Why It Takes Time For Broadband To Translate To Profit

A new report from the Australian Centre For Broadband Innovation highlights some of the ways in which high-speed broadband can be more effectively used by businesses. One key reminder in the Broadband Impacts And Challenges report? You can’t expect to turn a profit from new technology immediately upon its introduction.

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The chart below, based on analysis of ABS data, shows improvements in profitability for businesses which had made significant investments in technology, versus those which had not. Initially, the non-investing businesses (shown in blue) make more money. However, within two years, those who have invested caught up, and subsequently found themselves more profitable.

At the media launch for the report, researcher Dr Claire Mason emphasised (as all good statisticians) would that correlation does not, in itself, imply causation. Nonetheless, there’s a clear lesson here: it’s unreasonable to expect an investment in new technology to repay itself immediately, and also a chance that some firms will be left behind entirely. “Less than half of Australian businesses have an online presence, and for smaller businesses that goes down still further,” Mason said.

Not building and taking advantage of broadband networks could in itself represent a significant business risk, Mason suggested. “The risks that were identified were not anything inherently negative about broadband, but rather the failure to realise these opportunities,” she said.

“The risks are there regardless of what we do. The opportunities will only be there if we make the effort.”

One of the key themes in the report is that building a broadband network, regardless of the technology chosen, is only a relatively small part of the process. Educating people on opportunities and training people on how to use those new options is equally important. “There are other aspects that will determine our success,” said ACBI advisory committee chairman Malcolm Long. “Addressing these challenges is as important as developing our high-speed broadband networks.

One reason for resisting those investments is the need to spend additional money on training. Uncertainties around delivery of new services can also mean businesses put the whole thing in the “too hard” basket. Kate Pounder, principal advisor on technology and public policy at Australian Industry Group. “For a lot of businesses, until it’s one year away, it’s not on their top 10 list of things to do.”