NBN vs. the world: The American experience

Policymakers explain why the U.S. and Australia took different approaches to spreading broadband.

A similar geographic challenge but different market structure made the National Broadband Network (NBN) approach unworkable for the U.S., say Australian and American policy makers.

Australia and the U.S. watched each other as they designed plans to deploy broadband throughout their populations, policymakers from each nation told Computerworld Australia. While the nations share some geographic similarities, different market structures and regulatory histories required different approaches.

With the NBN, Australia is paying to bring broadband to every home, selling the service through wholesale agreements with ISPs. But the U.S. National Broadband Plan proposes using a subsidy system to spur private investment.

NBN Co looks “both nationally and internationally at the trends that are going to affect broadband take up,” NBN Co general manager revenue, Stephen Myers told Computerworld Australia. “We want to make sure we’re developing the network … in the context of what all of the developments that are occurring are, and making sure we continue to benchmark the developments that are occurring in the more advanced markets back into what can potentially happen in the Australian experience.”

NBN vs the world: The Korean experience

When writing the U.S. National Broadband Plan in 2010, the Federal Communications Commission (FCC) “looked at a lot of other countries but at Australia in particular because it was both timely and had geographic issues similar to the United States,” the plan’s lead architect, Blair Levin, said.

The Australian Perspective

“The American market came from quite a different structure from the Australian market,” said NBN Co’s Myers. And the regulatory environment in the U.S. is “very much hands off,” relying instead on industry competition to spur broadband, he said.

In the U.S., “you have a very wide deployment of cable,” Myers said. Big cable operators compete directly and aggressively with telcos on broadband and other telecom services, he said. That alternative platform “really has kept the telcos honest” and driven broadband deployment.

In contrast, Australia has Telstra controlling the cable and copper infrastructure, with no other company providing a competitive check, Myers said. “The government has stepped in to bring a uniform platform to the marketplace as an alternative and restructure the industry so that we’ll get a uniform, ubiquitous deployment of infrastructure.” The government determined it could not meet that goal through negotiation with Telstra, he said.

The U.S. and Australia face a similar geographic challenge in that both nations have large rural areas that are difficult to serve broadband, Myers said. But the U.S.’s vastly bigger population provides scale reducing the cost of connecting more expensive areas, he said. The American government has focused intervention in the market where there is no service available, with the FCC working to redirect its existing telephone-focused subsidies into broadband, he said.

The U.S. market structure has caused a problem of its own, Myers said. “It’s actually resulting in very much a patchwork network across the states.” Different companies deploy different technologies from each other, and even within their own footprint offer different speeds in different areas, he said. “There’s no consistency across the marketplace.”

“Verizon has rolled out an extensive fibre-to-the-home network in the US,” but hasn’t seen much take up, said Rod Tucker, a professor at the University of Melbourne. “This is because the Verizon fibre network runs alongside competing HFC and ADSL networks. The lesson that Australia can learn from this is that facilities-based competition can be inefficient.”

Over the page: The American Perspective

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More about: AT&T, AT&T, etwork, FCC, Federal Communications Commission, OECD, Telstra, University of Melbourne, University of Melbourne, Verizon, Verizon
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Comments

Francis Young

1

That's funny. The experts on This Week in Tech on 3 June 2012 said the opposite about the wisdom of allowing the oligopoly of incumbents to compete to extend services.

One guy amazingly has 25/25 Mbps symmetrical cable for $75 per month, BUT he got as part of a short-lived trial that the cable telco quickly stopped. Like our own Optus/Telstra HFC footprint, which has remained stuck on 500,000 premises for a decade of stagnation while the telcos bullied the government to build extensions for them to generate more profits.

The conversation is at about the 1h 5m mark in the two-hour broadcast at http://twit.tv/show/this-week-in-tech/356
Audio download is here:
http://www.podtrac.com/pts/redirect.mp3/aolradio.podcast.aol.com/twit/twit0356.mp3

Abel Adamski

2

"The lesson that Australia can learn from this is that facilities-based competition can be inefficient.”

And WILL result in more expensive services as cost must be recovered

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