The Left is winning again

In all the hand-wringing that goes on in left circles about "What's happened to the left?" I like to intrude with a simple hypothesis that the problem for the left was that it won.

It didn't win in the sense that there was a mass global outbreak of communism, or even fairly hard edged social democracy. But ultimately in the period from 1900 to 1970 there was a global settlement that was fundamentally Left. In Australia that was reflected in the so-caled Australian settlement introduced by Alfred Deakin and managed through to a Menzies Government that was highly interventionist and enacted massive social programs in extending pensions, higher education, state aid for schools and health care.

In his Crikey entry today Mungo McCallum has suggested that the problem for Malcolm Turnbull is there is no "right" party for him. Mungo makes the valid point that there never really has been a philosophical basis for the Liberal Party, writing;

Some breathless commentators have described it as a “battle for the soul of the Liberal Party”, which is frankly hogwash. The Liberal Party is a purely pragmatic body formed with just one purpose in mind: to oppose the Labor Party.

Until 1909 the conservative forces in Australia were split into two warring groups: the Free Traders and the Protectionists. But with a vigorous Labor Party on the rise, the sworn enemies united in a pact against the common threat. The recriminations were so severe, even violent, that they killed the speaker, Sir Frederick Holder, who fell from his chair with a cry of “Dreadful! Dreadful!” This was the inauspicious start of the Liberal Party Mark I, whose centenary was celebrated a few weeks ago.

Gerard Henderson is fond of pointing out that the Liberal Party of Robert Menzies was not some great small "l" liberal party of popular imagination, and did some pretty draconian things, like trying to ban the Communist Party, committing to two overseas wars and introducing conscription. In reality Menzies continued the great tradition of governing to keep Labor out, and his success was in reforming conservative politics to be more appealling to the mainstream - not more "liberal".

It was in the 1970s that the new conservative movement started to flourish. While the original thinkers like Ayn Rand and Fred Hayek that these conservatives draw upon had bee around a while, the start of a genuine philosophical movement that not only opposed the centralising tendencies of the left but also sought to promote the idea of "individual freedom" really only gained ground in the 1970s. There is extensive writing on this topic in the US, some of which I'm reading. But it is possible to conclude that the economic shock of the oil crises - shocks that were undoubtably made worse by the rigidities of the social democratic welfare state - created the framework for these ideas to gain purchase.

And so it was that through the 1980s and the 1990s the dominant global ideology became that of the free-market, smaller government and less state intervention. Even the parties of the left pursued this course. For the first time in three quarters of a century the left wasn't the only philosophical game in town. But the new right never really gained the kind of ascendency it imagined.

The question now is whether the conservative forces i the Liberal Party really do believe in the philosophical position or are merely (as Mungo thinks) habitually opposing what Labor offers. In the case of Nick Minchin I think it is definitely the former. His approach to all policy areas seems to be that the self-interest of players is the best outcome - no matter how "unfair" that contest may be.

Also in Crikey the more extreme Guy Rundle suggests that Malcolm Turnbull's choice of he loses the leadership might be to try to bring on a split - to take back the Liberal Party for the less ideological and more pragmatic approach of Deakin and Menzies and almost everyone else!

Splitting isn't really something the conservative side does, usually they reform after injections of talent from the other side. After the three great Labor splits (Hughes, Lyons and the DLP) the Liberals had their own one person split when the retired Don Chipp got together with some disaffected South Australians (Steel Hall) and the quixotic Australia Party to form the Australian Democrats. It hardly amounted to a split.

It would be fun to see what would happen in 2010 if Malcolm tried this on. I suspect young Mr Ridd would fair far worse against a Turnbull Liberal (or Australian Republican) Party and a Minchin Liberal (or Conservative) Party.

TV and broadband

Together with the announcement that the Tasmanian government will be distributing TiVOs in Tassie, comes news that the TiVO in Oz will be bigger and come with an online content service "caspa". (see news.com, lifehacker, Gizmodo, and itWire)

But the question is whether this is all a little too little and too late. Firstly US figures as Gizmodo reports show the TiVO in decline. There are other choices now built around Windows and Microsoft Media Centre, together with open PC architecture which means the customer chooses their hard disk size and be free to move their content around. The one advantage of TiVO was the EPG but there are now plenty of on-line EPGs basically built as Wiki's.

The really big part of TiVO though is the creation of caspa (or Caspa) - which is a video rental model (7-14 days to start, 48 hours to watch once started) that includes movies from blockbuster, TV content from major studios, and free music videos from BanditFM plus concert rentals.

With all these online style services you get the privacy concerns raised. I don't think TiVO creates anything new here. That article also talked about the trials and tribulations of managing distribution of the iVO.

Meanwhile TiVO is also going to be up against the Telstra T-Box. This hooks up with the Bigpond TV and movie download service.

Ultimately the "smarts" of TiVO are meant to be in the digital rights management side, it is about buying the right to watch not the right to own a copy of all the 1s and 0s.

Interestingly there is no announcement from Seven about using this platform for its own "Catch Up" TV service. "Catch Up" TV is where the shows shown on FTA are available free online for a period - two weeks in the case of the leader in this field the ABC iView. The ABC has now created the ability for a PS3 to be an iView box.

For both TiVo and iView a particular challenge is the pricing model for broadband. Because the variable cost of international capacity is a relatively high proportion Australia has a broadband pricing structure that includes the highly rational concept of download limits and/or fees. This is a rational pricing structure for anything where there is common capacity shared between users. The challenge is who should pay in the case of local content. TiVO and IView have been separately negotiating "un metered" propositions with some ISPs, which Telstra rejects.

