This is what really happens when NBN moves in

THE NBN was going to be a game changer and see the rise of silicon cities, but our investigation tells a different story.

IT’S the high-speed internet network that is meant to change our lives.

The National Broadband Network has been spruiked as the key to establishing “hotbeds of innovation”, creating a stream of hi-tech jobs and converting tired regional towns into “silicon cities”.

Sounds pretty great, doesn’t it?

But while NBN advocates made many optimistic claims to news.com.au, an investigation found that they failed to stack up.

The network may have the potential to change the way Australia does business eventually, but many of the assertions appear to be premature.

It has been five years since the first homes in Australia got access to the network and the rollout is expected to be complete within five years.

With those in regional areas getting access to the service first, NBN Co has been eager to highlight the possibility that places such as Ipswich, Ballarat, Prospect, Hobart and Gosford could be turned into “silicon cities”, or in the case of Wollongong, a “silicon beach”.

In its own Silicon Cities blog, NBN Co highlights these places as being “smart cities at the forefront of digital innovation”, thanks to their new high-speed internet connections.

But trying to establish a link between the NBN and these supposed “hotbeds of innovation”, as one blog post put it, has proved extremely difficult. And trust us, we’ve tried.

Take for example Ipswich, a former mining community 40km west of Brisbane that seems an unlikely place for a technology hub. The rollout of fast broadband in the area began in 2013 and currently covers about a third of homes and businesses.

NBN Co claims the area is “fast becoming a Silicon City” and points to the fact that it was declared one of the seven top Intelligent Communities in the world last year, and is in the running for the honour again this year.

“No other Australian city has achieved that,” Ipswich Mayor Paul Pisasale told news.com.au.

The award recognised Ipswich’s efforts to encourage its residents and businesses to embrace technological change, and also noted its success in lobbying for the NBN to locate two of its 19 initial rollouts in the region.

Cr Pisasale told news.com.au the NBN had already been a factor in attracting businesses and universities to Ipswich, and driving unemployment down by 2.9 per cent.

Here’s why the Silicon City story doesn’t quite stack up.

EMPLOYMENT

“Something good is happening (in Ipswich), it has low unemployment and its participation figures have gone up,” Professor William Mitchell, a labour market expert from the University of Newcastle, told news.com.au.

“But to really pin it down you need to know where those jobs are.”

Unemployment for Ipswich in September was at 5.7 per cent, lower than the rest of Queensland, which was at 6.8 per cent and Australia on 6.2 per cent. It has been improving since February 2014 when it hit a high of 12.3 per cent, which some blamed on the axing of government jobs.

But Professor Mitchell said improvements in the employment rate looked like it was being driven by new jobs for women, not specifically new jobs in ICT.

“Female employment growth is way above national and state average,” he said.

The female employment rate in Ipswich grew by 7.3 per cent in the last year according to the September figures, compared to 2.39 per cent in Australia. The contrast is even more stark when looking at the Queensland figure, which was 1.5 per cent.

In a city of about 180,000 people, the ABS figures show an extra 6,800 women found work in Ipswich over the past year.

Opportunities for men didn’t show the same growth, their employment only grew by 1.6 per cent in Ipswich, equal to growth in Australia overall, and slightly below the state figure of 1.8 per cent.

Only a third of homes and businesses have access to NBN in Ipswich and Prof Mitchell said he thought the take-up was not strong enough for it to be driving jobs yet, except in the construction industries involved in installing the fibre. But this was not traditionally an area where large numbers of women were hired.

A spokesman for Ipswich Council said the council did not have data on why the numbers had jumped but conceded that: “anecdotal evidence would suggest that the growth is in retail and predominantly part-time”, and this could be related to population growth.

BUSINESS

When asked to nominate examples of businesses that had been drawn to Ipswich because of the NBN, the council nominated the success of Redbank Motorway Estate, which at the time of its opening was the only industrial estate of its type with NBN fibre.

“It attracted worldwide logistics groups such as DB Schenker and TNT to relocate to Ipswich,” a council statement said.

DB Schenker opened its $40 million logistics centre in August 2014 but while the availability of NBN was an advantage, Queensland general manager Richard Holy told news.com.au that it was not a deciding factor.

Redbank Motorway Estate in Ipswich was the first industrial estate of its type to offer NBN.

“We probably would have got by without it,” Mr Holy said, but added that “having it there was a significant speed advantage”.

More than 40 other sites were considered for the DB Schenker facility, which has created more than 70 new jobs in the region. When asked what attracted DB Schenker to the site, Mr Holy said it was the availability of staff, access to infrastructure including rail and finding affordable land large enough to accommodate a 31,500sqm warehouse.

It was a similar story for TNT, with a representative confirming the NBN did not play a big part in its decision as it was not yet fully available at the facility.

Queensland regional director Shane Plant said the site was chosen because of its strong business and population growth, as well as being well connected via freeway to the centre of Brisbane, which is about 25km away.

Claims that universities have been attracted to Ipswich have been muddied by the fact that the University of Queensland, which opened a campus in 1999 recently sold this to the University of Southern Queensland, due to disappointing student numbers.

Another company highlighted by the NBN as a success story, LC Engineering, has been located in Ipswich for 10 years, long before fast broadband was installed. Project engineer Owen Sengstock believes the main selling point of Ipswich remains its affordable land.

“We need a lot of a land and we are on a huge block here, the costs are lower and you can utilise land for these big industries,” Mr Sengstock said.

Personally, he hadn’t noticed emerging technology businesses moving into the area.

“We haven’t seen a lot of other different styles of business, maybe more higher end manufacturing that you wouldn’t expect to see in a mining town, but that doesn’t mean it’s not improving, it’s developing,” he said.

