Who will pay extra for fibre to the home broadband?

3846815775_787b24c499Zillion TV, as you read in my last post, are about to serve up free on demand TV services to homes in the US using a business model based on personalised advertising. An interesting innovation at GDC this year is covered in a story on the BBC technology pages about a new on demand video games service called OnLive. The article is entitled ‘The End of the Games Console?’ and includes commentators who speculate that the PS3 and XBox360 may be the last games consoles produced because of the vast potential of serving up on demand games. But wait a minute, these services aren’t something that are going to launch in five years time, they are launching now or very soon.

Now, let’s look for a minute at the recently announced Australian government plan to build a fibre to the home broadband network in Australia. My main criticism of the plan is that it’s going to take 8 years to build the thing. What is harder to believe is the skepticism coming from some entrenched industry players (and opposition parties) about the long term financial viability of this network. Who is going to pay for it they ask? Will consumers increase their monthly broadband subscription fee from $50 to $200 per month is the question on everyone’s lips today (including Malcolm Turnbull). CEO of AAPT, Paul Broad, took this approach when interviewed on Lateline Business tonight and I’ve got to say I think this attitude is small minded in the extreme. Come on guys, lose the plumbing and superhighway metaphors and start thinking of some more imaginative business models. Making money from high speed broadband is not all about metering the pipe you provide into the home and if that’s the best you can do when you think 8 years into the future then you deserve to go broke.

Zillion TV, for example, is a service I would like delivered to my home and it seems advertisers are prepared to pay for the privilege of reaching me. Example number 2: rather than going down to the mall and picking through the bargain bins at EB Games I would like access to a much larger online catalogue of games which I can instantly download and play – OnLive?  The margin that I usually pay to the retailer instead pays for a proportion of the broadband service. It isn’t rocket science to work out that this broadband pipe is going to enable a wide range of services that are not currently available and my consumer spend is going to change, business models are going to change. Hopefully clunky old ISP’s and Telco’s will be left behind in the dust. (photo by Blentley )

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