Prime Minister Kevin Rudd has scrapped the broadband tender process in favour of forming a public/private company to build and operate a massive broadband fibre to the home network which will cost over AU 40 billion dollars. And I love it! As long as Telstra has absolutely no control over it!
Ivor Ries, an analyst with EL and C Baillieu Stockbroking thinks that few will pay the premium price for this service and that we do not need the kind of speeds (100 megabytes a second) that this proposal provides. He is not alone, many analysts feel the same way. Currently the average Australian home pays around $40 per month for broadband (add line rental etc) with very limited download caps. The new broadband offering will more than likely come in at around $70 per month.
Most of these analysts do not really understand the way these things work. Yes on the surface $70 per month is too way much, but think of no line rental – as this proposal is fibre to the home and business not node. Also think of additional services, no download caps, local and national calls included and you start to see things differently. Many companies will also create their own long range wireless networks (WIMAX) allowing them to offer broadband within a 20km radius of their business to their staff and executives.
The private sector will come to the party with additional offerings and we will no longer be held to ransom by Telstra which costs Australian billions of dollars a year in additional unnecessary charges, just because they can.
Think about a broadband telco and the future offerings – we will call our new company Onetel. Onetel will offer:
- 100 Megabytes per second download speeds
- Unlimited Downloads
- Unlimited Local and National Calls
- No Line Rental
- 50 TV Channels + ability for users to create and share their own local and community TV channels
All of the sudden the price sounds a lot more attractive. The dumping of line rental fees will save Australians billions of dollars per year and innovation will allow us to do so much more at 100 megabytes per second speeds.
Think of real estate video, IPTV (Internet TV) and video streaming becoming common place and portals becoming conduits for a wide range of data and services.
History also tells us that download speeds will continue to rise as innovation squeezes more and more out of fibre broadband, current ADSL2 comes in at 24 megabytes a second, from a start of around 256k.
If the 100 megabytes comes in at a maximum over the same period we could expect at least 1 gigabyte a second out of this fibre within 10 years. It also means companies such as Fairfax, News Ltd, for that matter any company can also get involved.