Australian Research Council
Telstra’s plans to rollout Australia’s largest Wi-Fi network over the next five years involves asking existing customers to allow part of their broadband connection to be used as hotspots. More than two million new hotspots are planned as part of the A$100 million-plus strategy to increase broadband connectivity in the places that Australians live, work and visit daily. The first 1,000-hotspots will go live before Christmas. But only two years ago Telstra shelved its plan to build a 1,000 hotspot Wi-Fi network, citing a lack of profitability and a clear customer preference for 3G connectivity. So what has changed? In contrast to the fixed line National Broadband Network (NBN) quagmire, the shifting position of Telstra with regards to Wi-Fi reflects a rapidly evolving wireless telecommunications market. The continued uptake of smart phones, tablets and other mobile devices, and the increasingly central role these devices play in social, economic and political life, is generating a phenomenal demand for wireless data. This is outpacing the development of cellular network capacity and creating congestion and reduced service quality on these networks. Telstra’s interest in developing a Wi-Fi network to offload some of this data traffic mirrors that by its international counterparts. The fundamental role that wireless communications now play in contemporary life has also translated into government interest in the provision of public Wi-Fi as civic infrastructure. Governments are well placed to do so since they control assets, such as light poles, on which the large number of low-range Wi-Fi access points can be mounted. While Telstra will make use of some of its own assets, such as public pay phone booths, it is seeking to establish hotspots in partnership with governments. This will spread the cost of provision, but Telstra are also undoubtedly keen to maintain some control over public Wi-Fi developments to make sure it reduces cellular congestion without cutting into its existing revenue streams. Telstra has also developed a business model that it believes will make sure Wi-Fi becomes a profitable revenue stream. Use of Wi-Fi hotspots by Telstra’s contracted home and business broadband customers will count towards their already monetised bandwidth allowance. Those without Telstra home broadband services will pay a fee to access the hotspots, the pricepoint of which will likely be structured to facilitate casual use but encourage regular users to consider signing up to Telstra broadband. Compelling as these reasons may be for Telstra to dip back into Wi-Fi provision, shareholders might be forgiven for worrying that the rollout of two million hotspots is an overcommitment, and one that will present similar headaches to those faced by NBN Co. But they should fear not, as Telstra will build just 8,000 of these hotspots, with the majority actually rolled out by Telstra’s customers themselves. A Fon on your Wi-Fi network A fascinating aspect of Telstra’s plan is its partnership with the European-based bandwidth sharing enterprise Fon. Telstra hopes that two million of its customers will follow the lead of Fon users around the globe and make part of the bandwidth they purchase for their home or business broadband service available to other users. So what is Fon, and are Telstra’s plans feasible? Fon was established in 2005 by Argentinian entrepreneur Martin Varsavsky. The company is headquartered in Spain, a country with a significant history of community wireless activism, such as guifi.net. Despite affectionate references to its community of “foneros”, Fon has moved some way from its cooperative roots. Backed by some heavyweight venture capitalists, Fon broke even after four years of operation. The company has been signing exclusive deals with foreign telcos like Telstra as a means of rapidly expanding its international hotspot network. The company now claims to have more than 13 million Fon spots worldwide. These will be available to Telstra customers through the deal. Fon’s bandwidth-sharing scheme is not unique, but its scale and ambition sets it apart. Commentators have been intrigued by the company’s evolving blend of user-generated and commercial elements. But its service model – which concentrates provision in private homes and residential areas – has been criticised for its variable accessibility and reliability. This concern would seem to be amplified in the large spaces of Australian cities. How many of the projected two million hotspots will be in low density neighbourhoods where Wi-Fi signals may not extend much beyond the front gate, or where there is little passing foot traffic? Will lingering outside houses to utilise the network boost commitment to the sharing economy, or arouse suspicion? Such suspicion will hardly be allayed by Fon’s unfortunate description of non-sharing network users as “aliens”. Telstra, then, will be tasked with boosting provision in commercial and tourist areas, and identifying incentives for householders to sign up and share. Who benefits from the deal? Specifically, it enables Telstra to secure a new footing in Australia’s rapidly evolving Wi-Fi scene. By asking Telstra’s customers to purchase and maintain a key component of the network infrastructure – the signal splitting modem – Telstra outsources infrastructure investment. More speculatively, the new network may generate revenue from casual users and remove data traffic from mobile networks in favour of premium voice services. Fon is aiming to build its global community but its business is currently concentrated in Europe, North-east Asia and South America. An alliance with Telstra brings Fon into the Asia-Pacific region. Partnering with major telcos may also help counter criticism of Fon’s reliability. The new hotspot network will provide a new platform for Telstra customers to access bandwidth from their home broadband plan and, depending on pricing and performance, may provide cost effective internet access for non-customers. More generally, roll-out of the network is likely to expand commercial Wi-Fi coverage in Australian cities, and may promote innovation and further technical development. Ian McShane receives funding from the Australian Research Council. Chris K Wilson and Mark A Gregory do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations. This article was originally published on The Conversation. Read the original article.
