Australians, generally high in the tech uptake, have been slow to embrace broadband. Angus Kidman believes this will soon change as competition increases and connection fees fall.

Published in The Bulletin, May 12 2003

The deMontigne family signed up for broadband last April, confirming their status among family and friends as early adopters of technology. "We always seem to be one of the first to get new stuff," says Sally deMontigne.

Sally and her husband Brendan, who live in Nunawading, eastern Melbourne, got on the broadband bandwagon principally because they wanted higher connection speeds when they were surfing the net. Since the arrival of their nine-month-old daughter Taylah, broadband has also been useful for emailing photos of her latest exploits to friends.

Sally has been generally pleased with broadband to date (after previous experiences with telcos, she was particularly impressed by how efficiently the installation was carried out). However, there have still been stumbling blocks. The family originally wanted cable broadband, but had to settle for a Telstra ADSL service because a cable connection wasn't available in their area.

More alarmingly, Sally has also noticed that access speeds, while still relatively swift, have been declining. "Over the last three months, it's gotten a lot slower."

This is hardly desirable for broadband, since its key selling point is going online as speedily as possible. Definitions of broadband vary widely, but a commonly used one is any internet access system that provides a data speed of more than 200 kilobits per second. By comparison, a dial-up connection – the kind used by most Australians accessing the internet – offers a typical maximum speed of about 50 kilobits per second.

Buy the way No matter what kind of broadband service you're able to get hold of, there are a number of crucial issues you'll need to consider before signing up for a high-speed system. What services are available? City dwellers will invariably have a wider range of choices, but even most rural Australians can now choose between ADSL and satellite services. Make sure you've checked all the options and don't just sign up with the first operator you notice. A visit to broadbandchoice.com.au will show you what providers operate in your area. How much will it cost? This varies widely. As a rough rule of thumb, you can expect to pay about $300 for installation, and then between $50 and $70 a month with a 12-month contract. Excess download fees can quickly enlarge this amount. How much data can you download? Virtually all broadband providers enforce a download limit (typically between one and three gigabytes a month). Once you exceed this limit, you'll usually have to pay for the excess, which can often prove more expensive than the monthly rental charge. Some broadband providers, like Optus, don't charge for excess downloads, but instead slow down your access speeds once you go past the limit. Many providers also allow unlimited data exchanges between users of their services. Who is responsible for installation? Most broadband providers will install equipment and get your computer up and running, but they'll normally charge extra to do so. Many companies will assume you're a Windows user; if you have a Mac or prefer to run Linux, check that these options are supported. How long is the contract for? As with mobile phones, the shorter your contract, the more you'll pay. The best value deals are typically tied to 12-18 month contracts. Also check if you can transfer the service if you move house. What are the payment options? Most residential broadband providers will demand up-front payment by credit card or direct debit. What do the neighbours think? Ask other users in your area who already have broadband what their experience has been. As more users sign up and bandwidth has to be shared with a larger group, access speeds generally decline. If everyone else in your street has cable, you may be better off with ADSL. COMING TO TERMS A glossary of broadband terms While broadband is often discussed as if it were a single technology, there are several distinct systems used to provide high-speed internet access. Which you choose will depend partly on your needs, and partly on availability. (Note that all broadband services offer a much slower speed for sending or uploading data -- typically no more than 128 kilobytes per second, and sometimes much less -- than for receiving it. This is not a problem for most users.) Cable (or hybrid fibre coax, to use its technical name) is the longest established option for broadband in Australia. It also offers the highest speeds (up to six megabits per second). Cable internet is delivered using the pay-TV networks established by Telstra and Optus, and requires a specialised modem for access. It is only available in the state capitals, plus Newcastle and the Gold Coast. As of December 2002, it had 173,200 subscribers, according to the ACCC. ADSL was first offered by Telstra in 2000 and is now available from a variety of wholesalers and independent providers, ADSL (asymmetric digital subscriber line) is expected to eventually dominate broadband access in Australia. ADSL can be provided via your existing telephone line - without tying up the line the way a dial-up internet connection does - and offers speeds up to 1.5 megabits per second (though 256 kilobits per second is more typical on most plans). While most Australian telephone exchanges are equipped to offer ADSL, it is only available if you live within 5km of the exchange, which excludes many rural users. The modems used to access ADSL can be retained if you decide to change providers. There are 139,900 ADSL users in Australia, the ACCC found. Although satellites can theoretically be used anywhere in Australia, they have proved most popular with remote and rural users who can't access other broadband services. Speeds of up to one megabit per second are possible, but installation is more expensive and in most cases a separate dial-up line is still needed for sending data via the internet, which slows everything down. Satellite accounted for just 12,200 broadband users in the latest ACCC survey. Wireless is an emerging option, especially in isolated communities, where networking systems share broadband access among users. Using this approach, a single high-speed connection (requiring more expensive equipment) can be set up, and other users can then tap into this using cheaper standard networking systems.

