Strike up the (broad)band

Joshua Gans has released a new discussion paper. Unless someone printed out this blog for you, you’ll probably be interested in what he has to say.

I have come to the conclusion that, given the constraints we face today, that the debate is all wrong. Put simply, the whole idea that we need a national solution to broadband is misplaced. The constraints are all in the last mile and hence, from a supply perspective, we need lots of local solutions. Moreover, the uses for broadband are primarily social rather than content driven. Once again, since social interractions tend to be local, so demand for broadband will likely vary from location to location.

There are many implications of this. First, no universal service obligation is required for broadband. Second, we can just ignore Telstra. If the investment does not need to be national in scale then we don’t need Telstra’s national presence. Smaller companies can do the job.

The paper, entitled “The Local Broadband Imperative: Appropriate high-speed Internet access for Australia” is here.

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3 Responses to Strike up the (broad)band

  1. Mark says:

    This is more a technical issue, but it is interesting to read that the constraints are all in the last mile. Doesnt the rate at which servers in the United States can transfer outbound traffic, and the distance between Australia and the United States have an impact on transfer rates and response times here?

    If response times are an issue (which they are if you play a lot of counterstrike), wouldnt a better way to address this be to move Australia closer to the United States somehow, possibly by using a series of nuclear explosions – similar to the ’tilt Australia’ campaign run by the chaser on CNNNN a few years back?

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  3. MikeM says:

    Mark is right. The constraints are not all in the last mile by any means.

    I have an ADSL2+ service from iiNet which is nominally 12 Mb/sec, although if I upgraded the router it would be nominally 24 Mb/sec, all over a plain old local telephone line.

    The thing to be aware of is that broadband is often not very broad. I occasionally see my link operating at full 12 Mb/sec when downloading files from local servers, but, due to network latency and bandwidth capacity of sites’ web servers, it is unusual to see faster than 5 Mb/sec. Broadband is magic for downloading software updates, video files and large PDFs but makes less difference than you might think to web browsing. On most browsing, Windows Task Manager clocks network throughput at rarely more than 1 Mb/sec.

    I am getting 29 millisecs turnaround time to a site in Melbourne (on dial-up it would have been about 70 ms) and currently 235 ms to Google (on dial-up, used to be about 290). UK sites are typically more than 300 msec. Whatever you do, signals take time to cross an ocean, even through fibre cable.

    I’d never want to go back to dial-up (which is basically no cheaper for substantial users once you take the phone call costs into account) but don’t expect more with broadband than you will actually get.

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