The cofounder of a pioneering Sydney-based robotics startup, with a Powerhouse Museum display and a successful crowdfunding campaign under its belt, says the sector is set to get much bigger but finance for projects remains an issue. Robological cofounder Damith Herath told Private Media there are a number of exciting robotics startups founded by Australians, including Marathon Robotics and Navisens, and the sector is gaining momentum globally. “It’s kinda like the ‘70s in computing and the ‘90s in the web. It’s the same feeling in the robotics community and the general consensus is it’s getting a lot bigger,” Herath says. “A few good examples are some of the startups Google has recently purchased, or Baxter, or Cynthia Breazeal, who quit her job at MIT to do a startup called Jibo and raised $2 million on Indiegogo. “But we have to be careful, because a lot of people over-promise and under deliver. Robots will move into other spaces, though not in the anthropomorphic sense. “One of the issues is finding people to finance you is tricky, especially for hardware. People are more comfortable with apps and things that get a quick return on their investment.” In January, Robological raised $3031 on Indiegogo for Ro-buddy, a pre-built board that integrates with an Android app, making it easy to build a robot without needing to learn a programming language such as C. Herath says the startup is finalising the board for fabrication in China. “You can build a Raspberry Pi robot straight away, plug in a camera and motors, and within 10 to 20 minutes you have a spy cam working with the Android app,” he says. “We think it’s useful because it’s in the pro-maker space, but it’s not as complex as Arduino. So if you’re building something in home automation, you can get something going with Android.” Aside from Ro-buddy, Herath says Robological does consulting and research work, including working as a research partner with the Australian distributor for Rethink Robotics’ Baxter robot and on Curtin University’s Alternative Anatomies project. It is also “chipping away” on a variation of the cloud-based internet of things robotics ideas put forward by UC Berkley professor Ken Goldberg, although Herath is remaining tight-lipped about what the project involves. The startup began with a robotics display called the Articulated Head, which was on exhibit for two years at Sydney’s Powerhouse Museum. “The three founders – Zhengzhi Zhang, Christian Kroos and I – met at the University of Western Sydney six years ago on a project called Thinking Ahead, which was a project of the Australian Research Council into AI (artificial intelligence). “We each had a slightly different background, myself with robotics engineering, Zhang with software engineering and Christian with linguistic and cognitive science. “Stelarc is one of the top performing artists in the world; an Australian artist who’s done a lot of work with robotics on stage and theatre. And the project I worked on was conceived of by Stelarc.” The project ended when funding ended, but this allowed the team to develop valuable intellectual property on robots and human interaction. The founders decided to form Robological to continue their research. One of its first projects was called Adopt a Robot, a research project looking into interactions between humans and robots. “It got a lot of good publicity because it captured the public imagination. We gave away seven robots and over six months we changed its behaviour and added a face… Each person who got a robot had to care for it and fill out a questionnaire every four to six weeks,” Herath says. Next month, Robological will jointly organise a workshop on robots and art with Curtin University as part of the Sixth International Conference on Social Robotics in Sydney. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
It’s been about five years since bitcoin emerged online, claiming to be the world’s first digital cryptocurrency. Bitcoin functions as a form of digital cash; really, it is a technology, using cryptography to ensure the validity of transactions and periodically generate new bitcoins. Bitcoin has grown into an industry now worth more than US$6 billion. Last week, the ATO published long-awaited guidance on the Australian tax treatment of bitcoin, in the form of draft rulings regarding income tax, Goods and Services Tax and Fringe Benefits Tax. The ATO’s position is that bitcoin is property. So bitcoin’s tax treatment for income tax, GST, and FBT, follows that of a valuable commodity such as gold or shares. Where bitcoins are exchanged for other property or services, this is treated as a barter transaction. Both the supply of bitcoin and the AUD (Australian dollar) value of the property received may be taxable. Income tax of bitcoin holders and traders Where a taxpayer holds bitcoin as an investment, capital gains tax (CGT) may apply to gains or losses made on the disposal of the bitcoin. This requires the taxpayer to track the purchase and sale price of bitcoin in Australian dollars. If the transaction remains under the A$10,000 CGT personal-use threshold, individuals who use bitcoin to purchase goods or services for personal use will not be subject to CGT. Equally, individuals are not required to report or collect GST when using bitcoin to purchase items for personal consumption. However, businesses will be taxable where bitcoin is received as payment for an ordinary business transaction, as the business must report as income the AUD value of the bitcoin received. Where bitcoin is paid to an employee, it is a property fringe benefit and FBT may apply to its AUD value. And if a business acquires and exchanges bitcoin in the ordinary course of business, the bitcoin is treated as trading stock. The ATO says bitcoin mining can