Abstract
Broadband Internet connectivity is seen as a means to increase the efficiency and competitiveness of an economy. But despite ongoing efforts to promote broadband in Australia, uptake has been much slower than expected. This chapter aims to identify areas that have been holding up the broadband development in Australia. In examining multiple areas for attention (competition, user characteristics and behaviors, applications, network characteristics, and pricing), we refer to the experience of Canada, a leader in broadband deployment, to show the differences in each area. The chapter outlines objectives for the development of a more user-friendly broadband environment in Australia, which would encourage broadband adoption. Although both countries discussed here have their own policy agendas and some unique circumstances related to broadband deployment, the chapter provide valuable insights for policy makers and industry leaders in Australia, and in other countries which are struggling to develop widespread broadband deployment.
Key Terms in this Chapter
Facilities-Based Competition: This term, also known as “intermodal competition” refers to competition between DSL and cable providers. There is high intermodal competition in the U.S. and Canadian consumer broadband markets, and it is believed that intense intermodal competition stimulates demand for broadband access. In countries where the cable company was/is owned by the telephone company, intermodal competition has been less fierce.
Local Loop Unbundling: The term “local loop” refers to telephone infrastructure used to provide DSL (digital subscriber line) broadband Internet access to consumers in their homes. In many countries, the local loop was built and operated by a monopolist telephone company, referred to as the “incumbent” carrier. In order to increase competitive provisioning of DSL service, “local loop unbundling” policies have been developed. These policies force the owners of the local loop infrastructure to make their infrastructure available to other providers (for a fee), so that competitors can provide DSL service without building new infrastructure. There is no consensus as to whether such policies have been successful in promoting broadband uptake.
Open Access: “Open access” policies are similar to local loop unbundling policies, but apply to the cable industry. Also known as “third party Internet access” rules, existing cable operators are required to make their network capacity available to competitors in an open access environment.
Threshold Factors: Necessary, but not sufficient, to encourage broadband demand. They include penetration of PCs in households, narrowband Internet adoption, and adequate development of broadband infrastructure.
Accelerators: The factors that most significantly increase demand for broadband services, and include the establishment of a competitive marketplace, user comfort levels with the technology, and network characteristics (e.g., speed, multiple platforms).
Stimulants: Have a moderate impact on increasing demand for broadband services. Stimulants include pricing and the sophistication of marketing broadband services.
Broadband Success Drivers: Gardner (2003) argues that success factors for broadband growth (which include favorable pricing, competitive market environment, and population readiness, among others) have differential impacts on growth in demand for broadband services. Gardner’s research identifies (1) accelerators for broadband demand, (2) stimulants for broadband demand, and (3) threshold factors for broadband demand. Recognition of this hierarchy of success factors is important in developing policies and taking actions to increase broadband adoption.
Download Caps: Many broadband service providers offer tiered pricing schemes for broadband connectivity. Common to such pricing schemes are restrictions on the volume of data that can be downloaded within a given period. For instance, in Australia, some broadband packages allow 0.2 Gb of “free” downloads monthly, compared to packages in Canada that offer 30-60 Gb of downloads monthly. When download caps are low, they can reduce demand for broadband connectivity. Depending on the provider and the service package chosen, consumers may have to pay for excess downloads, or may have their connection speeds reduced to dial-up speeds.