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The federal government has just spent $25 million on a study into the implementation of a national broadband network. Just think, $25 million spent -- and not a new wire in place. Isn't it nice, that the government has so much spare money to throw around...
A few days ago a newspaper columnist suggested, that the new broadband could be tested in a pilot study. Roll out a bit of network, see who is really interested. That's a good idea -- and the idea cost far less that $25 million!
Who wants it?
Some people seem to think that a new super-fast broadband network is a good idea. Mostly, this seems to be people who want to sell something via the new network. Wouldn't it be nice if they could go to market with zero upfront capital cost for the distribution network... Wouldn't it be nice -- for them.
It's like wanting to sell ice to Inuits -- and asking the government to create a new airline with a very large freezer on every plane.
Meanwhile, there are a lot of people who do not want a new network. A lot of these people may be those who already get all the network speed that they require. A lot more are those who don't use any network at all, fast nor slow. And a few of the dissenters will be like me: they know that the network will offer new services -- with the sole aim being, to convince us to buy even more.
Still, it may be that a super-fast network is, really, a good thing.
The latest study has reduced the cost estimate from $43 billion to a mere $26 billion. Well, okay, that's assuming that private enterprise will kick in another $17 billion of its own money. Oh, and less people will be able to access this cheaper version of the new service. (According to "Broadband viable without Telstra: study", The West, 7 May 10.)
Just a quick thought: Perhaps I should write a $25 million report saying that the network could be in place for only $20 billion. Even cheaper! Of course my network would only be accessible to the people of Perth. But look how cheap it is... at the planning stage.
Let's make a practical plan
Perhaps we could do a practical test -- a market test -- to see what this new network would really cost. And to see if it is really needed. So:- Call for expressions of interest, from both buyers and sellers. That is, from both homes and businesses which want to get access to the network and businesses which have something to sell via the network.
- Select an area which has at least one seller and as many buyers as possible.
- For that area, estimate the total cost of installation to at least the seller and all the potential buyers in the area. Just for that area. It's a restricted market test.
- Now you know the (estimated) cost, calculate the sale cost. That is, how much would the seller need to pay, how much would each buyer need to pay, to make the network viable.
- Go back the every buyer and seller in the selected area -- and to all other potential buyers and sellers in that area -- with the cost estimates. How many are still / now willing to buy in.
- If there are enough willing customers -- install a super-fast network in the selected area. Track all of the actual costs. (If there are not enough willing customers to even pretend to make the network feasible -- that's a fair indication that you should stop right here.)
- Count the costs of running the network. Measure the income, number of customers, anything else of relevance.
- Let it all run for a year. (By the way, if the project cost so far is less that $25 million -- demand money back from the group which did the $25 million "implementation study".)
- Count the actual costs, actual revenue, actual problems and benefits. Has it all been worth doing?
- If it was worth doing in that one area -- extend the super-fast network to another area. And another... and another...
- If it was not worth doing in the first area: Look at and solve the problems, or give it more time to catch on... or drop the national idea because it is not feasible.
What's wrong with this plan?
It seems to be a sensible approach, to begin with a restricted market test. Invest a relatively small amount of money, test the market response. Why not do it this way?Why would the government want to start with a small test?
Being in government is all about getting elected again. In order to get elected again, the government must provide noticeable benefits to the majority of voters. How many voters will benefit if a restricted market test is successful? Not very many!
How many voters will benefit if a full national network is rolled out? Well... we don't actually know... because no-one really knows if anyone actually wants the claimed benefits. So far, all we have is people who want to sell, and an unmeasured market of people who may, possibly, if it's heavily advertised, want to buy.
Nevertheless...
A national super-fast network will provide benefits to every voter. That is, if there are any benefits to be had. Even better: a national network will take several years to implement -- well past the next election, in fact. So the benefits -- or otherwise -- will not be measured for several years.
Meanwhile, the government will brag about the money spent. They will be able to claim massive future benefits -- which no-one will be able to dispute. They will be seen to be doing great things -- spending a very large amount of government money. All the time, claiming that benefits will flow...
Spending big money -- making friends with businesses, especially those building the network. Promising huge benefits -- with no proof at all. And several years to wait -- possibly through several elections -- before promises can be seen to fail.
Restricted market test? Practical, cost controlled, sensible. National all-at-once implementation? Politicking at its worst.
Agamedes Consulting. Support for your thought: email nick leth at gmail dot com |
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