Tuesday, June 17, 2008

Tuesday Column: Why Senator Conroy should take a look at Canberra's Black Mountain Tower

Black Mountain Tower is a monument - but not of the type its creators intended.

Do you ever think about why it’s there? There’s not much reason now.

But back in the early 1970s microwave transmission towers were vital. They were the main means by which telephone calls and television programs were relayed between Sydney and Melbourne. Canberra was an essential stop along the way.

The planners at what is now Telecom could see the need for microwave transmission facilities increasing rapidly and so, thinking big, they planned a monster tower – a design statement that would rise high above the national capital and provide for all of the intercity links that Australia would need.

It was an expensive bet on what seemed at the time to be the technology of the future. (So expensive that a restaurant and viewing platform were included to help fund it.)

Within years of its opening in 1980 it was out of date. Telecom Australia and its predecessors in the Post Master General’s Department had made the wrong bet...

All of Australia’s television operators began sending their programs around the country by satellite. The iconic tower, which was designed to be an essential part of the process of distributing television programs, instead suffered the indignity of having a small satellite-receiving dish placed next to it so that it could receive them for rebroadcasting to a local audience.

And then the laying of huge amounts of optical fibre cable between Sydney and Melbourne made the telephone transmission part of its role irrelevant as well.

Black Mountain Tower stands as a monument to the futility of building really big for the future - one the present Communications Minister Steven Conroy would be well advised to ponder.

The “richest” of the Rudd government Ministers, Senator Conroy has been given the right to spend $4.7 billion of our money building a national fibre-to-the-node broadband network, something he cheerfully says will “rival the Snowy Mountains Scheme in its scale and significance”.

Submissions from companies wanting to help build the network are due by the middle of next week.

Although the Minister has set up a panel of experts to help him assess the submissions he has been quite specific about the technology he wants.

It has to be fibre-to-the-node or fibre-to-the-premises. This means that an optical fibre has to go to within a few hundred metres of each house or office, with the remaining metres able to be covered by the existing copper phone lines.

He has specified a minimum download speed of 12 megabits per second, which is about 12 times what most of us could get a year ago, and said he wants 98 per cent of Australian homes and businesses reached.

Oh, and it all has to be done within five years.

What could possibly go wrong?

A lot.

For a start the ground could move from under him, just as if did from under the planners of Telecom’s Black Mountain Tower.

In fact it is almost certain to. Back in the 1970s and 1980s technological developments weren’t happening that quickly. Right now they are raining down upon us at lightening pace.

Anyone who specifies a particular technology, as the Minister did when he launched Labor’s $4.7 billion fibre-to-the-node promise in March last year, is highly likely to find that it is superceded or made redundant by the time it is built.

Oddly, it looks as if the main competitor to fibre-to-the-node will be copper itself.

The existing wires that connect most of our houses to the exchanges are proving far more useful than ever would have been thought. Three or so years ago they could only carry half a megabit per second (which we used to call broadband). Now they are easily doing 2 megabits and up to 12, and there is talk of them soon carrying 50 – which is far more than is needed for television. It is happening because ever more ingenious ways are being thought up to use radio waves to send vast amounts of data from one end of a copper wire to another and to correctly decode them at the other end.

The technology isn’t a new type of cable. (Copper is turning out to be incredibly versatile.) It is a new way of using the cables we have.

And by comparison with Conroy’s $4.7 billion spending plans it is cheap.

It may be that one day we will reach the limits on the use of the copper that already connects our homes and that one day we will seriously need something faster.

But neither has happened yet. And with technology evolving as quickly it is there is an excellent case for waiting. Anyone considering buying any piece of equipment right now is well advised to wait if they can. It is sound financial advice.

In a report for the Committee for the Economic Development of Australia last year Professor Joshua Gans referred to it as the “late adopter” strategy.

By contrast, the Communications Minister has a “build it and they will come” strategy. His speeches continually refer to future uses for the planned $4.7 billion high-speed broadband network that he says will evolve after it is in place.

Are the Senator’s plans making you feel uneasy? They might if you had heard the Governor of the Reserve Bank Glenn Stevens speak in Melbourne on Friday.

He told a business audience that in order to make room for some of the big infrastructure investments on the horizon he might have to push up interest rates.

As he put it, “in most economies, it is usually not possible, and certainly not prudent, to try to have a consumption boom at the same time as an investment boom”.

The Senator’s $4.7 billion spending program - to be matched or more than matched by a private partner - could be worse than redundant. It could push up inflation and interest rates.

Think of what’s involved. Rewiring the cables going into nine million houses would require enough skilled workers to disconnect and reconnect cables at footpath pillar boxes at the rate of 5,000 per day - every day for five years.

And that’s only part of it. In terms of the strain it would put on our resources it would indeed rival the Snowy Mountains Scheme. But the result might be a more dangerous version of the Black Mountain Tower.

Andrew Leigh writes:

Public policy by revolving restaurant

Peter Martin has a lovely column in today’s Canberra Times, using a metaphor that will appeal most to his local audience. Pointing out that the Telstra Tower was rendered unnecessary within a few years of its construction, he asks whether Labor’s plan of fibre to the node really is smart public policy.

This reminds me of the Woodrow Wilson School at Princeton, which spent hundreds of thousands of dollars in 2000 outfitting each seat in its classrooms with an ethernet port. A year later, wireless took over, and they issued all their students with a free wireless card. A year after that, all new laptops were wireless capable, and they stopped issuing cards. So far as I know, the ethernet outlets were utilised for about nine months.

Joshua Gans writes:

Unplanned obsolescence

Peter Martin has a terrific piece about Canberra’s Black Mountain Tower — an expensive piece of infrastructure found technologically obsolete within a couple of years as satellite killed the microwave star. It now pretty much a glorified lookout. Martin was drawing an analogy with current broadband plans. The whole example really resonated and towards the end of the article I realised why:

In a report for the Committee for the Economic Development of Australia last year Professor Joshua Gans referred to it as the “late adopter” strategy.

By contrast, the Communications Minister has a “build it and they will come” strategy. His speeches continually refer to future uses for the planned $4.7 billion high-speed broadband network that he says will evolve after the network is in place.

One little correction, believe it or not my report was written and released in 2006. Somewhat amazingly it still doesn’t seem to be obsolete.