Australian broadband jam

 by Simon Twiston Davies

The blazing pace of change in assumptions about the shape of the video industry was highlighted last week during a short trip to Sydney. 

Even though the core objective of the Aussie jaunt was to talk about SatComs at the well-attended Australasia Satellite Forum, in the end it was, as ever, all about the consumer. 

The relatively gentle satellite spectrum debates (organised by talkSatellite and Commsday) were quickly sidelined by a series of highly political (and often ill-tempered) discussions of the roll-out of the much ballyhooed Australian National Broadband Network (NBN). 

It was bewildering that it needs to be asked why all Australians shouldn’t have the same level of broadband services as every other advanced economy – and ASAP? 

Australia has a terrific road system. Great airports. A currently robust economy with a strong currency and low unemployment. Despite whingeing on the sidelines, it has first-class telecoms networks and some of the best food, drink and sunshine in the world. 

Of course, the two-speed economy has stalled over the last three years and become far too reliant on the resources sector, especially global demand for minerals.  But that’s why it’s so odd that Australian politicians are bickering over deployment of one of the few sure-fire economic drivers all around the world – broadband! And it would even support employment. 

The highly emotive political row revolves around not only the funding but also fundamental questions about immediate consumer demand for a new type of television in the still linear world of Australian TV.  

Part and parcel of the value of any NBN value is the unprecedented speed of access (100 Megabits per second) and interactivity that the full-blown service provides to telco service providers of all kinds, businesses, emergency facilities, schools, home offices and government offices.    

The Nub of the argument is whether the Australian consumer wants his “Broadband TV Now!” at optimum speeds (admittedly at a premium cost) or if he (or she) is willing to wait up to a decade while the rest of the developed world surfs the flood of the digital content and distribution? 

The reality of profoundly altered TV audience expectations underpins everything, even as both sides of the Australian political debate ignore those profound changes in audience behavior across the world. 

Linear TV (plain old TV networks of all kinds) is quickly evolving as little more than a barker channel for high-value on-demand content in all its shapes and sizes. And it’s about more than demands for uncensored day-and-date global releases of “Game of Thrones” or other megahit shows. 

While audiences are consuming more content than ever, they want it now and where they say they want it, and that’s “Everywhere!” 

Just as in China and Taiwan, the normally massively profitable Australian free-to-air networks (especially Nine, Seven and Ten) have seen catastrophic falls in their revenues and audiences. Local pay-TV operator Foxtel would seem to have hit a penetration plateau of no more than 35% of all TV homes after almost 20 years in business, even though a strong ARPU of about US$120 per month continues to inch upwards thanks to sophisticated management of sports and movie rights, plus a growing on-demand revenue stream.         

The prevailing evidence suggests that viewers are dissatisfied with the current TV offerings of all kinds and they want something new.  And many of them are now tasting the fruits of the high-speed Internet, even if few have experienced 100Mbps. 

Most consumers (especially the younger, the tech-aware and the well-travelled) have heard tell that TV choices are much, much broader and deeper in the US, the UK, Korea, Singapore and Japan.  Even China now has a greater range of on-demand TV than Australia. 

Yet funding a bottom line of a quoted US$40 billion to be spent by government (for that has been everyone’s promise!) over a period of more than 10 years seems to be just too much for the politicians to swallow despite the proven economic benefits that come with broadband (apparently something largely unexamined in an Australian context).

And now the Liberal Party political opposition reckon they would rather slow things down and roll-out the Australian NBN to the node with the last mile delivered by via telco Telstra’s aging copper network. Telstra, by the way, would be paid as much A$1 billion for its aging copper connections over a period of up to 20 almost years. 

However, contrary to Australian Liberal party promises of “jam tomorrow” it’s clear that consumers would support significant state investment in high-speed broadband (maybe topped-up by monthly premiums) provided they see definable value. Ask any administration in the US, European or developed economies in Asia. Ask them in Japan, Korea or Singapore. That’s the model these markets have adopted. 

In any event, as things stand the Australian NBN should be set to roll out across Australia’s vast geography with satellite and fixed mobile networks filling in less than 10% of the gaps where it’s too much of a stretch to connect cities, towns and communities with copper or fiber. 

Legally binding contracts have been signed and will be fulfilled whatever the detailed outcome of the on-going negotiations between government, the already operating beta mode of the Australian NBN and the dominant telco Telstra. 

And don’t forget that UHDTV (Ultra High Definition TV), a super high quality video stream (yep that’s broadband!) is way superior to the current offerings and will be soon just around the corner at a TV store near you. 

Audiences really do want to be able to access (and legally download and up-load) their favorite programming (as complete series) from their chosen recorded home libraries as and when they want. 

Series ownership (which was until recently was reflected by robust sales of DVD box sets in video chain stores) is the new “must have” in high-speed digital format, yet again now. 

The Australian consumer (like everyone else) wants his broadband TV – and he wants it now! 

Building broadband networks for yesterday and not for tomorrow, just won’t work.