The Australian government announced last week a massive 8-year, $31 billion investment in broadband that would leave the land down under with the most impressive internet infrastructure in the world. Not only does the plan promise tenfold faster download speeds (imagine streaming multiple HD movies at once), but promises to bring that speed to over 90% of Australian households. The remaining 10% will have to depend on next generation wireless networks that will only let them stream two HD movies at a time. On the other hand, broadband penetration in the States hovers at 55%, and telcos charge high prices and offer plodding speeds, leaving the U.S. at 15th in the latest international broadband rankings.
Interestingly, the Australian government’s internal debates shed some light on the US broadband market. Until last week, the Australian plan was just to replace old copper phone wires with fiber optics to specific nodes, leaving the copper wires that lead to homes. Instead, at significantly higher cost, Prime Minister Rudd opted to bring fiber optics to every single Australian home, rejecting the bids from old monopolizing telcos. Here at home, American companies are pursuing both strategies, with (again) the old monopolizing telcos like Verizon desperately trying to replace their old copper phone wires with fiber optics in order to keep up with the cable companies, whose newer technologies give them faster speeds.
However, what this leaves America with is a patchwork of different speeds, accessibility, and costs. This disparity will only grow as internet service providers focus their infrastructure improvements on dense urban and wealthy suburban areas, leaving poorer rural areas with the slowest speeds and even dial-up. This state leaves America less competitive than ever as internet services, whether commerce, education, or even medicine, become vital for our economy. Congress’ $7 billion stimulus dedicated to increasing broadband penetration may mitigate some of the market forces, but America will likely continue to fall down the rankings.
One overlooked point, too, is that the state-sponsored Australian network represents a sea-change in the internet market and political discourse. The Australian plan makes all their fiber optic infrastructure open-access and wholesale only. This requirement ensures that all internet services receive equal access to consumers, no longer throttled by draconian internet providers that feel resentful as Google piggybacks on their infrastructure and reaps huge profits. This debate is known as net neutrality and has become an internet rallying call, as AT&T and Comcast seek to charge companies like Amazon for priority traffic on their network or consumers for different levels of bandwidth consumption. Australia has deftly dealt with this contentious issue by rendering it a total nonissue, allowing telcos to focus on providing value-added services instead of plain old internet access, which is becoming increasingly unprofitable. Indeed as we wallow with Senator Stevens claiming that our “series of tubes” are clogged with “internets,” Australia is pursuing a coherent, egalitarian broadband policy that will open the door to huge increases in productivity and competitiveness.
