Australia vs. U.S. in broadband stimulus plans

When it comes to broadband, Australia isn't messing around.

Earlier this week the Australian government announced a new plan to build a new fiber-optic communications network that will cost the government about 43 billion Australian dollars or roughly $31 billion in U.S. money. The new national network, which will be built by a yet-to-be-named state-controlled company, will provide broadband speeds of 100 Mbps to about 90 percent of Australian homes, schools, and businesses by 2018. The other 10 percent will get broadband access via wireless technology.

The new network will be fast enough to allow Australians to watch multiple high-definition videos at once and download loads of other multimedia content all at once. Only a small number of countries today offer speeds that high to consumers, including South Korea, Japan, France, and Germany.

Prime Minister Kevin Rudd said the government is taking this aggressive step because he believes a fiber-optic network is essential to stimulate the ailing economy. He also believes it will increase Australia's productivity and competitiveness with respect to other nations.

U.S. President Barack Obama also believes that broadband is crucial to keeping America competitive in the world. The U.S. has consistently fallen short of other nations when it comes to broadband. A year ago, the International Telecommunications Union ranked the U.S. 15th in the world when it comes to broadband. Australia was ranked 12th.

Even though both countries see broadband as an important way to stimulate the economy and a good investment for future productivity and innovation, they are going about it in very different ways. Instead of controlling the deployment of new telecommunications infrastructure, the U.S. plans to provide funding to the private sector as well as local and state governments to build infrastructure and invest in new services as they see fit.

Congress has allocated $7.2 billion as part of its overall economic stimulus package to increase broadband penetration and coverage and to provide faster, more affordable service to as many Americans as possible. As part of the new legislation, the Federal Communications Commission has also been tasked with coming up with a national broadband policy.

On Wednesday, the FCC opened up discussion to help establish a national broadband policy. While the stimulus investment is certainly a start, the U.S. government has made no strides to build infrastructure itself. Instead, it will rely on a public/private partnership to improve the national broadband network.

It will be interesting to see which approach proves to be most successful. Will Australia move more quickly up the ladder of productivity and technological innovation due to its investment in broadband? Or will the government sink billions of dollars into a project that is unsustainable in the free market?

On the flip side, will the approach taken by the U.S. really improve broadband access, penetration and speeds? Or will the investment only boost already affluent and broadband-rich regions, such as large cities? I'm very interested to hear what readers think about Australia's plans with respect to what the U.S. is doing, so please share your thoughts in the comment section below.

[SIGHUP]

Please stop using the term broadband as a synonyms for fast internet access? I realize the government does it (they are idiots). You can have fast internet without broadband (Ethernet and Fiber). And not all Broadband is fast or has internet access.

[monkeyfun14]

Broadband is the general term for all high speed internet access

Meaning wide data lane

[monkeyfun14]

I personally find it pretty bad that the US being such a wealthy country that our broadband lacks so bad hopefully the US can do something about getting US average speeds in atleast the 50mb or 100mbps range.

[Spartan_458]

Consider this. The countries that have super-high speed internet connections and rank above us are much smaller countries. Sure, South Korea has much more advanced connections, but they would only account for 1% of the U.S. landmass and only 17% of the population. It's much easier and cheaper for smaller countries to implement such systems as fiber optics than for us to do it. Here, it's a much larger scale and cost. That's why we lag.

[cmstratton]

Couldn't agree more Spartan. Doing this in Australia is much easier than the US because even though Australia is huge, pretty much it's entire population is centered on the eastern coast.

[shootthecops]

what keeps the US from having fast internet? politics and lobbyists.

[venuesdotorg]

Australia vs U.S. Let's see. Australia spending $31 billion USD and U.S. spending $7.2 USD. Who will win??

[SIGHUP]

Its easy to do when you are on a small island like Japan, Or 90% of your citizen live within a city, like South Korea. When you consider our bandwidth penetration to country like Russia and China, which have a lot of remote rural areas like America, you see that actually America is doing very well. But there is always room for improvement.

[mrorie]

I'm surprised how many people don't realize this. It's obviously going to be more difficult to hook up broadband when your country is the size of the U.S., and it's relatively easy for places like South Korea or Singapore or Hong Kong to do so.

[Nicholas Buenk]

I don't buy this. America and Australia are both large countries of about the same size. But a lot of the population is still cluttered in large cities, if you just focus on broadband in those high density areas you'll still reach a very high penetration. And in America's case they also have a very large population, large consumer base to recoup the added costs from the size.

[spamspamandmorespam]

Fibre is very expensive to lay, and even more expensive to repair. Estimates for laying fibre range between USD$15,000/mile and USD$150,000/mile (depending on other costs such as right-of-way costs, etc.). Now let's look at four population densities:
- Manhattan - 26,000 people per square mile
- Brooklyn - 10,000 people per square mile
- Saratoga Springs, NY - 247 people per square mile
- Galway, NY - 81 people per square mile

Now where are you going to run fibre?

