Abstract
Public policies to deploy enhanced local broadband access infrastructure in locations physically very far removed from the firms and customers with whom they transact are frequently justified by claims of increased competitiveness arising from the elimination of the ‘tyrannies of distance’. Yet relative distance-based disadvantages remain in respect of time-dependent applications and those hosted on distant infrastructures or requiring data sourced from distant locations. Trading off the effects of faster local access and latency on the time taken to load a Web page based on the HTTP Web protocol, we demonstrate that the increasing returns to distance rapidly overcome the effect of faster local access bandwidth as the distance the data must travel increases. We conclude that claims that investment in ultra-fast local broadband access will unconditionally facilitate a step-change in national economic performance are without foundation. In the absence of some compelling underlying competitive advantages, the ‘transformational’ economic benefits will be local rather than international in nature. At best, government investment in nationwide fast fibre networks is a defensive strategy that enables ongoing participation in the international economy, but at relatively higher costs than those faced by larger economies in closer proximity to end markets.
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Notes
The term the ‘tyranny of distance’ is widely attributed to the Australian historian Geoffrey Blainey, whose 1966 work The tyranny of distance: how distance shaped Australia’s history explored how physical distance shaped the development of Australia’s economic and social institutions. The metaphor was revived by Frances Cairncross in her 1997 work The Death of Distance where the internet was seen as a transformational technology.
For a discussion of the role of economic geography on economic performance in OECD countries, see Boulhol et al. (2008). Evans and Hughes (2003) discuss the relevance for New Zealand. Several studies have examined the implications for Australia, including Battersby (2006), Battersby and Ewing (2005), Wilkie and McDonald (2008) and Rahman (2005).
In Australia, this is the A$43 billion National Broadband Network; in New Zealand, it is the NZ$1.5 billion Ultra-Fast Broadband initiative). For a comparative evaluation of both proposals, see Heatley and Howell (2010).
http://www.med.govt.nz/templates/StandardSummary____40551.aspx. Accessed 20 October 2010.
http://computerworld.co.nz/news.nsf/news/lets-have-some-excitement-around-ufb-joyce. Accessed 20 October 2010.
For example, the New Zealand Capital Markets Development Taskforce has suggested that New Zealand could utilise its strengths in agriculture to position the country as a capital market hub in this area and to develop upon its existing expertise as an exporter of high value middle and back office financial market services for this enterprise as well as for funds management firms (CMD 2009).
See Howell (2003) for a discussion of business Internet uptake (including broadband) in New Zealand.
In the British Isles, ‘the Antipodes’ is often used to refer to Australia and New Zealand, and occasionally South Africa and Zimbabwe, and ‘Antipodeans’ to their inhabitants http://en.wikipedia.org/wiki/Antipodes#cite_note-1. Geographically the antipodes of the British Isles are in the Pacific Ocean, south of New Zealand. Wikipedia http://en.wikipedia.org/wiki/Antipodes (retrieved October 31 2010).
Broadband has been available to over 95 % of New Zealand telephony customers since 2003 (Howell 2003).
Strictly speaking, the HTTP protocol is layered on top of the more general-purpose TCP protocol. Most of the characteristics examined in this paper are discussed in this paper are features of the TCP protocol.
The speed of light in fibre-optic cable is approximately 2/3 of the more commonly quoted speed of light in a vacuum. Data can therefore be transported along a fibre-optic cable at a maximum theoretical speed of approximately 200,000 km/s. At this speed, it would take 200 ms to circle the globe at the equator.
Southern Cross (2006) Network http://www.southerncrosscables.com/public/Network/default.cfm (accessed October 22, 2010).
Although plans have been announced to construct a second cable to compete with Southern Cross, albeit with the same USA destination as served by Southern Cross. See Pacific Fibre http://www.pacificfibre.net/. (accessed October 22, 2010).
A smaller volume of traffic is directed to Australia, with interconnections through hubs in Guam and the Philippines, to Asia and beyond.
The authors acknowledge that alternatives to HTTP exist in the HTML5 specifications, with WebSockets being an example of data communications capabilities for browser-based applications without requiring the use of HTTP protocol. However, HTTP remains the dominant form of access to web-based applications in 2010 and thus is a primary area of focus for current policy development.
It is noted that the TCI/IP protocol on which HTTP relies was designed to carry nonreal-time data traffic. It thus contains a high level of redundancy in order to achieve error-free transmission, so is not optimised for low levels of latency required by real-time applications.
The authors acknowledge that other factors exist that impact upon the user experience, such as congestion, HTTP pipelining and selective acknowledgement. It is recognised that techniques exist that enable enhanced application performance, but these are applied on an application by application basis by individual firms, rather than across an industry so are less amenable to policy intervention. Whilst these and other factors may affect the user experience, our data set is based upon a consistent application of these tools so does not alter our findings regarding the correlation of latency and effective bandwidth.
Whilst it is possible to construct individual sites to cache active data content, the bulk of sites that New Zealanders access are internationally located and target an international audience and thus would not be calibrated to optimise the experience for New Zealand users.
http://www.belshe.com/about/ (accessed October 22, 2010).
These are not stated, so we are unable to replicate his findings directly. However, the findings are consistent with experiments done on sites with which we are familiar.
ITU G.992.5.
http://www.vodafone.co.nz/mobile-broadband/speed.jsp?q=mobile%20speed, confirmed by Akamai (2010), where the average speed actually achieved is reported as 1,098 kbps—that is, 1.07 Mbps.
http://www.telegeography.com/cu/article.php?article_id=35052 accessed on November 21st 2010.
Vodafone New Zealand sponsor’s presentation at the 1st Asia-Pacific Regional International Telecommunications Conference, Wellington New Zealand, August 26 2010.
We note that Grimes et al. (2009) show in the New Zealand context that there is no apparent improvement in productivity for New Zealand firms using fast internet connections relative to those using standard connections. Howell and Grimes (2010) offer a number of explanations based on the nature of applications as to why this finding might be plausible. This paper adds a further, technological, explanation for the Grimes et al. findings.
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Acknowledgments
The authors wish to acknowledge the helpful comments of Mike Belshe, Lewis Evans, Arthur Grimes, Dave Heatley, Robert Kenny and Anton Nannestad.
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Obren, M., Howell, B. The tyranny of distance prevails: HTTP protocol latency and returns to fast fibre internet access network deployment in remote economies. Ann Reg Sci 52, 65–85 (2014). https://doi.org/10.1007/s00168-013-0574-0
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DOI: https://doi.org/10.1007/s00168-013-0574-0