eCommerce businesses celebrating Australian government decision to build $43billion national broadband network
Australian ecommerce businesses are celebrating today following the announcement that the government is to build a national high-speed broadband network at a cost of some $43billion.
The new National Broadband Network (NBN) should underwrite the continued development of online and ecommerce businesses, and particularly those that can benefit from high data transfer rates.
eCommerce businesses with services incorporating online video and imaging are likely big winners, as too are businesses relying on fast transaction processing such as online gaming, betting and financial services.
Universal high-speed broadband access at rates of up to 100mbs will also boost the viability of services integrating Internet telephony and video.
Local computer businesses offering software as an online service will also become much more competitive as their services will be much less prone to annoying time lags and interruptions.
Even so, the government’s surprise announcement, which also revealed the collapse of its NBN tender, has to be viewed with some caution.
It may yet prove more difficult than expected for the government to radically re-vamp the existing regulatory regime governing telecommunications services.
A national optical fibre network connected to 90% of Australian businesses and homes will effectively render redundant the existing national copper cable network owned by Telstra.
It will also place a question mark over the viability of other fibre networking investments by a range of carriers in recent years.
Those facts suggest that the development of a new regulatory regime, which must inevitably precede the actual commencement of any commercial operations using the network, could be bitterly contested and take a long time to finalize.
Moreover a detailed business case for the government’s $43billion spending proposal has yet to be seen.
And there are clearly some considerable risks that could imperil the government and its private sector partners from achieving the stated objective of getting a commercial return on the investment.
One such risk is the fact that much of Australia’s Internet usage involves downloading data from overseas. Without a corresponding significant and expensive investment in new undersea cable connections to the major data centres in the US and Asia, many online services will see little performance difference from the NBN.
Some consumers may be reluctant to pay for NBN connections and/or services if they don’t see enough value in such an expenditure.
Both those factors suggest the network may not become fully operational for some years to come, during which time technological and commercial developments may substantially affect the business case.
Continuing rapid improvement in the speed of communications services delivered using wireless technologies, for example, may make them, in years to come, significantly more competitive than they are today when compared against services delivered by fibre optic cable.
For all that, there is no doubt that yesterday was a red-letter day for Australia’s online and ecommerce businesses.
For more information go to
www.dbcde.gov.au
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