Most people know that Australia and the United States are of similar mainland land mass. But the similarities run out quickly. more than 80% of Australians live within 60 miles (100km) of the coast. There are almost as many people in the NYC Metropolitan Area (~19 million) as live on the entire continent of Australia (~22 million). And that is just one metropolitan area. The US has twice as many cities with populations of more than 1 million people. The population of New York City alone is larger than Sydney and Melbourne combined.

Bringing 100MB broadband to 90% of Australia is like bring 100MB broadband to the NYC Metro Area. It is an enormous challenge worthy of government attention. But it is NOT the same thing is bringing 100MB broadband to 90% of the United States.

[Nicholas Buenk]

Now spamspamandmorespam, I don't think population really matters, because with larger population comes more customers and more tax payers. That is to say, more population means more resources as well. So this is not an concern nearly as significant as geographic size and level of urbanisation.
Look at this way, America's population and economy is about 14 times Australia. If you do a comparison based on the relative GDP of both countries, that $43 billion AUD worth of spending on broadband for Australia, would compare to about $420 billion USD. Are you seriously telling me the US couldn't do a similar project with that much money allocated towards it?
Percentage of GDP, there's no point in making a comparison between the countries without taking that aspect into account.

[tphm]

7.2 billion is a small change that can't do much, except as an incentive for private funding. I find it really pointless if we let private, national broadband companies put the bandwidth cap on their users. All that high-speed access won't help anyone if the cap is on.

Broadband/High-Speed Internet will be built the same way the initial phone lines were, by private industry. I agree that the government has to offer incentives for it to be done, but doing it themselves is a money pit. After the gajillion dollars are paid to get it in place, there is that much more for repairs and maintenance after the fact. We need higher speeds here in the US, no doubt, but going the way Australia is going will just be more painful in the long run.

I live in Australia and I see the A$43b as a big gamble with little return on investment. There are big headlines for this initiative but no substance yet, no company, no costings, no technology plans nothing. Our government has moved from a model similar to what the US are doing tho this over the top deployment. Our land mass is almost the size of the US but less than 10% of the population. I would love to have this speed to my home but I will be waiting a long time to get it.

[dylerl]

No the way Australia is doing this is the correct way. Keeping internet connections in private hands is just going to stifle any innovation on the internet, and we will never get net neutrality. Private Industry is not going to deploy broadband in rural places just because the government throws a little money at them for it, they still need to make money off of these places and they will not. Internet should be a commodity that all Americans have access to at high speeds. Government can keep the network up, can open the net to everyone and can implement net neutrality. Private industry is not going to do this unless they see a big return on their investment or they would have already done this, I don't see 100 mbps anywhere here!!!! Have we not learned anything from the banking crisis, I have and that is I don't trust Private Industry at all anymore and there are some things that I cannot trust them to do anymore, and the only person left is Government!!!! Sorry Conservatives your time is finished it is time for our great society to come back and the only way to do that is to move our progressive agenda ahead and fix our problems that Conservatives and private industry have caused. It will help us with this agenda if All Americans have high speed connections. I call on the Democrats in congress to use your majority and do what the people want in this country (thats why we elected Obama) and if the Republicans don't want to come along let them go into the past, Democrats forget about Bi-Partisanship if the Republicans cannot understand what the word future means!!! We have the majority and we do not need them!!

[Nicholas Buenk]

Way Australia is doing it is with a corporation majority owned by the government. This is the correct way to do it.
If it's entirely public and depends entirely on government for it's operation, government will never bother to upgrade it until voters get angry. A corporation has profit motives to increase speed, to offer more to customers.

[ilya_87]

Kevin Rudd's decision has much more than broadband access as inspiration. The country has run out of options for getting around the incumbent carriers monopolistic tendencies, and one of the main benefits here is that this will finally create a level playing field. This is definitely not the cheapest way of delivering the service.

Currently, most of the country has access to ADSL2+ services, topping out at 24mbps. In addition, in all the capital cities, most residences have access to a hybrid fibre coaxial network (cable internet), which the incumbent carrier has decided to upgrade to Docsis 3.0 in response to the proposed fibre network, matching the proposed speeds. The other cable network can also be upgraded to this speed relatively cheaply, but a ridiculous market situation in Australia gives no reason to do so.

[koduk]

I'm also Australian and, although acknowledging that the government's plan is indeed short on detail, I'm convinced it's the way to go. Australia is only slightly smaller than the contiguous US states, with only 7% of the US population, so if the ITU rankings quoted in the article are correct, it's obviously fallacious to argue that being a larger country makes it harder to provide a decent service.

