Industry attacks draft bush broadband incentives

Industry leaders have criticised the government's draft regional broadband guidelines, arguing that the benefits may accrue mostly to established players.

Federal IT minister Daryl Williams called for public comment 23 January on draft guidelines for a proposed $107.8 million Higher Bandwidth Incentive Scheme (HiBIS). The scheme is meant to improve broadband access in the bush.

However, Dennis Muscat, managing director of Pacific Internet in Australia, said the guidelines -- while a step in the right direction -- would likely favour large players already established in the regions over small ISPs.

“This seems to be directed around infrastructure players and telcos. To get these rebates, you've got to get into the black spots where there's no ADSL. You've got to be able to come up with an exchange or build on a POP,” he said.

He said he hadn't had time to look at the 100-page draft guidelines in depth but it seemed that niche ISPs with no infrastructure would gain little.

“The major beneficiaries will be major players, in particular Telstra. They're the experts in rolling out infrastructure,” Muscat added.

Further, it seemed that to be eligible for rebates, ISPs must restrict their pricing -- an element of the proposed guidelines that could chill competition, he said.

“I'd almost rather say: 'Just forget about the rebate, so I can charge what I want.' So, it's a good idea but just might help Telstra with its roll-out program and to get their one million broadband subscribers by 2005,” Muscat said.

He said broadband providers would have to jump through many hoops to gain benefits from the scheme. As such, only “a few corporate interests” would definitely gain while companies such as Pacific Internet that could not configure an exchange would remain unable to manoeuvre.

“It's like you have to give up your first-born child,” Muscat said. “It could benefit the most major of major players and they don't need the money.”

Gary McLaren, general manager for products and regulatory at Request Broadband, said the guidelines as they stood could hit Request Broadband's small regional partners hard.

“We're fairly focused on main metropolitan areas -- the lion's share of business -- [but] we notice this is really intended only for retail service providers. For wholesalers through channels, it doesn't really fit in with them,” he said.

McLaren also singled out the “bureaucratic process” as a stumbling block for smaller regional players with fewer resources to apply to strict stipulations and criteria.

“So we have got a little bit of initial concern about how our partners will be able to compete with that and getting through it,” he said.

At first glance, however, the draft guidelines did seem aimed at allowing service providers to get into the regions “other than just Telstra” but it was doubtful whether the playing field would be sufficiently levelled, McLaren said.

Marty Gauvin, an MD at managed web and e-commerce services provider Hostworks, argued that the guidelines could exacerbate ISP consolidation in the regions.

Although more larger players could appear as a result, it seemed likely that the overall ISP population could shrink from “hundreds down to dozens”, he said.

“You have a leg-up to take on Telstra or Optus at a market player level but you could get killed in the process,” he said. “The little guys run the risk of being gobbled up.”

Gauvin said firms already offering ADSL in the regions and large carriers might gain, but small regional ISPs without infrastructure would probably suffer.

Also, the scheme ignored one big barrier to broadband adoption. Regional internet users had little idea of the benefits broadband could bring to homes and businesses, he said.

“I've recently spent a few weeks in the country, seeing internet connections and rural responses to that. Frankly, it's terrible -- but it's what they've come to expect,” he said. “It takes forever, it drops out, but you do that rather than drive 45 minutes to get to a bank.”

Many regional users took a dim view of internet connections in general so failed to see why they should pay twice the price for broadband. Thus, education must play a major role in any successful broadband uptake plan, he said.

“I've said, 'would you pay $40 or $50 a month for broadband', and they say 'no',” Gauvin said. “This is a $100 million scheme -- why can't they spend some of that on showing people what it can do?”

However, Ross Chiswell, CEO at specialist wireless distributor Integrity Data Systems, said that, while the draft guidelines were around infrastructure providers and those already in the regions, he disagreed that they necessarily favoured big players such as Telstra.

“I don't agree. I actually believe now everybody has an ability to do it -- to do a wireless point to multi-point distribution system, because [the infrastructure's] the most expensive part,” he said.

Chiswell argued that one big problem was likely to be keen players buying ineffective hardware to set up their wireless networks. Too many in the past had simply bought an Access Point and a cheap 802.11b device only to find the setup eventually failed to work properly on a radio level, he said.

“You get collisions ... all the signals hit each other, get jumbled up and messed up and it has to be re-transmitted,” he said.

Wireless broadband providers must ensure they bought quality gear that would enable them to build valid networks that would keep regional customers happy, Chiswell said.

Warwick Ponder, a spokesperson for Telstra, said the carrier was still formulating its official response to the draft guidelines but felt it was a positive step.

“We fully support this scheme and we're very keen to participate but we're still putting forward our response, which we expect to submit [to Daryl Williams' office] in the near future,” Ponder said.