IT's just not good enough
- Brad Howarth
- 28 May 2009
If you grew up with mono television, would you really understand why stereo was so much better until you heard it yourself? Or how about 5.1 surround sound?
The same analogy can be cast for much of Australia’s information infrastructure. We hear every day that our broadband fails to stack up in global terms, that our mobile charges are too expensive, and that there is no money to fund start-up companies, but do we really have it that badly?
Many of the things that we take for granted today – such as internet banking, mobile telephony and email – were barely known of just 20 years ago. All of them depend on a web of interwoven infrastructure, from internet standards to payment and billing gateways, right down to the networks they run on.
So let’s look at where it stacks up and falls down.
Broadband
Broadband networks have become a political football in Australia, to the detriment of consumers. But if broadband speeds and access are an important component of future competitiveness, the figures do not look good. According to numbers released by the OECD, in December 2007 Australia ranked 16th in number of broadband subscribers per 100 inhabitants, with 4.83 million households connected.
The Government’s proposal is to contribute $4.7 billion to the construction of a national broadband network (NBN) using fibre technology that would provide download speeds of 12 Megabits/second or greater, to a minimum of 98% of Australian homes.
This makes it Australia’s largest single infrastructure investment; but according to an analyst with broadband comparison site Broadband Experts, Rob Webber, we are not alone in upgrading.
“In the US, president Obama has recently unveiled the first stages of plans to spend US$8 billion to improve broadband networks, while in the UK internet provider British Telecom has said it will invest £1.5 billion in a new high speed fibre optic network that could reach speeds of up to 100Mb,” says Webber.
Our Government’s proposed speed is laughable compared to commercial networks elsewhere in the world that look to be delivering speeds of 100 Mbits/second and beyond, and Webber says the UK already has 99% coverage, albeit within a smaller area.
However, he says the speeds and prices of Australian services are not too far out of line with global comparisons.
“Starting prices for home broadband in Australia and the UK are around $10 [a month] ranging up to $37 in the UK and $49.95 in Australia,” says Webber. “However, the Australian plans have strict download limits, unlike many of the UK plans. The US also offers unlimited broadband plans, but the speeds for the top five are comparatively slow compared with Australia and the UK at 1.5 – 6 Mbits/second for between $31 and $46. One US home broadband provider offered up to 20 Mbits/second, but the cost was $93 a month.”
In many parts of the world the deployment of high-speed networks has been by telecommunications carriers and coupled with services such as internet television, as a means of recouping their investment in direct challenge to cable television operators. In Australia, however, the largest telecommunications carrier also owns 50% of the cable television network, reducing the chances of a competitive challenge.
While the national broadband network rolls on, Telstra has announced that it is upgrading its hybrid fibre-coaxial network in Melbourne (the cable that carries Foxtel) to deliver speeds of 100 Mbits/second in time for Christmas 2009. The company says it will spend more than $300 million on upgrading the cable network this year.
Mobile networks
At the recent Mobile World Congress event in Barcelona, it was hard to move without running into Telstra chief executive Sol Trujillo spruiking the upgrade of his company’s Next G network to deliver data at speeds of up to 21 Mbits/sec.
Telstra is the first company in the world to upgrade its network to this speed, and Trujillo has talked about taking it to speeds of 42 Mbits/second before the year’s end. Competitors have not been so quick to follow suit. Optus, for example, operates part of its network at 7.2 Mbits/second, but has not announced a roadmap to go faster.
Australia’s world-leading position is likely to be swiftly lost next year as operators elsewhere migrate to the next generation in mobile networks, based on a technology called Long Term Evolution (LTE ). Also known as ‘4G’, LTE promises speeds of well beyond 100 Mbits/second, and network operators in Japan, the USUS and Europe have begun discussing trials of the technology ahead of commercial deployments in 2010.
What we currently gain in performance, we lose in price. According to Webber, Australia has an expensive pricing regime for mobile data, with carriers usually charging high rates for usage above that cap. This contrasts to the US in particular, where many carriers offer unlimited data downloads. However, we do fare somewhat better in terms of mobile data speed than consumers in the US.
“Of the five best mobile broadband deals currently quoted on our Australian, UK and US websites, the UK offers the fastest speeds in its top five and the US offers the slowest selection currently,” says Webber. “The US mobile broadband costs are higher than the UK and Australia for much slower speeds.”
Computers in schools
A clear key component of Australia’s future is our ability to equip the next generation with the skills and tools they need to take advantage of the new opportunities that technology is delivering. The Digital Education Revolution has promised to get laptops into schools, but it is what students do with them that is critical.
Damian Anderson, the principal at consulting group Acceleration, believes that Australia’s K-12 eLearning content is up there with the most innovative in the world, thanks to ongoing investment at a state and federal level. He says Acceleration worked on the first state pilot of eLearning content creation in Tasmania around 1999 and then worked with the Le@rning Federation Initiative, which has spent approximately $250 million over seven years developing content, software infrastructure and skills to support the online delivery of learning to students in all states and territories.
“We have a fragmented curriculum structure [across states] and a socially and geographically diverse society, so our schools education sector has needed to find ways to use technology to engage kids in the classroom while managing the practical and political pressures,” says Anderson.
Competition for work in the future will be stiff, however, and the APAC education director at Adobe Systems, John Treloar, says Singapore and Malaysia both realised much earlier than Australia that a student needs 21st century tools across all areas.
“If you visit a school in Australia, the use of technology is limited to electronic whiteboards, and the use of 21st century tools such as multimedia, publishing by students, and so on, is limited to special multimedia and design classes,” says Treloar.
Online banking and financial services
Online banking and payments are already critical to Australian small business, and have become a key component of international competitiveness. But it’s no surprise that other markets are investing heavily to modernise their financial processing infrastructure.