be a business, depending on the scale and nature of the bitcoin operations. Mining could be treated as generating services income, as miners verify the validity of bitcoin transactions; but if bitcoin is really an intangible commodity, perhaps this is a business of acquiring or producing that commodity itself. How do we value bitcoin? The CGT treatment of bitcoin means bitcoins are not fungible. For example, over time, a business or investor acquires three bitcoins for a cost of $100, $500, and $1000 respectively. Later, one bitcoin is valued at $500, and the business wishes to use one bitcoin to pay for a $500 transaction. This could generate very different tax consequences depending on which bitcoin is sold: a taxable gain, a loss, or no net tax. This produces tax planning opportunities, as for other investments such as shares. Valuing bitcoin is difficult as it has “no intrinsic value” (as noted in an OECD working paper). It is also highly volatile. Determining market value at receipt and disposal of each bitcoin will result in administrative costs. GST on bitcoin exchanges GST will apply to a supply of bitcoin by a registered business and it is not treated as an input-taxed financial supply or as money. When bitcoin is used in a transaction with another business, two GST events occur: the supply of the product and the supply of the bitcoin. If cash were used, GST would be charged only on the product. While a business purchaser is entitled to an input credit for both the bitcoin and product supplies, this approach presents a commercial disincentive for using bitcoin as a means of exchange compared to Australian dollars. It is likely to be more costly and difficult for businesses to reuse bitcoin in business-to-business transactions. What is the alternative? The ATO’s approach is broadly consistent with the tax rulings issued to date by many other countries. US IRS guidance issued in March this year acknowledged bitcoin is a “convertible virtual currency” but states that for tax purposes it should be treated as property. Since then, a range of software has been created that helps automatically complete administrative tasks like valuing bitcoin. But other countries have taken a more flexible view. The UK has avoided giving a blanket tax classification to bitcoin, instead stating tax rules would be applied depending on the facts. HMRC guidance also notes that, given their volatility, bitcoin investments could be considered as gambling gains or losses (and therefore gains may not be taxable - or losses deductible). Most significantly for businesses, the UK takes the view that VAT will not be chargeable on bitcoin mining or on most trading transactions. Uncertainty about VAT and bitcoin in Europe has led Sweden to recently request that the EU Court rule on the VAT status of bitcoin. The ATO considered whether bitcoin should be treated as a foreign currency or “money” for tax. Some Australian and English courts have taken a functional approach to defining money as a “generally accepted medium and means of exchange, without being legal tender” [Emmett J, Travelex]. However, this is not widely accepted and other courts indicate that money must be issued or authorised by an act of sovereignty. A fundamental feature of bitcoin and other cryptocurrencies is that they are non-fiat, that is, not established or backed by a government. But what if bitcoin was to gain recognition as a currency by governments in future? This would undermine the ATO approach. California recently legislated to remove impediments for corporations to put bitcoin into circulation although its not legal tender in the US. Bitcoin in the global digital economy The ATO rulings do not discuss jurisdiction to tax bitcoin and nor do they address the challenges of secrecy and tax evasion or money laundering potential of bitcoin. These and other issues are raised in a recent OECD report on tax and the digital economy and an OECD working paper. The question of which country has a right to tax (and ability to enforce tax rules) is increasingly difficult to answer in the digital world. If mining, or trading, bitcoin is a business or service, where does this occur, given that bitcoin operates on a global peer-to-peer network? It’s possible that countries will treat bitcoin differently for tax and other regulatory purposes. The German Federal Financial Supervisory Authority classifies bitcoin as a financial instrument or “unit of account” that functions as a form of private money, for regulatory purposes. The inability to identify bitcoin owners is a serious problem for regulators, who may treat bitcoin as currency or cash for transaction reporting purposes even though tax authorities view it as property - and that could help tax authorities with enforcement. The tax and regulatory challenges of cryptocurrencies are only just beginning. Miranda Stewart receives funding from the Australian Research Council. Joel Emery does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published on The Conversation. Read the original article. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
