Broadband and business: if you build it will they come?

New research from the Centre for Broadband Innovation explores what’s required to get more businesses online. Lukas Coch/AAP

As the debate about the type of broadband infrastructure Australia is investing in rolls on, the really big question concerns the extent to which Australians will benefit from this investment. This is not about the type of network, but rather, the way we will use broadband.

This issue is even more critical when you consider new research from the Australian Centre for Broadband Innovation. It found businesses with a web presence that invested more in technology were ultimately more profitable than their unconnected competitors.

More generally, it found people that had a greater and more diverse use of digital services tended to have a higher level of well-being, timelier access to healthcare, increased community engagement and an improved capacity to grow their knowledge and skills. And yet one in five adult Australians are still not using the internet.

Determining the long-term impact of broadband uptake is difficult to do. As with the introduction of other general technologies (like electricity) that enable many and varied uses, it is difficult to accurately determine the benefits.

The impact of next generation broadband is influenced by a complex interplay between people, organisations, markets and social institutions. It requires understanding the behaviour and capabilities of people and organisations to adopt and gain benefit from digital services. These capabilities will largely determine the overall level benefit for Australia in terms of growing businesses, creating new jobs and improving economic productivity.

Making profits flow

For business, the research identified the benefits to business from adopting broadband, drawing on the best available Australian information (raw anonymised ABS data) and international peer-reviewed analysis. Our statistical modeling showed that economic benefits arising from the use of broadband and investment in computing technology were not always apparent in the short term, but over five years, businesses with a web presence that invested more in technology, realised greater profits than those that did not.

Businesses do not automatically become more profitable when they “go online”; rather, the way businesses engage with broadband and digital services is critical in determining what outcomes are achieved from it.

On the whole, Australian businesses have been slow to engage with broadband and slow to realise the opportunities to transform their business processes.

Digital services will also create challenges for Australia, accelerating disruption to businesses, jobs and services. Marc Andreessen, one of the pioneers of online business, has written about software eating industries, forcing companies in those sectors most affected to either transform or perish. Timely action is required if Australia is to realise these new opportunities and mitigate these threats.

Small business falling behind

An area of concern is the low level of adoption of basic digital services by smaller companies, with the majority lacking a web presence and not having the ability to receive online orders. Our interviews identified there were significant skill, confidence and information barriers in getting small business to engage more with digital services. Other factors deterring adoption include the lack of access to trusted technology suppliers and lack of awareness of or interest in existing government supported training programs.

Because every business is different with regard to operations, resources and markets, what represents the best use of broadband will vary. Industry groups that currently influence business owners are well placed to inform and affect their response to digital services.

Interviews with small business owners revealed that industry peers, technology service providers and industry organisations can be central enablers of digital engagement. To ensure this support is effective, it needs to be delivered in a more strategic way than has been the case to date, including more context-specific information, better evaluation and more collaboration and knowledge sharing.

Disruption looms

If large parts of the population and the business community do not take up digital services, then many opportunities for social development, innovation and economic growth may not be fully realised.

A number of international studies have shown the significant economic benefits from getting more people and businesses online through greater efficiencies in business operations. As such, addressing Australia’s digital divide makes good business sense, while also enhancing overall social equity and quality of life.

Leadership is required at all levels of society and business to ensure a timely response to the opportunities and challenges of next generation broadband. Disruptive change can be challenging for people, businesses and institutions and it is easy to defer action. But the impact of broadband and the digital economy will continue to accelerate and failure to respond will threaten jobs, businesses and the sustainability of government services.