The real benefit of the NBN, Mr Sengstock said, was being able to contact the rest of Australia more quickly and efficiently, which allowed the company to remotely install upgrades to its software in sites around the country.

Members of LC Engineering on a conference call. Supplied by NBN.

“Without it we wouldn’t be able to do product development as much, and this would cost us clients and sales, so it has really helped us immeasurably,” he said.

Mr Sengstock said he also knew of at least one executive who had decided to work in Ipswich because of it.

“One of the executives of our sister company based on the north side (of Brisbane) started working here at our office after noticing the benefits of the NBN,” he said.

NBN has allowed the executive to be more productive because he often used video conferencing and also had to review a lot of large documents, Mr Sengstock explained. “He has decided to work here almost permanently”.

HOBART

It’s a similar story in Tasmania, which was home to the first trial areas of the network in Australia in 2010.

The NBN said fast broadband had been critical for online video company Biteable to communicate with its operations in the US and Singapore.

But Biteable co-founder Simon Westlake told news.com.au that the business launched before it had access to NBN and while it made a massive difference to the speed they did their work and enabled the business to grow quickly, they probably could have achieved this without it.

The founders of Biteable in Tasmania. Supplied by NBN.

“It would have been a lot harder but we probably still would have done it,” he said.

When asked whether the business could survive without the NBN, he said: “We’ve set up a lot of video rendering in Singapore now so I think we would be okay,” he said.

SILICON COMMUNITIES?

So far the NBN seems to have helped existing businesses to work more quickly and improve their operations, especially if they need to use video conferencing regularly.

But will this actually translate into these areas becoming “silicon cities”?

Probably not, according to KPMG social researcher Bernard Salt, who has also produced reports for the NBN. This is because becoming a technological hub requires more than infrastructure.

Mr Salt said creating a silicon city, a workplace hub or a technology hub, was not just about attracting workers who wanted to work remotely.

“A worker attached to an employer doing work remotely is not creating work, they are just stretching work from one place to another,” Mr Salt said. “What you need to do is create your own business.

“It’s not about turning Byron Bay into a place to manufacture computers, it’s about turning Byron Bay as a location into a community that is innovative and creative and generates employment opportunities locally.”

But Mr Salt said he did think the NBN would facilitate the creation of silicon cities and super connectivity was critical to encouraging new ideas and enterprise.

“I think by the end of the 2020s super connectivity will certainly start reshaping society,” he said. He believes it will start influencing people’s decisions on where they want to live by the 2030s.

When mass numbers of people start doing this, Mr Salt believes the NBN will facilitate silicon communities, with people being drawn to lifestyle areas, probably within a two-hour drive of Melbourne or Sydney.

“You might find people going to Kiama for lifestyle reasons and because they have the right skills set, access to superconnectivity and entrepreneurship, you might find businesses established and created.”

Demographer Bernard Salt believes the NBN will eventually see people move to areas for lifestyle reasons.

With 1.3 million homes and business able to connect to the NBN currently but only 630,000 taking up the opportunity, Mr Salt said it was too early for the broadband network to have had much of an impact.

But Mr Salt, who has also produced research for the NBN, believes Australia will see the rise of areas blending lifestyle and technology precincts over the next 20 years.

“It may be Katoomba, Terrigal, Kiama (near Sydney) or Red Hill outside Melbourne or Torquay,” he said, adding other options could include Port Stephens, Byron Bay, Noosa or Mornington Peninsula, as all were within striking distance of a capital city.

“But it’s not going to work if you don’t have people with skills or the right attitude,” he said.

“You can provide all the infrastructure you like and it won’t work, it needs to be married with creative enterprise.”

WHAT YOU NEED

Mr Salt said Australia’s own “silicon city” could be a while off yet but the basis for “silicon suburbs” was already emerging, especially in Melbourne and Sydney.

He said two of the best known hi-tech clusters were in the north west Sydney suburb of Ryde, and around Melbourne’s Monash University in Clayton.

Both these sites were anchored by nearby hospitals, universities and other private businesses. Clayton was assisted by construction of the Australian Synchrotron, a $700 million radiation facility where experiments using particle accelerators are performed.

“You need an anchor to kick it off, whether that is a university, the CSIRO or a Synchrotron or weapons research,” Mr Salt said.

Bernard Salt says the basis for silicon suburbs already exist. Picture: Regi Varghese

He said you could also argue that a similar precinct was emerging in Perth around Murdoch University and the Fiona Stanley Hospital, and to a lesser extent in a high tech business park on the northern edge of Adelaide in Salisbury near weapons testing range at RAAF Woomera Test Range.

“Brisbane doesn’t really compete in this space at this stage although Southport on the Gold Coast anchored by Griffith Uni have a research and development precinct that is going gangbusters,” he said. This research facility was involved in nanotechnology, robotics, artificial intelligence and medical research, particularly around malaria.

“So there are elements of a Silicon Valley but they’re in suburbs as opposed to being a completely separate city,” he said.

When asked whether Ipswich could become a silicon city, Mr Salt said its advantage was that it was close to RAAF Base Amberley and other infrastructure but it needed a local university, a major research hospital and to develop its lifestyle.

“The problem there is if an aspiring scientist had to chose between Ipswich or Southport, where would you go?

“Its best chance is to pursue more aviation based technology, which Southport can’t compete on, as opposed to a being a medical research space.”

With five years to go until the rollout is expected to be complete, Mr Salt said he thought communities who got access to the NBN early did have an advantage.

“The longer the NBN is there, the greater the resonance, the greater time the population has to reorganise itself and recognise opportunities and facilitate the business and lifestyle of the future.”