 2001 following Telstra's ADSL rollout in late August 2000. It is important to note that broadband rollout in Australia was delayed by the regulator until unconditioned local loop (ULL) provision was in place. This in essence meant Telstra had to delay its own rollout until a competitive framework was put in place that would allow other high-speed ISPs to install their own equipment in Telstra's exchanges.'

Regardless, Telstra still has a monopoly in anyone's language, and Lundy says that will continue for as long as the Government has a 'conflict of interest.'

'Whilst ever the privatisation of Telstra is on the agenda [the Government] has an interest in Telstra's ability to make a return in order to maximise their share price; in order to make the actual sale worthwhile. We know they don't want to sell it while the share price is low,' she says.

Lundy says proper competition laws in this country would inevitably put far greater pressure on Telstra's financial position. 'The competition laws in this country are failing.'
'Before Alan Fels' departure from the ACCC, he cautioned that if we keep going down the same path that we're going, competition in telecommunications is going to get worse, not better,' Lundy says.

For the first time the ACCC acknowledged that Telstra is in the position to become more dominant, not less dominant, under current Government policies, she adds.

Slow on the uptake

Netgear's McLean says although migration to broadband is inevitable, uncertainties surrounding issues of security and cost, combined with a lack of knowledge of how broadband works and integrates with existing infrastructure, means that the uptake of broadband within Australia has been slower than anticipated.

The BAG report says the two key impediments to broadband adoption are the affordability and availability of broadband