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Do Consumers Want Taxpayer-Financed Gigabit Service?

May 24, 2017

That’s a good question, and it’s one the Coalition for the New Economy often has asked. It’s certainly one that officials in many U.S. counties and towns have answered affirmatively.

But just because local lawmakers build these networks, doesn’t mean consumers will come. To illustrate, let’s go “Down Under.”

Australia’s National Broadband Network (NBN) offers gigabit speeds. Superfast speeds are a little bit more expensive, about $8 per month than slower speed packages, but not much, acknowledged NBN CEO Bill Morrow in a recent speech at the American Chamber of Commerce.

What gives, then? Why aren’t Aussies flocking to their government-owned gigabit system?

According to ZDNet, in his remarks “Morrow reiterated his previous statements that users do not need and would not use 1 gbps internet speeds currently, as reflected by the fact that a majority of NBN users are still opting for the 25 mbps speed tier.” Specifically, Morrow said, “The reality is that very few Australians have a use for gigabit speeds today. The fact is, the very few applications that demand this amount of data simply aren’t at scale yet.”

Morrow told the audience that 83 percent of NBN homes subscribe to speed packages of 25 mbps or less.

Morrow concluded, “Installing gigabit speeds today for everybody would be a significant investment with a questionable rate of return. Ultimately, this why we are building the network Australia needs today and ensuring the technologies we are deploying each have a very clear upgrade path into the future.” Morrow said this was the “fiscally prudent” approach.

Let’s hope American politicians are listening.