The Australian telecommunications network was originally built with public funds and legislation required that all profit be reinvested in improving the network. It provided a world class service until it was sold and its profits privatised. The resulting corporate behemoth doesn't want to have to provide broadband services to all of Australia - just the regions where it's assured of making a profit. Fair enough. That means it falls to government again to ensure all Australians have access to what is fast becoming an essential service.

I just hope that if taxpayers do wind up paying for it, government doesn't sell it out from under them again!

[theluckychicken]

I agree.

[clinnd]

Good Idea by the Australian government.

Sell off a monolopy to private enterprise and mums and dads, break the new company with legislation. Then announce a new monolopy owned by the government which will be eventually sold off to private enterprise and mums and dads...

In both countries market forces drive costs down and supposedly innovation up but does not have a social concious which is why we are in the state we are in now (ie crisis, poor public services etc...).
As long as this is priced appropriatelyy for all to afford then this will benefit the country.

What will probably happen though is that it will be priced as appallingly as the current ADSL2+ service which restricts usage by limiting speed or increasing costs per Mb and we will be back to square one with a huge debt, a crippled Telstra and a service that is technically inferior

[a85]

The irony of it is astounding isn't it. The farce that is Telstra incontrovertibly evidences the inevitable failure of privatising natural monopolies and providers of public goods.

[ericinoz]

My 2 cents worth (also from Australia) - This is without doubt the largest infrastructure project in Australia since the Snowy Mountains Hydro scheme - & long overdue. People commenting that it's too costly or that it'll never make a profit are missing the point. Broadband is not just about downloading movies - solid braodband will help solve a wide range of problems, including bed shortages in hospitals, by facilitating home medical treatment where possible, reduction of carbon emmissions & reduction in road maintenenace costs by enabling workable video conferencing & providing a larger than current amount of people the ability to work from home (not to mention the reduction in stress by not having to spend hours in traffic) & a whole raft of areas that we're not yet even aware of.
Regrettably this kind project has to be handled by government because private enterprise will (understandably) have the bottom-line return to shareholders as its main priority & thereby almost certainly will not be able to do justice to a proper roll-out of the service. In essence the cost is immaterial, because at the end of the day it's a governments obligation to provide an environment where business can piggy-back of a project like this to then leverage profit making ventures. And lets not forget that aside from providjng opportunities this project will highly likely provide employment for a large number of people, which in todays market has to be a good thing.
Time to wake up & recognise that we're in the 21st century, people.

[TigaAyes]

Another Aussie.

In this context, comparing USA with AUS is daft. Yes the major land masses have a similar area, but not only is Australia's population much smaller (21M v 300M) it is also far less dispersed than that of the mainland USA, indeed Australia is the most urbanised country in the OECD.

With respect to telco's AUS has one dominant provider, Telstra, a former state owned enterprise, it enjoys about 80%+ market share. Telstra has a major stake in what is, to all intensive purposes, the sole pay-TV provider (FoxTel). On the other hand the USA has a vast panoply of telco's and pay-TV outfits - indeed just as it can be said that AUS has too few, so the USA might be said to have too many. Hence the approaches need in order to provide hi-speed 'net access in the two markets must be quite different.

I very much doubt that the $43b AUSsie behemoth will fly and I doubt that Conroy (the Minister / Secretary for telco's) expects it to fly. What he wants to do is to force Telstra to contemplate transfer of the ownership of it's network (along with those of the smaller players such Optus & AAPT) into a single wholesale telco (Telecom Australia dare I suggest) that will sell capacity to the retail telco's - Telstra, ptus, AAPT, IINet, TPG. Telecom Australia will probably have a PPE or GSE financial structure.

A major roadblock to Telstra taking a sensible, progressive approach on this issue has been its CEO, Sol Trujillo. But Sol will soon be winging his way home across the Pacific, his bags stuffed full of our loot. Hopefully his successor will be a more enlightened soul who doesn't have the attitude of a 19th century robber-baron.

The other major roadblock is the Chairman, Donald McGauchie, a man with a colourful history. By inclination he's an monopolist of the agrarian socialist kind. He defends cartels such as the Ricegrowers Coop and the Australian Wheat Board -- that's the AWB that took kickbacks from Saddam Hussein in the UN Oil for Food program, he may have even been on the AWB board when that was happening. he also had a part to play in the attempted destruction of the Maritime Union in 1998 - Google for Fynwest.

Aside - Obama is often compared to FDR, unfortunately that's the wrong R, what's needed is someone more like TR. If we let them put the Humpty Dumpty back together again, then Humpty Dumpty will only fall off the wall again. We need to break up the mega banks, kill the shadow banks and abolish the ratings agencies, only a Teddy Roosevelt would have the courage to do that.

