Bound up by broadband

Slow broadband is holding back Australian business and innovation, new research by SmartCompany and Roy Morgan shows. By AMANDA GOME and BRAD HOWARTH.

Australian entrepreneurs are being held back by slow internet speeds, research released today by SmartCompany shows.

Small and medium enterprises, the innovative heartland of Australia and biggest creator of new jobs, say they are disadvantaged by the poor broadband infrastructure in Australia compared to overseas.

The SME Opinion Leaders poll, done by SmartCompany in conjunction with Roy Morgan Research and Dun & Bradstreet, shows that 64% of companies could innovate more with faster internet speeds.

Faster broadband would enable 58% of companies to offer new services or products. And 58% would change their business strategy with faster broadband. About 40% say faster broadband would have an immediate impact of increasing their sales.

There has been almost no research done into how poor broadband is affecting Australian business and the kind of broadband they want, Stuart Corner says in iT Wire this morning.

But the SmartCompany-Dun & Bradstreet research, which looked at the opinions of 248 entrepreneurs, leaves no doubt as to how important broadband is for Australian business owners and how politically significant it is – especially in an election year.

About 87% of respondents said they believe that the Federal Government should fund (or partly fund) improved broadband infrastructure; 92% said faster broadband is important in their business; with 52% saying it was very important.

The Opposition has made broadband an election issue. It has attacked the Government with OECD figures that place Australia 17th in the world in terms of residential broadband adoption, and has proposed building a government-funded fibre-to-the-node network.

The Howard Government maintains that the private sector should build the network. It has fought back by undermining the OECD report with research by firm Market Clarity, which ranks Australia 11th. Telstra, which owns the copper wire network, is blaming the Government and the Australian Competition & Consumer Commission, for a lack of spending on infrastructure, alleging that excessive government regulation is holding it back.

Yesterday, the Optus-led G9 consortium made public its plan for a new broadband network for Australians. See our news briefing for details of the new plan.

As the battle hots up a range of experts, including Microsoft chief executive Steve Ballmer, have criticised broadband services in Australia as being slow and expensive.

Experience has shown that as companies move to higher speed services, their usage activity tends to broaden, from simple web browsing and e-mail to more advanced applications such as video-conferencing and accessing more advanced services.

Losing ground

The managing director of the business broadband service provider Pacific Internet, Dennis Muscat, says Australia is definitely slipping behind regional trading partners in terms of utilising high-speed internet to conduct business, particularly in comparison to Singapore, Hong Kong and Korea.

“They’ve moved to higher speeds because there has been more direct involvement by government in getting initiatives going, and there has been more competition on the ground level,” Muscat says. “You see that smaller businesses are using more bandwidth and more applications and are able to access higher speeds than we are in Australia.”

The result has been the development of a wider range of services and efficiency gains for business. In Singapore, for example, aspects of the judicial system can now be accessed through network-based video-conferencing.

For the 30,000 Australian businesses involved in import and export activities, Muscat says the lack of speed of broadband access makes it harder to compete. This is particularly important to data-intensive professions such as engineering, graphic design and architecture, but applies to anyone accessing digital services.

According to Pacific Internet’s own research, 92% of all small and medium businesses that are connected to the internet are using broadband. There is also a steady migration of businesses from entry-level broadband plans at speeds of 512 kilobits per second, many of which are sold as residential packages, on to faster, business-grade plans at 1.5 megabits per second or higher.

One of the big growth areas for broadband use has been so-called internet telephony services, also referred to as voice-over-internet protocol (VoIP), which enable companies to make telephone calls over their broadband connection at often greatly discounted prices. The most popular of these is Skype.

Experienced broadband users also tend to migrate to more secure services. Some also create virtual private networks (VPNs) as a secure means of communicating between office locations or remote workers.

Nevertheless, there are many options available now, from low-cost fixed-line services and a plethora of wireless technologies to more expensive and reliable managed services.

The most common is asymmetric digital subscriber line (ADSL) technology, which enables much faster speeds over existing copper phone lines than can be achieved through dial-up services. These services start as low as 256 kilobits per second and scale up to eight megabits per second.

A new version of this technology called ADSL 2+ enables speeds up to 20 megabits per second. Other solutions include delivery via cable (such as through the Foxtel network) or over wireless networks using microwave technology or 3G telephony networks.

For any company providing these services, there is a huge appetitie for simple and efficient technology that is up there with the world’s best.