Malcolm Turnbull’s press conference this week kicked-off an intense review and transition for the much maligned NBN Co and Australia’s broadband network. It marks the beginning of a critical test period, and not just for the yet-unknown new NBN Co board. The process and results will also brand what type of Communications Minister Turnbull may be.
Given the sheer scope and technological complexity of the review, the forecast of a hot Australian summer will be mild compared to the heat that’s going to build in the Minister’s office and in the NBN Co boardroom.
On the agenda in the next 60-90 days are several distinct but highly inter-dependent and daunting tasks. They include the search for and appointment of a new NBN Co leadership team; a forensic audit of NBN Co’s costs and activities; and the drafting of a new business plan. The latter two tasks are to be carried out by the new board within 60 days after Cabinet approval in October.
There is also the Federal Government’s independent cost-benefit analysis of broadband infrastructure. The independent author(s) of that analysis will be announced after Cabinet approval.
Turnbull has stated many times that he just “wants the unvarnished facts” from a new NBN Co management, rather than any contrivance that seeks to conform to any real or imagined coalition political agenda.
“I know there is a lot of politics associated with the broadband issue, but much more than there ever ought to have been,” Turnbull said. “There has been a huge amount of misinformation and spin about broadband and what various technologies can offer. So my commitment is that we just deal in fact.”
The goal of the multi-faceted strategic review is to assess the money and time cost of completing Labor’s FTTP rollout under existing specifications, then to assess available options to reduce that cost and timing by exploiting different technologies and architectures. The whole point, according to Turnbull, is to “complete the National Broadband Network sooner and more affordably for consumers and at less cost to taxpayers.”
Given the repeated missed goals and deadlines of Labor’s NBN Co, it would be highly remiss of any incoming communications minister not to demand a forensic stock-take of Australia’s biggest infrastructure project and to assess alternatives. Last week, NBN Co’s outgoing chair Siobhan McKenna advised the government that the target for premises past by fibre by June 30 next year would again be revised downward. That revision is down by almost half from the previous downward revision made only four months ago.
By any measure, Labor’s NBN is a failing project. It’s time for us all to rethink the approach to the potential of a national high-speed network in the context of international benchmarks and what it could mean for Australia’s competitive advantage.
In OECD rankings of a nation’s technological competitiveness, Australia has slipped from 13th to 18th place since 2007. If Australia was ever perceived to have a broadband advantage, it has quickly eroded. This is why we need to roll out any version of the NBN faster.
But you can’t measure innovation in megabits per seconds and technology architectures, which is where the NBN debate has been stuck for years on both sides of politics.
In the forward to the 2013 World Economic Forum’s Global Information Technology Report, Booz & Co stated: “The lesson for policymakers is clear: having laid the necessary groundwork for building out broadband infrastructure and ensuring access, it is now time to differentiate around distinctive opportunities and capabilities.”
This is why the government’s cost-benefit analysis will be revealing. One way or another, it will indicate the Coalition’s take on Australia’s potential for a new era of net-based innovation, enterprise and productivity in a global economy.
There are few things more difficult from an economic and policy perspective than assessing the future value of enabling technologies. Best efforts are almost always best-guesses, because the history of tech-based innovation shows that wealth creation comes from where we least expect it.
Silicon Valley entrepreneurs and venture capitalists — and those in many other countries including Australia — know this. While it is easy to look at the likes of Google, Amazon, Twitter, and Facebook as new powerhouses, few remember how they were born.
The initial ideas came from talented individuals that had a particular obsession. Twitter founder Jack Dorsey was obsessed with understanding the pulse of cities observed through the dispatch systems connecting New York ambulance, police, fire and cab workers. So he eventually built a web-based despatch system that became Twitter. Facebook’s Mark Zuckerberg was a highly talented programmer who gave birth to Facebook largely motivated (according to Silicon Valley lore) out of revenge on college girls.
There are numerous similar examples in the non-tech creative industries new and old: Jim Henson, for instance, had an obsession with puppetry, which became Sesame Street and the Muppets.
Such is the value of platform technology, obsession and entrepreneurship. Google gets this. The company’s fibre rollouts in Kansas City and elsewhere is about connecting and enabling individuals that may have an obsession of their own because Google will benefit greatly when they put up a shingle and pursue it. Google is doing its rollout faster and at cheaper cost for the consumer than anyone else, although is also likely heavily subsidising consumer connect costs.
It's the Silicon Valley way to broadband versus the telco way. In their approach to assessing enabling technologies, telcos and governments tend to look for the obvious blockbuster applications.
In all the back and forth about Australia’s NBN, the real potential of high-speed broadband as an enabler for creativity, new distribution and business models — especially for the SME, the creative and hobbyist classes —has been overlooked.
Whomever is charged with doing the independent cost-benefit analysis of the NBN needs to take full consideration of what is often called, the long tail of innovation and entrepreneurship.
There are other important considerations that don’t get airplay. The Australian NBN policy was designed to solve a market failure in the access side of wire-line services. It was never asked to solve the challenges posed by the increasing need for international capacity or the central use of mobile broadband. We need to ensure that these aspects of Australia’s communications infrastructure don’t become bottlenecks and result in a loss of skills and a shift of services to offshore digital factories.
The network is an essential enabler for business and industry, but it is only one element of the overall innovation value chain. So it’s critical to consider how an NBN supports a cultural change rather than forcing an adaption to specific technologies.
For Australia to generate sufficiently scalable new digital products and services, as well as breathe new life into traditional industries, we need to start with a global outlook. For our ideas, services and business models to become the export industries of the future, they must work on a range of devices and access technologies that a potential international customer base is using.
The real challenge for Turnbull and the Coalition is to execute a vision of broadband that helps us become a more innovative and prosperous nation.