Videoconferencing and streaming media are two areas where higher connection speeds are essential. Another benefit of broadband is that it provides a permanent internet connection, unlike dial-up systems that usually disconnect after a set period of inactivity. While this can pose security issues – since the system is always connected, it makes a more visible target for hackers – many consumers find that being able to go online without the hassle of connecting up a phone line and dialling into an ISP fundamentally changes their internet experience. (About 8% of Australian internet users have permanent connections.)

Yet despite its apparent appeal, and the fact that it has been available to consumers since 1997, broadband has yet to take off in a big way in Australia. According to the Australian Competition and Consumer Commission, which issues quarterly reports on the broadband market, as of December 2002 there were just 363,500 broadband connections across the country. This represents well under 10% of the Australian Bureau of Statistics' estimated total of 4.6 million internet users nationally.

While Australia has often enjoyed a reputation as an early adopter of technology, broadband is proving a significant exception to the rule. "Australia has dropped since mid-2002 from the 12th to the 19th position on the OECD benchmark table and we are poised to drop to below 40 by 2005, as others are broadbanding much faster than Australia," analyst Paul Budde said in a recent commentary. The OECD estimates that about two in 100 Australians have access to broadband, a figure dwarfed by such diverse countries as Korea (20 in 100), Canada (11 in 100) and even Iceland (about five in 100).

Why such a high level of resistance? For consumers, the most immediate issue holding back broadband seems to be cost. Even the cheapest broadband connection costs at least $50 a month, compared with existing dial-up accounts that typically range between $10 and $25 a month. Potential broadband users also need to pay between $300 and $500 for a modem capable of accessing the broadband service.

Most broadband providers also charge users for downloaded data once they exceed a fixed limit (known as a "download cap"). Providers maintain that this is essential for commercial viability; they are charged by traffic volume when they access international internet connections, and those costs need to be passed on to consumers. Nonetheless, many consumers are frustrated to learn they have a high-speed connection but are restricted in how much they can download.

Until recently, a lack of competition has meant little incentive for broadband providers to lower their prices. While cable remains available exclusively from Telstra or Optus, ADSL has become available from a much wider range of providers, who purchase access to the telephone network at wholesale rates from Telstra. However, the widespread availability of competitive ADSL offerings has only come about after repeated stoushes between Telstra and the ACCC over wholesale access prices and conditions.

The ACCC remains concerned that Telstra has recently exploited its dominance of the market by imposing delays when those with Telstra ADSL accounts attempt to switch to another provider. "Complainants suggested that these delays, which varied from a few days to a number of weeks, were stifling the further development of ADSL competition, as consumers were deterred from moving between ADSL service providers for fear of experiencing these delays," says ACCC chairman Allan Fels.

While cost is a major issue for consumers, that concern doesn't seem to have registered with suppliers. Telstra and Optus, which collectively account for the vast majority of broadband connections, have long maintained that one of the key drivers for broadband will be the provision of broadband-specific content. Telstra, in particular, has invested large sums in activities ranging from a net-only radio program starring Doug Mulray to a $25m development program to encourage broadband applications.

