visions

This page considers visions of Australasian telecommunications.

It covers -

• introduction - thinking about connectivity futures
• fields of dreams
• policy challenges
• national objectives
• fibre to the toaster
• unwired networks
• the connectivity business over the next two decades
• convergence and control

     introduction

What is the future of telecommunications in Australia?

The answers to that question are not clear. That is unsurprising, given -

• the interaction of differing interests, objectives and priorities
• noise created by conflicting advocacy statements
• disagreement about basic information and its interpretation
• the impact of contingencies such as the 'War on Terror'

In discussing markets we have suggested that some basic trends are apparent, with for example ongoing uptake of mobile devices (in particular mobile phones).

     fields of dreams

There is no dominant vision of the future of Australian telecommunications, in particular a vision that embodies a striking nation-building metaphor and that is supported by a detailed map of objectives and actions. Debate about the further privatisation of Telstra has served as a surrogate for consideration of infrastructure, access and economics: the policy model in Australia is implicitly one of 'policy by default' or 'policy by muddling through'. The 'national consensus' on telecommunication policy is shallow, not much deeper than largely-unexamined assumptions about 'universal access' or broadband as a fix for numerous woes.

In 2007 one pundit thus responded to the Howard government's pre-election national broadband initiative by claiming

Vision would be understanding how the payoff would be enormous. Vision would be seeing how this would get people *out* of our congested cities, how it would open up new markets all over the country, how it would inspire people to create undreamed of products for export and internal consumption, how it would change this century as rail once changed a century.

Sceptics might question assimilation of US hype and argue that most consumers (or their employers) in fact do not want to head for the bush and indeed would not depart from the cities if cheap reliable broadband was available outside metro centres.

A succession of government forecasting documents have been largely descriptive and aspirational rather than prescriptive, invalidated by problematical assumptions about consumer demand and private sector investment ("build it and they will come").

The history of ISPs, ICHs and telcos highlighted in preceding pages of this profile suggests that much private sector forecasting was equally flawed, with -

• several billion dollars disappearing through investment in infrastructure, organisations and alliances that showed few if any positive results
• problems despite decisionmaking by some of Australia's richest families and saviest financial institutions, backed by advice from supposedly the best experts that money could buy
• indifferent understanding by professional analysts and often uncritical reporting by the media.

One perspective on telecommunications futures is provided by the ACA 20/20 project, centred on regulation issues. Non-academic think tanks have been surprisingly shy in providing a coherent a detailed picture of objectives and actions, leading one client to quip that the pundits are suffering from telco fatigue.

Another is offered in the 170 page Smart Internet 2010 (PDF) report from the Smart Internet Cooperative Research Centre, a useful compilation of current enthusiasms - open source and social software - and received opinion about the road ahead.

     policy challenges

In introducing this profile we suggested that telecommunication policymaking has become significantly more complicated over the past 15 years.

Traditional policy challenges regarding the Plain Old Telephone Service (POTS) were simple, concerned with provision of basic access - primarily voice traffic, with expectations of a single line per household - for a uniform market. The one network technology supplied the full range of services and offered what Chandler identified as significant scope and scale economies. It resulted in maintenance of a nationwide monopoly responsible for the full range of services, with cross-subsidies to meet uneconomic demand (eg provision of infrastructure and pricing of services in remote Australia).

New infrastructure and application technologies have intersected with changing market demands (and expectations) and competition. That has resulted in a fragmentation of the 'uniform' market, as different customers seek - and have the scope to pay for - services other than fixed-line voice, including call enhancement, mobile, broadband data and multiple lines.

They have also intersected with perceptions that telecommunications equal modernity or that broadband will somehow enable an economic and social development that is qualitatively different.

That is evident in calls for "future-proofing the bush" (eg the Page Research Centre's 2005 report PDF), at its vaguest embodying an expectation that ongoing erosion of rural economies and adverse demographics (overall, people in remote rural Australia are likely to be older, poorer and in worse health than their metropolitan and 'urban fringe' counterparts) can be reversed through ultra-cheap broadband.

That expectation is politically resonant and echoes past rhetoric about "drought-proofing" Australia through dams and other infrastructure, albeit without much recognition of long-term problems with salinity and deferral of appropriate rural restructuring.

However, it conflicts with the substantial research over several decades about the nature of problems in the bush, including disparities in income, employment opportunities, education, access to entertainment or health services and other 'quality of life' issues. Free video on demand (or telemedicine) is unlikely to substantially bridge what is only one of a range of divides. 'Future-proofing' can be argued as basic social justice or instead characterised as a fixation on infrastructure at the expense of use, facilities such as dams, highways and cables being easier visualise - and easier to promise - than how those facilities are used.

     national objectives

What are the national objectives for telecommunications?