The Abbott Government’s first federal budget has allocated funds for capital investment into the National Broadband Network (NBN) to continue up to 2017-18 but with a cap of A$29.5 billion. This falls well short of NBN Co’s original forecast of A$44.1 billion not withstanding various estimates of cost blowouts and new NBN Co leadership’s revised forecast of A$72.6 billion. The Coalition under Tony Abbott’s leadership in opposition and in government has long maintained that NBN could cost less and be rolled out quicker. That commitment was confirmed this week by Communications Minister Malcolm Turnbull following the budget announcement on spending. In a statement, he said the budget provides A$20.9 billion in equity funding to NBN Co to cover up to 2017–18. This is on top of A$8.6 billion already committed bringing the total to the capped A$29.5 billion. New sources of funding needed NBN Co CEO Bill Morrow now faces some difficult decisions in deciding how best to allocate resources to meet the objective of providing high-speed broadband across Australia. Since the Coalition’s election in September last year the NBN has been subject to a number of reviews and a wholesale clean out of management. With many reviews, such as the cost-benefit analysis, yet to report, the strategic direction for NBN Co is uncertain making it difficult to comment on future developments with accuracy. What can be said with certainty is the capping of the government’s investment gives a clear indication that Coalition’s NBN will be vastly different from that proposed under Labor. But some issues will need to be addressed so they do not provide a thorn in the side to NBN Co or hinder the rollout of broadband across the community. The funding cap amplifies the need for private investment. Only A$57 million has so far been earned in revenue related cashflow against the A$7.3 billion invested to date. NBN Co will therefore be required to increase revenue and raise funds through private equity or debt financing to ensure it can fund both operational expenses and future capital investments. But it will need to show an attractive rate of return potential to lure Australian institutional investors, superfunds and other international investors. Alternatively NBN Co will be forced to secure loans to bridge the gap. But whether the Abbott government would offer debt guarantees to the company remains an open question. NBN Co may seek to reprioritise the rollout of the planned network by cherry picking more profitable connections in metropolitan regions. But this may detract from the rollout of services in areas with a higher capital cost, such as regional towns and outer suburban areas, which are often those areas that have the most to gain from the provision of broadband. Deals with telcos The A$11 billion deal with Telstra to lease part of its existing network is currently under renegotiation. This might extend to accessing existing fibre-to-the-cabinet, hybrid fibre-coax and dark fibre in addition to copper infrastructure to speed up “new” NBN rollout. A changing technology mix means that some existing copper will not be decommissioned, entering operation as part of the NBN. The outcomes of the renegotiation and the terms of any new agreement will impact the rollout and the future technology mix. Fibre-to-the-node in some form and maximising the use of existing copper infrastructure appears to be a dominant base for such mix and existing carrier infrastructure may offer opportunities in a funding constrained environment. By further reviewing its construction and installation methods NBN Co may be able to achieve some cost savings and curtail cost blowouts. Network competition The NBN Co is operating in an uncertain regulatory environment. The current rules were set up with the NBN Co being a monopoly wholesale infrastructure provider. But internet service provider TPG’s plan to rollout its own fibre-to-the-basement network is changing the telecommunications landscape requiring a regulatory response. Failure to clarify this would force NBN to lose opportunities in rolling out to rapidly expanding apartments sector with a customer base often opting for higher tier services. Australia would then see its history repeated once more with parallel network rollout similar to the hybrid fibre-coax rollout by Telstra and Optus. Maintaining the wholesale monopoly for NBN Co could have possible competitive consequences. Currently there appears to be a confusion in the way wholesale services are defined with potential restrictions on emerging market opportunities. NBN review panel’s terms of reference is seeking input on clarification of this. Relieving NBN Co of its wholesale-only constraints, or at least redefining its limitations, would allow it to provide network connectivity directly to business end-users such as mobile base-stations, large businesses, governments and national infrastructure such as power grids which offer high growth potential. This approach would be good for NBN Co as it would open new revenue streams that would support the government’s desire for the company to increase private investment. Thas Ampalavanapillai Nirmalathas is a Professor of Electrical and Electronic Engineering. He is currently an Associate Director with the Institute for Broadband-Enabled Society which has received funding from a range of sources including the University of Melbourne and Victorian Government. He is also the Director of Melbourne Accelerator Program which helps to promote entrepreneurship culture through acceleration of start-ups. Views expressed in this article is entirely that of the author and do not reflect the views of his employer - University of Melbourne. He receives funding from the Australian Research Council. This article was originally published on The Conversation. Read the original article.
The scope of a competitive grants scheme has been questioned after it was revealed university research and development supporting grants totalled $22 million less in 2012 than in 2011, despite the government’s heavy focus on this area.
Australia’s innovation performance is “appalling” compared to other countries in the Organisation for Economic Cooperation and Development, according to a former chief scientist.
The Federal Government has pledged $67 million for more than 200 research partnerships between universities and businesses, with projects ranging from needle-free vaccinations to protection from cyber bullying.