To Benson,
This may change your mind.
NBN and productivity.
Faster & Smarter Communications
Keeping up with world progress demands faster and smarter communications these days, and this is coming (belatedly) to our nation via the National Broadband Network (NBN) and other private sources (wireless and satellite) during this decade. High-speed broadband, coupled with advanced software and analytics, constitutes what IBISWorld terms a new utility: a major enhancement of the information and communications technology (ICT) utility underpinning our New Age, which began in the mid-1960s and is likely to run for several decades yet.
Australia, like other developed economies, has had a number of utilities over the past several centuries that have made the running of business, households and governments easier and more productive. Their emergence is illustrated in the following exhibit.
The second chart shows the nation’s changing mix of industries as it moved through the above four ages. The colour code highlights the dominant sectors in each age being the primary, secondary, tertiary, quaternary and emerging quinary sector.
The nation’s standard of living has climbed spectacularly through these ages of progress as the next chart shows so clearly, punctuated as this journey has been by four depressions – the last one ending in the 1930s.
But there is a worrying degree of ignorance or regressive thinking when it comes to the role of high-speed broadband in Australia’s future economy and society as we progress through the rest of this new Infotronics Age.
Perhaps being in the midst of the ongoing global financial crisis, yet carried along by a relatively debt-free economy (courtesy of the Howard–Costello reign for 11 years to 2007) and a minerals price boom, has lulled us into a false sense of security – a feeling that high-speed broadband could be an extravagance. The fact is: it isn’t a delete option for a progressing nation.
The NBN is intended to make available fast broadband (up to 100 megabits per second) to nearly 10 million households and 1.8 million businesses by the end of this decade. Yet South Korea already has broadband available at 10 times that speed (1 gigabit per second) to households and businesses; Singapore will too, next year, and some European economies are close behind that achievement.
Some say we don’t need those speeds and capacity! Seems like the statement that dirt roads were adequate in the 1950s: why have sealed roads or multi-lane high-speed freeways and toll roads? The naysayers need to think again: broadband is considered by the United Nations to be a human right and a core indicator of national wellbeing.
Some see the NBN as a huge and wasteful expense. This absurd claim is made by too many, again out of ignorance or for political point-scoring. The fact is that the existing sunk cost of all telecommunications in Australia is currently $70 billion, much of it antiquated. At some $36–$37 billion over seven years, or $5 billion per annum average, the NBN investment amounts to just depreciation allowance spending on that $70 billion – hardly excessive or over the top.
In the process, the ancient copper wire gets replaced by new age telecommunications. If some of the money is wasted, it is well to remember that is normal for most large-scale projects, be they public or private – witness desal plants, toll roads and other recent projects.
IBM Australia was sufficiently concerned late in 2011, as a global ICT giant, to ask the question: where to in this century with broadband?
The result is a completed 153-page report entitled A Snapshot of Australia’s Digital Future to 2050, researched by IBISWorld and now available free from the IBM website. It covers the impact of high-speed broadband (and related adjuncts such as cognitive computing, analytics and online intelligence) on society, business and government, terming this new arsenal of tools Australia’s ‘new utility’ – as historic and game-changing as electricity and telephony.
The report suggests that high-speed broadband is essential for Australia’s economic growth, will address our ongoing productivity decline, secure our longer term prosperity and transform every aspect of Australian society: our industry, our lives, our cities and the way we interact.
The report predicts the nation’s GDP will climb from $1.5 trillion in fiscal 2012 to $5.3 trillion (in today’s money terms) by 2050, and that the new utility will generate about $1 trillion in revenue, almost eight times the $131 billion generated today.
A world first, the report examines the nation’s entire 509 industry classes to identify the industries that will disappear, which will prosper and what new industries will emerge as a result of our digital future.
The report found that by 2050, 46% of Australia’s current industry revenue will substantially benefit from the new utility: 23% of the nation’s revenue will not function without this new utility, and a further 23% of industry revenue will use it to drive step-changes in their business.
Who will the big winners be? Public Administration & Defence/Safety will benefit most from superfast broadband, by harnessing high volumes of data to make more informed and effective decisions across a whole range of public works and services, from transport systems to entire cities. Close behind is retail, where we can already see many of the evolutionary changes towards an online ecosystem. Other beneficiaries will include Health, Education, Mining, Professional & Technical Services and Utilities.
Only 15 out of the nation’s 509 industries face demise from the advent of superfast broadband, constituting less than 1% of national revenue today. Some of these will be absorbed into other industries or reinvent themselves, while others, like video stores and newspapers (in their present expression), will die out entirely.
The report research suggests the capacity and speed of superfast broadband will more than compensate for these industry losses with huge productivity and revenue gains in other industry classes.
We need to think big to realise this new technological potential, and take steps now to make such a potential future a reality. It is later than we think: mining booms and other serendipitous impacts don’t last forever.
Who will the big winners be? Public Administration & Defence/Safety will benefit most from superfast broadband, by harnessing high volumes of data to make more informed and effective decisions across a whole range of public works and services, from transport systems to entire cities. Close behind is retail, where we can already see many of the evolutionary changes towards an online ecosystem. Other beneficiaries will include Health, Education, Mining, Professional & Technical Services and Utilities.
Only 15 out of the nation’s 509 industries face demise from the advent of superfast broadband, constituting less than 1% of national revenue today. Some of these will be absorbed into other industries or reinvent themselves, while others, like video stores and newspapers (in their present expression), will die out entirely.
The report research suggests the capacity and speed of superfast broadband will more than compensate for these industry losses with huge productivity and revenue gains in other industry classes.
We need to think big to realise this new technological potential, and take steps now to make such a potential future a reality. It is later than we think: mining booms and other serendipitous impacts don’t last forever.
Source: IBISWorld Pty Ltd, Melbourne, VIC 3000
The full IBM report is available at ibm.com/ibm/au/digitalfuture.
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