$43B High Speed Internet to the Home wrong priority

Here we go again. Labour loves big projects. So they have decided that the $10Bn they were going to spend on a national high speed broadband Internet network just would not cut it.

They threw out the tenderers’ submissions as inadequate. Wouldn’t you be miffed after spending all that time and money submitting a quote?

No matter. The government has calmed the waters by telling them all the government will now spend up to $43Bn instead! And they could all have a share. “Ruddnet” as it is being called, is hoping that private money will chip in at least 50%.

The private tenderer’s are rubbing their hands with glee because they will now have a much lower cost of entering the high speed Internet world and it will be built for them by the tax-payer.

The US is planning a similar high speed network under the Obama US Broadband System Plan. But it seems more to make more economic sense and is targeted.

“The $6bn would be used to build wired and wireless broadband infrastructure systems which would bring Internet services to rural communities and other areas which US Internet providers have yet to reach.”

There is no economic rationale to bring 100Mb broadband to the home of 90% of Australians. Here is a nice bit of political-speak in the article, “Australia unveils $43Bn broadband plan“,

“Like the US, Australia contains large stretches of sparsely populated land through its interior which makes the deployment of broadband networks challenging for private telcos.”

That’s political-speak for its uneconomical and should not be done using borrowed money to build a very expensive high speed broadband service.

Internet World Stat show that of the 20 million people in Australia, there are 15 million Internet Users. So based on that I’d say there are plenty of takers and the consumer market is well established.

15 Million Australian Internet Users out of a population of 20 million

I don’t know about you but much of my Internet searching is done in the US. I’m wondering how quick that link will be. Remember if you complain to your ISP about slow Internet connection they will tell you to run a test to their server, where you initially connect. That connection will be fast. If that is performing they will tell you, you do not have a problem.

The fact that you don’t want to just look at information on their web site is not relevant.

Where is the tax-payers economic benefit especially right now in the middle of a major economic crisis in spending $43Bn over the next 8 years to allow those same tax-payers to access the Internet faster at home to basically play games, buy heavily discount products, send email, chat, twitter and surf, which is all many of them do?

(Okay I know many are downloading music and sharing it across the Internet and downloading movies illegally too and it is eating up the bandwidth. So maybe that’s the reason for spending $43 billion.)

Don’t forget that our government is going to censor the Internet to selectively stop you watching sites it deems inappropriate. The first western nation to do so. It has been said that the mere act of doing this could slow the Internet speed down by 50%.

So we are going to pay $43Bn to get a high speed Internet access to our homes which is going to be censored and slowed down by up to 50%. That makes even better economic sense 🙁

Ah but we will be employing 25,000 to build this network. My calculator doesn’t do Billions but I found a way to calculate how much each worker will cost the tax-payer, $1,720,000 per full-time worker. “Australia unveils broadband plan” states,

“The government estimates that the network will take more than 8 years to build and require roughly 25,000 full-time workers over that period.’

Australia need fast Internet services for business first and foremost. But private companies can do that at their cost as 90% of businesses are in the major cities.

$43Bn if it has to be spent and I don’t think it does right now, should go to building up Australia’s transportation system, its roads and even more important a modern train system. Build a modern airport between Sydney and Canberra and have high speed train services running to it. That would make more sense.

When all those consumers get their high speed Internet services and buy all those “physical” products how will they be delivered efficiently if we don’t have a modern transportation system? Seems to me we have the cart before the horse here.

Who will benefit from this high speed Internet? Forgive my cynicism but it is being built for the benefit of the big telco – Internet Service providers. The big guys want to get out of the current Internet pool to the high tech, higher cost barrier to entry services, like high speed real time paid for movies, and other paid for and licenses services. FoxTel on Internet and the like because that’s where the money will be. The operative phrase here is “paid for”

If 15 million of us are prepared to pay high dollars for capped simple Internet service we get now, how much more will we pay for Internet movies to our homes?

One last thing. We are going to have to borrow this money as we are spending massive amounts of money on stimulus packages. Our government projects they will be $220 million in the hole before this crisis is over. I assume $43Bn is just being added on to that?

Borrowed money means interest payments. Interest payments means more taxes if governments don’t cut expenses and their size. All these means it will be much harder for private businesses to borrow money to grow their businesses as they compete for money with the government. That can only mean slower growth of private business.

All this because the government doesn’t like Telstra and wants to set up its own network. Wow I’d hate to upset them!

All this borrowing and spending must affect your nest egg investment returns and it will surely take a lot longer to recover any losses.

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