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Bronwyn Howell authored an important commentary in Cartt.ca with “Lessons from Australia’s national network mess.” Based on observations about Australia’s broadband and mobile markets, she warns that politicizing Canadian telecommunications regulation is a bad idea.

Australia appears to be a simple counter example to Canada, with similar population density and geographic challenges. However, the political interventionism in Australia’s mobile and internet markets should serve more as a cautionary tale than a gold standard.

Like her recent piece on the AEIdeas blog, “Upping the political ante in mobile markets: A cautionary tale from Canada” (the subject of my post “A cautionary tale of political interference“), Dr. Howell warns that we should be concerned when “politicians usurp the role of regulators and start making matters of regulatory purview the subject of election campaigns.”

Advanced communications infrastructure is too important to be abandoned to the vagaries and short-term agendas of the political process. Australia’s failed NBN experiment is stark reminder, for Canadians, of how expensive this trade off can be.

Paul Burbank at Faskens wrote an article (see: “Calling All Voters – Be Wary of Wireless Promises this Election Season”) that sums up the election hype over mobile prices: “Affordability has become a central theme in this campaign and cheaper wireless makes for great politics. But great politics doesn’t always translate to great policy.”

Providing broadband in rural and remote areas isn’t easy. If it was easy, we wouldn’t have needed billions of dollars of government incentives directed to improve access over the past decade.

It comes down to economics. On a per customer basis, it is costlier to connect rural homes and distances mean that it can take longer to install and service these connections.

No single technology can be relied upon to deliver broadband internet to everyone. The biggest challenge is in delivering service in markets with extremely low household density.

For wireline based services, there is the cost of running cable. With the greater distances between rural households, these long cable runs – with costs measured in dollars per foot – can lead to initial placement costs that simply cannot be recovered from monthly service fees. And that assumes the distances even permit a broadband connection. For many households in rural markets, a wireline connection simply isn’t practical.

When wires aren’t economic, fixed and mobile wireless can be effective if there are enough households within the reach of the base station. These solutions use spectrum; more customers and higher speed services need more spectrum. That is why reports about this week’s results from the 2500 MHz spectrum auction have referred to rural consumers being the big winners.

But there are still some residences that cannot be served by conventional wireless technologies and the only viable solution available today is satellite. New fourth generation satellites are able to provide broadband speeds that can deliver two-way video calling and streaming media. While there is a longer latency – it takes a quarter second for a signal to go up and down to a geo-stationary satellite – satellites enable broadband connections for households that are beyond the reach of terrestrial technologies.

Other countries have recognized the role of satellites in providing broadband access for rural markets. Despite massive levels of government subsidy, satellite and fixed-wireless are part of the solution for universal broadband in Australia and even the UK.

In February, I wrote about the common misinformation about Australia’s NBN as a universal fibre to the home initiative. Last year, I wrote about an interim report from Australia that showed that after spending more than $7B, only 260,000 premises had access to fibre with only 78,000 subscribers – a cost to taxpayers of nearly $100,000 each. In the UK, despite far greater population density compared to Canada, “Superfast Broadband” includes satellite for rural markets: “The Government will be working with local projects and suppliers to launch a scheme which will offer people with less than 2Mbps broadband services the option of taking up superfast capable satellite service”.

One technology simply doesn’t fit every application.

On June 3, Xplornet President and CEO Allison Lenehan will be talking about delivering advanced services to rural Canadians at The 2015 Canadian Telecom Summit.

Have you registered yet?

I noticed that Australia is continuing to press forward with its government-led NBN project, pumping about AU$36B of government funding into a project that hopes to have fibre to the home for 90% of the population.

The NBN plan is said “to promote sustainable retail-level competition, and fair pricing of wholesale services for all Australians.”

What is meant by fair pricing? $36B works out to about $5000 per household in upfront spending. That upfront government cash adds about $50 per month to every Australian households’ tax burden. Korea’s national broadband network is also the result of massive government involvement.

When looking at international broadband pricing, should comparisons include these hidden costs?

The business plan for Australia’s National Broadband Network was released and it confirms that Canada is $41B and a decade ahead [pdf, 3.4MB].

Once the government invests $27.5B in equity and raising a further $13.4B in debt, in the year 2020, Australia will still have 3% of its population served by satellite-based broadband service with an additional 4% served by fixed wireless service. That is 7% of the population that won’t be reached by wired facilities after 10 years and more than $40B.

At last month’s Obligation To Serve hearings, we heard considerable discussion about how to reach the final 5% of Canadians who are beyond the reach of telco or cableco facilities.

John Maduri of Barrett Xplore criticized a proposal to create a new $7B fund for Canada:

7703   Instead, MTS would prefer you ask them to spent $7 billion on wires. The sad part of their proposal is that even with a $7 billion of wires, you will probably still need a satellite to fill in the inevitable gaps in coverage.

7704   I point to the Australian example again where with $40-plus billion to get to 90-plus percent and the balance even with that significant investment, [there is still] the need for satellite and wireless.

The NBN business plan confirms these statements. We have a vast country with many people choosing to live in sparsely populated areas. The private sector is continuing to invest in network upgrades to meet evolving demand.

In the new year, I would like to see the focus on the 20% of Canadians who don’t own a computer. As you have read on these pages [eg. here and here], I would like to see a connected computer in every household with school aged children.

I have thoughts for how this can be done in a competitively neutral manner.

Who wants to join the campaign?

Too many people have focussed government attention on intervening in the supply of broadband facilities. Let’s face it, it is easier to look at a dozen or so suppliers to gather information and figure out who should receive a cheque to help direct their investment in broadband facilities.

On the other side of the equation, it is hard work to stimulate demand. But this is precisely where our efforts should be focussed, as was recommended by the Berkeley Research Group (the report I discussed on Friday).

A series of stories are coming out of Australia that reinforce the need to focus more attention on broadband demand, rather than supply.

Our friends down under are realizing that the $40B National Broadband Network needs to do more than just install infrastructure. An editorial is questioning the business case and another article indicates that many homes being offered free connections still aren’t signing up for service. In fact, a majority just don’t get it.

The preliminary indications are that the NBN could be a field of nightmares – what if you build it and nobody comes? The lesson is that infrastructure is a necessary, but insufficient prerequisite for a digital economy. At some point, we must turn our minds beyond the electrons.

According to CRTC figures, there are around 8 million Canadians who don’t have broadband. Consider that one in five Canadian households does not yet a computer. How many of these households are likely to suscribe to broadband?

As the CRTC begins its hearings in Timmins today, there will be some groups calling for the CRTC to continue to intervene in the supply of broadband infrastructure.

Improving broadband adoption doesn’t need government intervention in the plumbing end of the business. Service providers are investing plenty of money to make sure the pipes are in place.

What we need is help in getting more people to drink from the broadband faucet.