HP recently cited Australia's National Broadband Network, or NBN, as a reason to site a new cloud-computing datacenter in the greater Sydney area. Datacenters require significant Internet bandwdith, and HP has been no doubt reassured that Australia will be able to deliver what's needed.

The truth of the matter is the NBN is a lunatic idea that may end up delivering great value to the Australian economy, but only if its promises are unfulfilled.

The NBN purports to install enough direct-to-home fiber optic cable to deliver gigabit-per-second speeds to 93% of all Australians. The other 7% will have to make do with 12mbps service.

Estimates of the NBN's cost run in the $35-40 billion range. This number approaches $2,000 per person, and almost matches amount the country spends on all of its IT each year. Imagine a national broadband initiative in the US that cost almost $600 billion, and you get the idea.

Nice Gig if You Can Get It
A gigabit per second is about 100X what one would need to stream movies, and several hundred times what most people experience in the world today. Popular plans in the US typically guarantee 4-6mbps service at a cost of $40-50 per month. Even though they often deliver about half of that, it's enough bandwidth to keep most of the people happy most of the time.

To be sure, national internet backbones that are fast, ubiquitous, and reliable are a key element of global competitiveness today. But establishing a holy grail of gigabit service for each individual household, or even 100mbps, seems to be politically over-ambitious and technically under-informed.

With luck, cooler heads will prevail in Australia, and a fraction of the budgeted amount will be used simply to build a hella fast backbone that delivers all the bandwidth businesses and individuals need.

This would not fulfill the promises of the NBN. But it would make any number of companies confident that they can build and deliver Cloud Computing services from a country that needs to upgrade its economy from its traditional reliance on raw goods.

Following through on the NBN, on the other hand, will build an Information Superhighway to Nowhere at a preposterous cost.

• Mezeo Software President and CEO to Discuss "The Profit Model for Cloud Computing" at Cloud Computing Conference & Expo
• Group Buying For Cloud Computing Capacity
• Nemertes Research Names IBM Top Provider for Cloud Computing