Howard Government critics allege that its dominant objective is essentially full privatisation of Telstra on the basis of ideology and the transfer of several billion dollars from investors to consolidate revenue or a national infrastructure fund. Others have suggested that most governments are concerned about the availability of infrastructure (at the heart of competition policy) rather than use.

From that perspective what happens on networks is of concern only in relation to -

• adult content
• terrorism
• economic crime (in particular intellectual property infringements)
• protection of particular vested interests, notably free-to-air commercial broadcasters

The 1999 NOIE Strategic Framework for the Information Economy: Identifying Priorities for Action identified the federal government's infrastructure objectives as

1. High communications bandwidth, widely available in a cost effective way, and able to support advanced applications for the information economy.
2. Access by all Australians to this capability wherever they live or carry on business.
3. The availability of a wide range of cultural, business, educational and social services and applications which meet the needs of the general public, the business community, and groups with special needs such as people with disabilities

In practice, strategic planning has centred on the Telstra conundrum (at its crudest an uninformed debate about privatisation rather than an effective competition policy), with an absence of substantive work to address a range of digital divides and facilitate broadband access.

Modernising with Purpose: A Manifesto for Digital Britain from the UK Institute for Public Policy Research argued in 2005 that internet infrastructure policy embodies a fixation with technological benchmarks, lamenting that

We have been trying to get this infrastructure in the ground, on our desks and in our schools and homes, but we didn't think too long and hard about why we wanted to do it

and warning about unintended consequences of a campaign to bring broadband "to all who want it" by 2008. In echoing recurrent claims that over 50% of respondents cite downloading music or adult content as their motivation for broadband, the IPPR sniffs that

Music downloading remains tainted with illegality while the act of viewing pornography speaks for itself.

     fibre to the toaster?

A rationale for the federal government's dominant shareholding in Telstra (or claims by Telstra for dispensation from competition constraints) is the assertion that only Telstra has the resources for national roll out of fibre to the kerb - or farm gate - and thence into households/SMEs.

That 'fibre to the toaster' - enabling "true" broadband, in contrast to 'shaped' asymmetric services - is characterised as a prerequisite for national economic competitiveness, social cohesion and a range of e-goodies that encompass the health, culture, education and government sectors. Advocates argue action is necessary if Australia and New Zealand are not to slip further down the international ladder, having been overtaken by South Korea, Singapore and other states that are on the correct side of the 'broadband gap', an echo of the 1960s 'missile gap'.

Estimates of the cost of rolling out fibre to most households are problematical; it is likely that expenditure of over $30 to $50 billion would be required. The $30 billion figure is around 150% of Telstra's annual revenue as of 2004, 30 times the writeoff of value in its Reach undersea cable venture, almost as large as Telstra's 2003 assets of $35 billion and roughly as much as forecast returns from sale of the government's stake.

The National Party's Page Research Centre estimated in 2005 that a taxpayer-funded fibre broadband network across regional Australia would cost $7 billion; Telstra and Optus argued that the same network would cost over $20 billion.

Telstra would presumably demand special treatment for that investment. Some critics have suggested that the federal government should instead pay for and build a new national fibre-to-the-home (or even fibre-to-the-toaster) network, charging Telstra and its competitors for access to that infrastructure.

     unwired networks

[under development]

     the connectivity business

Prior to the dotcom crash enthusiasts such as George Gilder forecast a telecommunications millennium in which connectivity - and, even more improbably, content - would be free for most people in most locations.

That vision has not eventuated in Australia. It appears unlikely to be fulfilled in the lifetime of anyone reading this page, given -

• investment in establishing infrastructure
• the cost of maintaining that infrastructure and associated services, on a subsidised basis for remote Australia or otherwise
• the corporate imperative to exploit commercial advantage, with Australasian network oligopolies (like their overseas counterparts) typically agreeing to forgo some revenue in gaining market stability and excluding market entrants
• renewed interest by government and other stakeholders in connectivity providers as regulatory chokepoints

The latter point is likely to accelerate the consolidation of the ISP sector, with small operators being unable to achieve economies of scale or pass on new compliance costs such as a EU-style requirement for the five year retention of all customer traffic data.

Rather than substantial new entrants into voice and data markets we are instead likely to see 'virtual operators', badging services provided by a dominant player and essentially existing at the pleasure of that player.

     convergence and control

There is more uncertainty about questions of convergence, which as we have suggested in discussing networks, is often a weasel word (akin to 'energy independence', 'community standards' or 'free speech') that is used - or misused - by people to mean different things.

At the device level most Australians appear to be using mobile phones for voice, SMS and the occasional photograph rather than as multimedia entertainment devices (eg for viewing movies, listening to music or even playing games).

At the corporate level Telstra has recurrently had the strategic wanders, expanding with indifferent success from print directories into software development and services, online recruitment, advertising and overseas infrastructure. The example of Bell Globe Media in Canada suggested that extension through acquisition of the Fairfax print media group - a broker and columnist's wet dream - was not inconceivable.







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