According to the managing editor of Online Banking Review, Charis Palmer, Australia’s banks have traditionally been years ahead in online banking services. Online banking usage in Australia is very high, as is satisfaction, and she says we’re now seeing more banks move to offer mobile banking as they respond to customer demands for banking on multiple channels.
“For mobile banking to really take off, banks will need to address the issue of mobile payments,” says Palmer. “European markets have generally been better at this, but it is a challenging proposition to get banks and telecommunications companies to work together so that any payments offering works with multiple banks and multiple handsets.”
However, she says security for online banking has started to lag as mandates around the world force banks to improve their security.
“The chip and PIN project in the UK meant UK banks were able to offer card readers for securing online banking transactions – much stronger security than the one time password tokens or SMS offerings we see in Australia,” says Palmer.
Another area where we are lagging is in our payments infrastructure, especially in comparison to the UK, where the faster payments initiative has delivered real time, straight through payments. Australian systems by comparison require payments to be processed overnight and are delayed by weekends and public holidays.
Research and development
Australian IT research and development received a sharp wake-up in January 2009 with the publication of the 2008 OECD Information Technology Outlook, which showed that business research and development for information and communications technology (ICT) goods and services went backwards as a share of gross domestic product in Australia.
Part of that slack is being made up by public sector institutions. Although small in comparison to Europe and the US, Australia has a healthy research and development community in information technology, led by the CSIRO, NICTA and various cooperative research centres.
According to the head of the CSIRO’s ICT Centre, Alex Zelinksy, the amount of ICT research undertaken in Australia may be lower than the OECD average, but the quality of the research is high and well respected.
Zelinsky says CSIRO focuses on areas where it believes it has global competitive advantage, such as wireless communications (where it is involved in a lawsuit against giants such as IBM over patent violations), networking technologies, information systems and automation systems.
According to the chief technology officer at NICTA, Chris Nichol, Australia has isolated pockets of excellence in its ICT innovation system.
“We need to get resources behind our innovative companies, entrepreneurs and researchers to help them succeed,” says Nichol. “Thinking in terms of national core competencies enables us to grow capability that drives strategic competitive advantage.”
Innovation programs and venture investment
A critical area of growing Australia’s information future is our ability to produce home grown technology companies that can both generate revenue and jobs, and provide innovative reasons to attract and retain the best talent.
But it is a sector that was kicked in the teeth last year when the Government cancelled the Commercial Ready program. Twelve months later it has still not provided an alternative, despite commissioning the Cutler Report on innovation. Many start-ups relied on Commercial Ready to fund crucial research and development programs, and its cancellation has set some back by 12 months or more.
Serial entrepreneur Jonathon Barouch is critical of Australia’s lack of incentives for start-up businesses. He says the whole business culture of supporting entrepreneurs that occurs in the US seems to be lacking in the Australian psyche.
“In the US and Europe there are programs to help with training as well as tax incentives for SMEs and start-ups to encourage entrepreneurs,” says Barouch. “In Australia, policy makers seem to be determined not to extend any preferential treatment to start-up businesses, which is a real shame.
“In times of economic downturn, SMEs and entrepreneurs may prove the key in increasing employment opportunities for Australians.”
Access to venture capital has also been constrained, thanks in part to the poor performance of the superannuation funds that back them. According to investor and chairman of the IT think tank The Pearcey Foundation, Wayne Fitzsimmons, the number of new early-stage companies has diminished as entrepreneurs come to believe that raising capital will be too difficult.
Fitzsimmons says that only four venture capital funds remain interested in early stage IT companies in Australia – Southern Cross Ventures, Starfish Ventures, Innovation Capital and CM Capital – in comparison to the many dozens operating in the US.
While government funding is available through the Innovation Investment Funds, this still requires matching funds to come from the commercial sector.
“And so the cycle continues, exacerbated by the global financial environment,” Fitzsimmons says. “On the positive side, the research and development tax refunds/credits available to hi-tech SMEs continue to materially assist those entrepreneurs game enough to have a go. As well, there are Angel funding groups in most capital cities in Australia and they continue to invest in early stage companies.”
Conclusion: must try harder
There is plenty of evidence to suggest that countries that invest in their information infrastructure reap future benefits in terms of more prosperous economies. According to the telecommunications analyst Paul Budde, it is not surprising that many of the economic stimulus packages being crafted to lever countries out of the economic crisis include information infrastructure.
“There has been a clear shift – notably in the US – towards the importance of telecoms infrastructure in relation to that national economy and society at large,” says Budde. “This is leading to the concept of trans-sector thinking, where you multiply the economic and social benefits of this sort of infrastructure investment in terms of e-health, tele-education, smart grids, smart buildings, and smart cities.”
Budde believes that if the Government can get the NBN implemented effectively, we will be one of the first countries that can link a vision for trans-sector thinking with the infrastructure needed to make it work, leading to greater productivity and prosperity across many sectors of society. A big if – but also potentially a big payback.
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Government Report Card
Broadband: C
Comment: “Our Government’s proposed speed is laughable compared to commercial networks elsewhere in the world that look to be delivering speeds of 100 Mbits/second and beyond.”
Mobile: A
Comment: “Australia’s world-leading position is in danger of being swiftly lost next year as operators elsewhere migrate to the next generation in mobile networks.”
Computers in schools: B
Comment: “If you visit a school in Australia, the use of technology is limited to electronic whiteboards, and the use of 21st century tools is limited to special multimedia and design classes.”
Online banking and financial services: B+
Comment: “Online banking is very high, as is satisfaction, and we’re seeing more banks move to offer mobile banking.”
Research & Development: B
Comment: “We need to get resources behind our innovative companies, entrepreneurs and researchers to help them succeed.”
