A Tale of Two National Broadband Networks

In both countries, the government has announced a sizable investment in a national broadband network that is designed to deliver high speed connectivity to homes, schools and businesses. The governments argue that this investment will lay the foundation for sustained productivity and innovation.

 

The economic argument for investment in critical infrastructure is not a new one; it has been used over the decades to justifiy investments in infrastucture, such as roading. The orthodox view is that national infrastructure projects can have both direct and indirect effects. Jobs are created to construct the infrastructure; this is its direct impact. The indirect impact of infrastructure investment is more complicated with a greater potential to increase national and individual prosperity.

 

The indirect influence of infrastructure investment includes the ability to enhance productivity, increase the competitiveness of local firms and improve the quality of life of all citizens. These are some of the indirect returns that the Australian and New Zealand governments expect from their investment.

 

The challenge of poor labour productivity growth is felt acutely in New Zealand, as it scores poorly on this measure when compared to other Organisation for Economic Co-operation and Development (OECD) countries. There are many ingredients to labour productivity, and increasing it is a daunting task, but there is a growing body of empirical research that illustrates the important role digital infrastructure plays in encouraging economic and productivity growth¹.

 

ICT infrastructure also creates opportunities for local firms to develop skills they need to compete effectively as exporters to foreign markets. The construction of a modern digital infrastructure will provide local firms with an environment where they can develop skills and abilities that will become increasingly important as they export to both developed and developing countries.

 

Improvements to the communication infrastructure in both Australia and New Zealand have the potential to improve the quality of life for all citizens. It will allow the public sector to improve the effectiveness of current services and embrace new delivery options. For example, ubiquitous high-speed connectivity could enable a range of modern health solutions, including remote diagnosis and virtual consultations serving patients unable to travel to the doctor or who wish to consult with a specialist in a different city. There are many opportunities in education. Online learning solutions and content could be expanded making learning opportunities available to more students in more locations. Job seekers could be matched with new positions or re-trained through portals rich with training materials and career advice. The productivity of small businesses could be enhanced by connecting with specialist advisors and helping them access larger markets. Democracy itself could be transformed with modern digital technology allowing citizens to engage and influence the processes of government.

 

The Australian and New Zealand governments have taken different approaches to ensuring that their respective countries realise the indirect benefits of the investment being made in digital infrastructure.

In Australia the initiative to deploy a national digital infrastructure is known as the National Broadband Network (NBN). To manage their investment the government has created a new company called NBNCo Limited, the principal activities of which are to build and operate a national broadband network to deliver telephony and high speed broadband to Australian homes, schools and businesses.

 

The creation of NBNCo lays out a very clear set of foundational goals. With the government’s investment in a ‘fibre to the premises network’ others are looking at the opportunities such an investment offers. The University of Melbourne, in conjunction with industry, has invested in a research institute dedicated to products, services and innovations that maximise the benefit of new broadband technologies for Australia. The Institute for a Broadband Enabled Society (IBES) aims to ensure that there are real societal and economic impacts from the investment in a modern broadband network. The Institute’s work covers a wide range of fields including content creation and delivery, delivery of remote health services and education, social networking, entertainment and broadband technology.

 

In New Zealand, the deployment of the national broadband network is being managed by a government entity called Crown Fibre Holdings Limited. The primary responsibility of this organisation is the orderly and cost effective deployment of the new network. It has a limited role in ensuring that services and content that utilise the network are developed. In addition to this, the New Zealand government is also investing in several public sector projects to develop services that will benefit from the network. 

 

In general, the approach of the New Zealand government is to encourage the private sector to take the lead in developing the strategy, and build the services that use the network. The government will invest in the network, the private sector needs to make sure that New Zealand benefits from it.

 

Unfortunately, to date the public debate has primarily centred on the details of the project to rollout the network, i.e., who will win the tender, how they will be engaged. There is a paucity of constructive dialogue about the ways the network can be used, and how New Zealand, as a country, maximises its return on this national investment.

 

There is little doubt that both the strategy and services will emerge over time. Private and public sector organisations will take advantage of the network to deliver new services which utilise the new network and the opportunities it affords. Nonetheless, it is unclear whether this laissez faire style approach will help New Zealand to get the most from this investment in the shortest period of time. For a country with limited resources, the opportunity exists for government to play a greater role in bringing together the private sector, academic and international experience to ensure that indirect benefits of a national investment are realised.

 

Governments around the world are investing in national broadband networks because they believe those networks are key ingredients to their sustained economic prosperity. The Australia and New Zealand governments are both well down the (sometimes rocky) path to rolling out their own networks. The Australasian governments agree that this investment is important for the future for their countries, and they concur that government has a role to play in these projects. One of the key differences between New Zealand and Australia is the steps the two governments are taking to make sure the benefits of these networks are realised. In Australia, government is actively supporting research to understand and develop services and content that will utilise the network. Through IBES government, academia and the private sector are all working collaboratively to find what a national broadband network may mean and what opportunities it will provide for the development of new applications, tools and services. To date in New Zealand the government is content on relying upon the private sector to lead in this endeavour.