It is interesting to see opposition communications spokesperson Malcolm Turnbull regularly using the South Korean broadband example in his criticism of the NBN.
Turnbull is absolutely correct in his conclusion that high-speed broadband penetration in South Korea, and Japan also for that matter, has slowed down.
This is clear proof of the claim that supply alone does not create its own demand, regardless of price. BuddeComm has been saying this since 2005 and that is why we have always said that in order to build a successful high-speed broadband network you need to work on both the demand and the supply side.
We have called this the trans-sector approach.
We have not only used the situation in Korea and Japan. We have also pointed, for example, to the Fibre-to-the-Home (FttH) network problems in the Netherlands and the USA. They face similar significant problems because in those countries also there is no trans-sector strategy underpinning these investments.
It is therefore very pleasing that in Australia the NBN is linked to a trans-sector policy — which is clearly stated in the recently launched National Digital Agenda. Already changes have been made to healthcare legislation that for example allow for e-health identifiers and for video-based medical consultations to be covered by Medicare.
The Smart Grid/Smart City project also opens the door to using the NBN and there are at least another dozen smaller trans-sector projects linked to the NBN first release sites.
However, at the same time we strongly believe that far more is needed to ensure that we do not end up in a similar situation as the countries mentioned above, and concerns remain about the lack of active involvement of NBN Co in these developments.
Interestingly, South Korea itself is well aware of the situation. We had first-hand discussions on this topic with Dr Kim Seang-Tae, the chief architect of the Korean FttH network and the President of the National Information Society Agency of South Korea and, as we reported in 2010, the South Korean government has set up a Presidential Committee for e-Government. This committee is developing policies that will see a range of trans-sector services being made available over their high-speed broadband network.
The government of South Korea has made the strategic policy decision to start building its broadband network on a ‘build-and-they-will-come’ basis. Of course, South Korea has based this on the unique policy and investment decisions it made as long ago as the late 1990s. The reason for doing this was to give its telecoms and electronics industries a head start in this new industry – and Korea has certainly achieved enormous success in this field.
The cost-benefit analysis for the significant investments that the South Korean government has made in its broadband networks was structured around the economic benefits of its broadband network – it was not based narrowly on the total amount of subscription fees that are paid to its telcos. The government, in its own words, ‘has built an entire value chain from equipment design and manufacture to applications’. South Korea sees this as nation-building and is proceeding in a way that fits its culture, economy and political situation.
Without the vision of the government in the 1990s South Korea would never have been able to build the successful electronics industry that it has today. Its vision involved a perception of broadband as national infrastructure, and recognition of the fact that further elements would need to be adjusted along the road — and that is exactly what is now being done.
Comparing South Korea with Australia — or, for that matter, a comparison between any two countries — is futile, since political, social, economic, geographic and environmental situations vary so widely. This is also the viewpoint of the ITU/UNESCO Broadband Commission for Digital Development, the OECD and the World Bank. They all advocate that we should learn from each other but not copy each other. South Korea has most certainly been a leading case study for countries developing their own national strategies; and now the world is watching Australia.
One important lesson that everybody has learned from South Korea is that without government leadership — dating back to the 1990s — South Korea would never have been able to create the high-speed broadband market that it has today.
*Paul Budde is the managing director of BuddeComm, an independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries. This article was first published on Technology Spectator.
A most insightful analysis, Paul. It’s a pity that Turnbull & Co don’t respond directly to your comments. This about Nation-building as well as company-building.
Korea’s motivation for being a pioneer in installing high-speed comms at home is an industry-development strategy that has also been adopted by China, Japan and Germany in the solar PV panel industry- ie a legitimate way around the WTO regulations forbidding subsidising of exports.
The WTO is silent on domestic subsidies- it’s the province of governments to allocate and re-distribute domestic resources according to local political and social philosophy. So the trick is to subsidise local consumption of industries that are likely to become exports later. It’s even easier when the government owns the particular market and can readily obscure real costs.
In the case of Australia and the NBN, we have to rely on analyses that the direct and spill-over benefits of users will justify the installation costs, as we are unlikely to be exporting any NBN hardware.
Similarly, PV panels have to justify their purchase in Australia on the basis of energy savings or reduced greenhouse gases, as, unlike China, Germany and Japan, we have no substantial PV manufacturing industry- although we probably could have had one if we had seized the initiative 20 years ago when we were leaders in the-then small global market. Garnaut has had to appeal to “fair-share” arguments to justify early purchase of PVs.
Australians are generally unfamiliar with WTO- work-around industry strategies because we have relied on resources exports where, for the most part, straight-forward commercial decisions prevail.
If we were a clever country, we would be leveraging the IT and logistics systems of the resources industry to create new industries for the next decade. I doubt whether we have the political nous to the left or right to do that any more.
John Button- where are you when we need you most?