Telstra has decided not to offer
fibre to the node infrastructure that would enable users (at least in capital
cities) to purchase high bandwidth internet access. Of course, right now, users
don’t need high bandwidth access, precisely because the services that utilise it
are of only limited availability. Which might provoke the response: so who
cares?


But this is somewhat naive, as the
world is moving in a clear direction. When the first long-distance
telegraph
was introduced, Henry David Thoreau said: “They tell us that Maine
can now communicate with Texas.
But does Maine have anything to say to Texas?” It may not have just
then, but soon enough it did, and it was the chicken that followed the
egg
of pre-emptive investment in telecommunications.

The problem is that to seed
network services requires large capital costs and patience. Telstra has the
ability to invest in large capital costs but this week’s events show that it
doesn’t have the patience to bear all of the risks involved. This is where
there’s a role for the government. Governments are the patient actors in the
provision of infrastructure. The copper network around the country occurred
because of that patience. The same is true of other national networks in road,
rail and ports (air and sea) as well as the way energy is brought to people’s
homes. The government took the running and only later, when patience was less
of a virtue, did the private sector find its role.

High-speed broadband is critical
for Australia
precisely because the rest of the world – by government or other means – is
investing in it. That means that the host of complementary services including
media but also the ability to source complex applications off-site and to
coordinate graphic interfaces for design will be coming and Australians will be
unable to access them. This impacts on consumer welfare, to be sure, but also
potentially on our ability to compete in an outsourcing world and to save our
human capital from migration. Cutting us off from the world in this regard leads to a
risk we won’t need those services because the industry and people that rely on
them will go elsewhere.

As an economist, I don’t normally
advocate near blind investments in infrastructure. The case has to be made
weighing costs and benefits. But if we look at how the case is made around the
world, the case here becomes stronger and stronger. To let it be decided by a
single privately-operated corporation seems foolish. The historic role for
government continues to be there and the fact that they own 51.8% of an entity
that can deliver it only strengthens their hand. Let’s hope they use it.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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