Broadband: American Free-Market Success vs. Australian Government Failure

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By Keith Calder

An intense fight is heating up between private telecommunications companies and local cities throughout the United States over who should build out America’s broadband networks.  Proponents of government-run broadband infrastructure believe that America’s broadband technology is lagging behind places with government-run networks.  The facts show the opposite.

Since 2009, $250 billion in private capital  has been invested in U.S. wired and wireless broadband networks compared to $15 billion in grants and loans from the Federal Government since 2008. That’s more private investment in the information and communications sector than in another other sector of the U.S. economy. Thanks to private companies, more fiber-optic lines have been laid in the U.S. in each of the last two years than in any year since 2000. In addition, the United States is the first country deploying 4G LTE technology. In late 2012, the U.S. had as many LTE subscribers as the rest of the world combined. There is no doubt that America continues to be on the cutting edge of wireless technology.  

Likewise, annual investments in U.S. wireless networks top the world when compared to European and Asian networks. Investments grew more than 40% between 2009 and 2012, from $21 billion to $30 billion. In contrast, wireless investment in Asia has grown a meager 4% percent while European investment remains progressively flat.  Analysts continue to project $35 billion more in wireless investment, which is 50% percent more than all of Europe. This private venture has led to an infrastructure boom seen nowhere else in the world. Since 2009, average U.S. broadband speeds have nearly doubled and broadband networks now reach more than 80% percent of U.S. homes, compared to 50% of EU households.

American workers are also being rewarded with an increase in direct and indirect employment. Since 2007 wireless broadband infrastructure created more than 1.6 million jobs, while the new mobile apps industry has created more than 500,000 jobs. This amazing new economy will only continue to grow if the federal government continues to allow the free market to flourish.

On the other hand, if you compare this success story with Australia’s failed experiment in government-owned broadband the contrast is stark.

In 2007, The Australian government had a choice: connect 98% percent of Australian households though private entity Telstra, or take the European approach of massive government intervention. Australia chose the latter and for the next seven years the National Broadband Network (NBN) became the largest example of government-owned broadband.

Since NBN’s incorporation, things have gone from bad to worse. After years of false starts and delays—it took 3 years just to develop a business plan—the NBN has been inundated with delays, costly fixtures, and continue mishaps (Obamacare anyone?).

A scathing review of the trouble NBN roll out concluded that the project was three years behind schedule and $29 billion over budget. In total, the government spent $7.3 billion, but only installed enough broadband for 350,000 of Australia’s 7.7 million households—only 260,000 of those premises are “serviceable.” To top it off, out of the 260,000 premises only 78,000 are actual subscribers. Whereas NBN continues to falter, private competition appears to be back on the rise, with an upstart company knocking on the door delivering a cheaper, better service.

If only Australia chose the private market less than a decade ago they would not be struggling with $7 billion of mishaps and delays.

Susan Crawford—then 2009 white House broadband advisor—was “fascinated”  with Australia’s broadband experiment touting its supposed success, going as far as suggesting it as a model for future U.S. broadband development. She along with others on the left continue to push for government-owned broadband infrastructure, regardless of the facts. However, facts are stubborn things—as the U.S. and Australian experience have demonstrated—the real path to improved broadband, more jobs, and revolutionary technology lies in the free market, not government.