100 Megabits

One of Kevin Rudd’s main goals is to implement a blazingly fast nation-wide 100Mb/s national broadband network, at a cost of around $43b. This would place Australia at the pinnacle of world broadband networks. Frankly, I can’t think of a single bigger waste of tax-payer’s money than this (especially when we are due to run huge deficits). After all, what does one use 100Mb/s for? Movies, music and porn – that’s it. I’m a fairly heavy internet user, yet I can’t for the life of me think how I would use anywhere near 100Mb/s. You don’t need 100Mb/s to check your email. You don’t need 100Mb/s to do research for your high school essay. You don’t need 100Mb/s to chat to your Mum over Skype. All you need it for is BitTorrent. Should the government really be spending several tens of billions of dollars of taxpayer’s money on subsidizing BitTorrent? I don’t think so – especially given that governments around the world are spending billions of dollars trying to fight copyright infringement. It would be much more cost effective to subsidize rental video outlets and adult stores, which would have the same effect for a fraction of the cost.

I see two possibilities for how this scheme could develop. First, given that it is estimated that use of the network by the end user will cost around $200/month, there is a very real possibility that few people will want to pay the price to use it, in which case the resources will have been wasted. Alternately, lots of people might start using the network for its speed which will put private sector ISPs out of business, since they will be unable to compete against this newly created, heavily subsidized behemoth. This could have devastating implications for the telecommunications industry and might effectively socialize this critical sector of the economy. Either of these possibilities is undesirable.

In Australia, like in other developed countries, the market has proven very effective at providing broadband services to our residents. If a 100Mb/s network hasn’t already developed in the market, this is probably a fairly good indication that such a network would be economically unviable and therefore shouldn’t be pursued by the government.

This post has been cross-posted at the Australian Libertarian Society’s blog – Thoughts on Freedom.

9 thoughts on “100 Megabits”

  1. Peter,

    I would bet that in 10 years we will certainly have use for 100 Mb/s. 10 years ago barely anyone had any internet at all, and look where we are now. To think 100 Mb/s will be used just for illegal downloads and porn is as simplistic as thinking, 20 years ago, that the internet would always be the domain of academics and computer nerds. Plus, the existence of infrastructure should drive the development of applications. It’s been like that for many technologies we have seen emerge in the last decade or two. A country who gets the infrastructure set up first may see the next Google or Facebook emerge in their own territories.

    Furthermore, large infrastructure investments can and should be taken by governments even if the free market does not find incentives to do so. Governments aren’t just large businesses. Even if they can’t get a profit out of this investment, returns may come indirectly through general economic growth sparked by the existence of the infrastructure. The internet itself wasn’t started by private companies, but by universities and the public sector. No one had then any idea of how useful (and profitable) it would eventually turn out to be.

    Not to mention other less directly measurable possible benefits. Socialising this critical sector may also have other strategic and political benefits, precisely because it is a critical sector. Look at Russia’s political power for having control of Europe’s energy supply. Now imagine a large Chinese corporation with control of Australia’s telecommunications…

    But there’s reason to be suspicious. Especially when I think of the internet censorship scheme running in parallel, and the excessive influence of fundamentalist christians on this government. And $200/month is a lot of money. Doesn’t seem to agree with the government’s claim that “Every person and business in Australia, no-matter where they are located, will have access to *affordable*, fast broadband at their fingertips” [from the link on your post]. Where did you get that figure from?

  2. Hi Eric,

    I agree with you that infrastructure/technology often precedes the application for that infrastructure, but I don’t think this is justification for spending $43b willy nilly on something that *may* find applications further down the track. This is an enormous amount of money for a country the size of Australia and I can think of better infrastructural projects that this amount of money could be spent on. The problem with the “infrastructure may drive the applications” mentality, is that the applications further down the track are generally unforeseen and it is therefore a significant gamble to invest this kind of money.

    The $200/month figure came from a news article on this topic, which was just an estimate given by some analysts. To my knowledge, the government itself has not officially indicated how much it will charge for this service – it may be more, it may be less.

  3. Having just discovered rapidshare, I’m inclined to agree with Eric. There is no reason to assume that the way technology is used today will remain static. And that applies to the legality/illegality of current applications too. I imagine a future where TV programs and gaming and media are delivered via the internet, Software like photoshop and office are browser based.
    The fact that bittorrent is mostly used for pirating doesn’t preclude some transformation in the way intellectual property is structured, and how IP holders accrue rents. technological advancement occurs in step with wider social progress, intellectual property laws which excessively favour IP holders are likely to result in less development not more.
    Should the government spend $43b on a broadband network? I have no ideological problem with public provision of public goods. However, in the case of this network, it seems to me, that there is no reason NOT to expect considerable private sector investment in ITC infrastructure.
    Maybe the government should concentrate on making the telecom market in Australia more competitive and less telstra-ted.

  4. And another application that seems to be around the corner is to have all your data (documents, music, videos, applications, etc) online. I have no doubts that with fast broadband no one will have data only on their laptops/desktops, but uploaded somewhere with Google or Apple (or whoever). The technology in fact exists already (Google Documents, Apple’s MobileMe), it’s just not used much because of bandwidth issues. TV and music? Yeah, no doubt! Have a look at my “radio station”:

  5. An internet connection is a private good, not a public one. A company can easily exclude me from their network, and when I use a cable I stop others from doing so.

    I agree that we’ll use all the bandwidth we’re given, though.

    Eric, “if the free market does not find incentives” it means that people aren’t willing to pay for it, and therefore resources shouldn’t be invested in it. Also, I have no problem with a Chinese corporation owning the ITC infrastructure we use. If they tried censoring the web we’d just boycott them.

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