Broadband: a consumer luxury provided by the market, or infrastructure funded by the government?
This week in New Zealand a report commissioned by Telecom, Vodafone and TelstraClear said it was doubtful there would be demand for the high speeds provided over the fibre-to-the-premises network envisaged by the Government. For more details see this Stuff.co.nz article. Conversely The Guardian in the UK tells us that British Telecom (BT) will spend £1.5bn rolling out the sort of fibre-optic network needed to achieve the speeds common in Korea and Japan to10 million homes over the next four years. There is clearly a stark contrast between New Zealand’s high-speed aspirations and that of the UK’s, Korea’s, Japan’s, and, no doubt, many other countries.
There is a significant cost in deploying a full, high speed service to a country; the £1.5bn being spent by BT is an order of magnitude, and then some, lower than the total bill estimated to be between £5.1bn and £28.8bn. However, relying on supply and demand economics as an indication of requirements, for this type of service, seems to me to be unrealistic. Ten to 15 years ago we did not know we needed the Internet, but now as my new born baby sleeps and we shop online I know I need it. History is full of similar examples, from seat belts that were not needed in the 70s, to the education of children in Victorian times. These later examples, I agree, are a little emotive, but I think the argument is worth making that for many people there are things they don’t know they need, and without the opportunity to trial and understand them, they will never demand them.
Anyway… time will tell if the demand does exist and in a few years we can look to the UK, Korea and Japan to see if they or we got it right.