[Nicholas Buenk]

It's not a bad plan except for the fact that they are completely ignoring the international links to America under the pacific ocean that 80% of the traffic in Australia goes through.
This is why there are such small caps in Australia, 20GB is common, 40GB if you pay a bit more, 100GB if you pay a lot. All still very low, but it's to reduce the load on the very expensive cable links to the USA.
Fibre broadband is not going to really help here, do I really care if all I get is that I'll be able to reach the limit of a 20GB faster? The real problem is the lack of bandwidth to America, our current broadband speeds are plenty fast already. 30mbit for cable, 24mbit for ADSL. They need to focus on the international links.

[jwilson00m1]

There are large areas of the US that don't have access to DSL or Cable internet connections. These areas are necessarily far from urban centers but they are in the "No Man's Land" between cable providers and DSL providers and the cost to reach them is just not worth the return on the providers' investment. If the US government can reach that segment with its stimulus plan then I say wonderful. But from what I've been reading the stimulus package may leave out that population and send companies laying cable/fiber for the farmlands and hinterlands of the rural west. I hope that the suburbanites get some love from this stimulus too. My parents live 20 minutes away from the center of Kansas City, MO which has a collection of major fiber optic networks, yet, because they live on the fringes of a small town they're out of the loop and have to use a cell phone connection or satellite connection. Both of which are pretty poor in comparison to even a slow dsl connection.

[NoVista]

Many salient comments already, so some comparisons by analogy from this American living in the land of oz since 1974 ...

First, looking at Telecom then: comparing to experience in Providence, RI. I worked for the TV station and thus was on call -- moving across town, so needing phone service changed over. Called the local on Monday, techs arrived on Wednesday, even as the moving truck was at the new place. They were in and gone in an hour and a half. Had to run extension to bedroom on 2nd floor. Left no mess. Total charge, $26.00. That was 1972.

We arrived in Australia in 1974, I'd been offered a job in Hobart, Tas. A few months later, I bought a house and again needed phone service. There had been a phone line in by the previous owner. However, getting it reconnected took six weeks and $160.00 ... (and further, the first 10 years of my fulltime working life was with AT&T, so I had another basis of comparison.)

Second issue: cable TV vs. 'free-to-air' ... there was a 25 year moratorium on cable "so we could do it right.": In 1970, I'd just finished a contract job in Saudi Arabia and used the final travel allowance well, ending up in London, and seeing ITV. Which business/programming model seemed sensible. Yes, there were ads -- but nothing to break up program content. Start a movie and it runs end to end, then a block of ads, time enough for refreshment etc.

Finally, cable is implemented for Aussies. Galaxy was the first I saw, it got swallowed up. Next was a trial with Optus. Their business plan for the first three months was 'free' via a voucher system -- but appeared to be the sort of scam of 'we never received the voucher' followed by acrimonious phone calls until I threatened to throw their black box out into the front yard. A tech arrived the next day to collect, end of story. Colour me unimpressed.

Enter Foxtel. Uh huh. I thought the whole idea of cable TV was freedom from ads, for a price. Time passes and now I live in Far North Queensland. With Austar satellite TV. Ads are proliferating to the point that I cut back my subscription package to the minimum -- plus the annoyance of 'dartboard programming' with TV series starting and stopping or changing days, and/or hours -- and usually run in 'random walk' sequence.

All in all, the worst of all possible worlds. Now that I'm a 72 y.o. grumpy old widower with no grandchildren, why on earth do I need any kid's channels? It'd be simple enough to set up a business model whereby you pay a minimum fee per month and choose the channels you want. Want more? Pay more. I'd even pay more for no ads ...

So, in the discussion of guvmint vs. market rhetoric, one can find bad examples on both sides.

And finally, remember that 'the man' gives you nothing he hasn't already taken from you.

[adt125]

This is essential infrastructure and in 10 years will be as standard as bitumen highways.

In Australia it will only ever get partially built and piece meal and very late, as the telcos maximize returns on low quality products. Their very little competition and one company owns the majority of the infrastructure. It has the capability but will never do it unless it cheat the life out of everyone at every turn.

This is why the Australian government had to take the path it did, to over come market blackmail. Now if the laws are passed it will have the power to blackmail the monopoly as its infrastructure could become worthless if the government builds a new higher class duplicate.

What will happen is existing telcos will give up whatever suitable infrastructure they have in the way of conduits and fiber connections for a stake in the new company. This is their only choice really. This will speed up the completion of the project, make it cheaper and more business viable in a shorter space of time.

The multipliers of this capability both business and social will be enormous. Just like going from dirt roads to 8 lane highways. It increases efficiency, speed, productivity, profits and competitiveness.

It is right that Governments build this stuff, just like they build major roads.