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Michael Foley December Column

01 Dec 2009

The government’s Ultra Fast Broadband (UFB) Initiative continues to ramp up with the latest milestone being  release of the eagerly awaited Invitation to Participate (ITP), essentially the government’s tender for investment partners. We’ve also seen announcement of the inaugural Board of Directors for the newly formed Crown Fibre Holdings (CFH) that will oversee the government’s investment of up to $1.5b infibre optic   infrastructure.

So momentum is building, and at this stage anyway I suspect there will be some on the other side of the ditch  eyeing New Zealand with envy as Australia’s NBN initiativecontinues to stutter.

My reading of the various government papers that have been released on the UFB Initiative distils the  government’s objective down to two key points: efficient infrastructure and economic growth.

The first of these implies, and requires, a nationally coherent investment and deployment strategy that  leverages a service and support implementation which can be established lean and then scale over time. This implementation is to be framed within a return-on-investment expectation that reflects the intergenerational  and utility nature of thefibre infrastructure.

To some extent the government’s innovative commercial model creates a fertile environment for this, but the  government’s would-be investment partners will also needto come to the party with equally innovative propositions around the “how we will do this” to get us all collectively to where we need to be. The next few  months, as bids are prepared, submitted and evaluated, will determine whether a pass mark is achieved in this regard.

The second key objective remains more vexing, and as I and others have asserted time and again, an  economic miracle isn’t going to spontaneously happen once the fibre is in the ground. The challenge is that this  economic growth outcome underpins return–on-investment; it is the demand side of the business cases  that are being pored over in bid ’war-rooms‘ up and down the country.

To my mind the government’s drive on UFB is a speculative punt on behalf of the nation. And I applaud that  leadership stance, havingseen too many future-facing business cases scuttled by the misguided attempt to  justify a future investment using today’s return profile. The simple reality is that the Internet has changed the  rules and what even the next 10 years will bring is anyone’s guess, much less the next 20 or 30!

Unfortunately this fact flies squarely in the face of investor certainty, demanding a truly entrepreneurial stance  that is somewhat counter-culture.

In terms of transformational importance, ubiquitous ultra-fast connectivity to the global connectedness that is the Internet can be likened to the discovery of fire by early man.

Once man had discovered fire, and later the means to create it at will, he could warm himself in front of the  flames and cook the flesh of animals that had previously been eaten raw. Fire brought light into dark caves, extending the day and encouraging social development.

With fire, man built furnaces into which he put iron and a variety of other substances. He observed the effect  of wind on fire and developed the bellows, which he used to make fire hotter and so was able to fashion tools:  axes, hammer, anvils, tongs and deadly weapons. He learnt how to make glass and ceramics that he put  to both practical and aesthetic use. And so the story goes on.

What’s the relevance of the history lesson?

Simply put, it is one of a myriad of examples of man being unable to conceive of the application of a  transformational change agent. And equally, one of a myriad of contexts that illustrate the propensity of the  combination of the human mind and spirit to discover new ways of lookingat the world and using the tools at  his disposal. When early man first warmed himself and lit his habitation using fire, he could not foresee how it  would transform humanity. We need only look back 10-20 years to observe the parallel in the truly transformational impact of the Internet on our lives; across business, leisure and societal contexts.

As we proceed along the government’s UFB Initiative, let’s be bold and future-focused. If we are, my bet is  we’re onto a winner