Despite these efforts, not everyone is convinced that consumers are clamouring for content. "People want the internet, they don't want a subscription to someone's streaming media service," says Simon Wright, founder of broadband consumer advocacy site Whirlpool.

Another problem is the lack of choice faced by many buyers. While a Sydneysider might theoretically be able to choose between Telstra and Optus cable, ADSL from a range of providers and a number of satellite players, those in regional areas generally have far fewer options. Australia's size poses challenges not faced by nations such as Korea, although the high uptake rate in Canada suggests such challenges are not insurmountable.

Within the Australian internet community, it is frequently claimed that government intervention is needed to further stimulate broadband uptake. For the most part, the government has maintained that it will not intervene in a commercial market, but there are some signs of change. A report by the Broadband Advisory Group, commissioned to advise on how to encourage the use of broadband, stopped short of recommending full government intervention, but did support the notion of ensuring access to broadband for all Australians. The BAG recommended that the government "commit to refine the regulatory regime as required to ensure that it continues to advance the long-term interests of end users and to promote facilities- and services-based competition".

Ironically, those subscribers who do have broadband are probably grateful that the adoption rate to date has been slow. As Sally deMontigne has discovered, as more users sign up for broadband services in a given area, the connection back to the provider becomes saturated and everyone gets lower speeds.

However, a rise in subscriber numbers will bring other benefits to users. As competition increases, prices for broadband services will inevitably fall. Competition in the ADSL market has already seen a wider variety of offers. While Telstra continues to charge $76.50 for its entry-level ADSL offering, other ADSL providers have reduced that monthly rate to as little at $48.95. Some have also begun offering plans with unlimited downloads, which could significantly change market dynamics over the next 12 months. If the major providers respond with further price reductions, then broadband will become much more appealing to many Australians.

WHIRLPOOL EFFECT
The Whirlpool web site has become the definitive information service for broadband.

Simon Wright was one of the first customers to sign up when Telstra launched Big Pond Cable, Australia's first broadband service, in 1997. Just after that, he launched the Whirlpool web site, which started out as "just a few pages of links and very simple information" about broadband issues. "It grew from being just a little personal hobby to what it is today: an interesting beast that's hard to classify," he says. "Whirlpool was uniquely positioned, by pure chance, to be a driver of the broadband community."

With an active community of about 10,000 members and more than 5 million page views a month, Whirlpool now has a visible influence on the development of broadband in Australia. Although it is staffed entirely by volunteers, its news service regularly unearths new broadband deals and highlights problems with existing providers. "We're not trying to be a professional, polished news service; we just mention things that consumers will be interested in," says Wright. "It's great that every now and then we can scoop the media, but it's not something that's a core aim of what we do -- it's a bonus."

As well as news and a database of all Australian broadband providers, Whirlpool's forums provide a meeting point for existing and potential broadband customers, allowing them to discuss the pros and cons of different offerings. Some ISPs even have "official" representatives signed up as Whirlpool users to provide instant feedback on problems.

Wright, who works as a contract web developer by day, still pays to host Whirlpool himself ("My intention is not to be a commercial web site"), deriving satisfaction from the community service it provides. Like many Whirlpool visitors, he's less satisfied with the offerings in the broadband market, especially from Telstra. "The cost of providing bandwidth is constantly reducing, but Telstra hasn't increased the value of its service."

Limits on downloads remain a major concern for the Whirlpool community, although the growth in ADSL providers to rival Telstra has changed the situation somewhat. "Download caps are bugging people, but they're bugging people less and less these days as more ISPs start providing services that the consumer wants."

Although Australia's uptake to date has been slow, Wright remains convinced that broadband is the future. "In five years, the large majority of people who have internet access at home will use broadband, and the service will be as ubiquitous as dial-up is now."