There appear to be two logical points for strategising here. The first is whether or not the ABC, TiVO and the Freeview collective should be joining forces on the un-metering debate. This may require creating some "peering points" in popular peering exchanges around Australia and negotiating collectively (and sharing common costs in content distribution and storage). It would also make sense to create one "catch-up TV" platform.

he second point is how all this changes with the NBN. The PVR set-top box as a centre for both FTA and VOD gets a big boost from the fact that most broadband connections can't support real time video downloading...that is the store and view model makes sense rather than the point-click-watch model. The NBN changes all that with a dedicated 10Mbps from home to "exchange". In that model there is no need to copy the movie from the central store to the local device. Indeed there is no need to have the PVR for FTA if the FTA is distributed from a datacasting store in the exchange - because I can pause MY feed without pausing everyone else's.

Ultimately though the latter is about a dedicated IPTV service as part of the NBN not just an "over the top" VOD through internet model. The Tasmanian announcement was really just another ISP deal deal for TiVO - to TasCOLT customers as part of NBn hype. It is not a model of video over the NBN.

A curious motion

I noted that the Senate select Committee on the NBN reported and the Senate agreed to amend its terms of reference again. In my earlier post I questioned how the committee was meant to report given that the Senate motion hadn't amended the reporting date.

I was advised that the committee website has been updated with the new date - so everything was sweet. But I was still confused as to how this occurred.

The current explanation is simple. Senator Fisher moved the changed terms of reference by moving that recommendation 12 of the committee be agreed to. My problem is that I have been reading from the summary of recommendations which says;

Recommendation 12
9.18 That the Senate agree to extend the Select Committee on the National
Broadband Network, under the following revised terms of reference:
a) That the resolution of the Senate of 25 June 2008, as amended, appointing the
Select Committee on the National Broadband Network, be further amended:
(2A) The Committee is to examine the findings of the National Broadband
Network Implementation Study, the Government’s response to the
Implementation Study and any subsequent implications of that report for the
National Broadband Network policy.

However where the recommendation actually appears in section 9.18 it reads;

Recommendation 12
9.18 That the Senate agree to extend the Select Committee on the National
Broadband Network, under the following revised terms of reference:
a) That the resolution of the Senate of 25 June 2008, as amended,
appointing the Select Committee on the National Broadband Network, be
further amended:
• to omit "25 November 2009", and substitute "30 April 2010"; and
• to add the following paragraph to the committee’s terms of
reference:
(2A) The Committee is to examine the findings of the National
Broadband Network Implementation Study, the Government’s response to
the Implementation Study and any subsequent implications of that report
for the National Broadband Network policy.

In other words the recomendation in the body of the report provided the extension of time. I doubt there would be no legal problem in this case with taking the later version, as the first version results in an ineffective amendment.

But what would the position be if there was something in the wording of the summary that was diametrically opposed (like the version of the King James bible that forgot the "not" in "though shalt not kill")?

Remember '96 ...(or the Liberals part 3)

Much is being made over the repeated claims by Malcolm Turnbull that a failure of the Liberals to do a deal on an ETS is a win for the climate change denialists and the sceptics. Turnbull repeatedly claims that the party will be annihalated at an election if it goes with a policy of climate change denial.

There sre two interesting historic comparisons here. The first is about how to behave in opposition. The second is about how to win Government.

The first is the simple interesting story of unfair dismissal laws. When I put to a Liberal recently the proposition that a cabinet Minister when in opposition told me he did not intend to try to "govern from opposition" he replied that this wasn't true as the ALP had rejected the Coalitions change to unfair dismissal laws 44 times. I reminded him that once the Liberals got control of the Senate they implemented that policy - and lost the next election. Lesson - if opopositions try to save Government from bad policy they help the government stay in power.

The second is to remember how John Howard won in 1996. While it is nice to think of this as a stunning repudiation of everything Paul Keating and Labor stood for, all the soft left causes, the reality was somewhat different. In fact, Howard went to the 1996 election with the entire environmental/green movement on his side because of the promise of a $1B environment fund to be created from the proceeds of the sale of the first tranche of Telstra.

While the structure of this was as much about making the sale policy palatable it was also significant in getting on board - or neutralising - a significant block. This was after all the block that Richardson had secured to deliver the 1990 (I think) election for Hawke.

The conservatives within the Liberal party need to learn these lessons.

Policy inversion...(or the Librals part 2)

It is very hard to figure out exactly what any of the individual Liberals who are making a racket about the CPRS think. The statement by Sophie Mirabella in The Punch only adds to this confusion.

There seem to be a number of strands. The first are the outright denialists or sceptics. This is a very small group really, but led by the very vocal Nick Minchin who went on record claiming that climate change was a giant left wing conspiracy to bring down capitalism.

The second set is the we are too small set. This is the set that uses the language in Mirabella's piece that as we are the source of only 1.5% of the world's emissions then we aren't enough to make a difference. This is usually married with the concern that we will penalise our industry and only send the issue off-shore.

The third is the this is a tax argument, which focusses on the increased costs to families. This is perhaps the weirdest of them al, becaue the scheme is ultimtely NOT a tax, and even if it were it is a "good" tax in that it is designed to increasse the cost of what economists call "bads" (the opposite of goods). If the consequence of the scheme were to increase total Government revenues, then the expectation would be to elsewhere reduce tax. Just like the GST a new tax isn't bad itself, the champions of small Government really want the lowest over all tax take (as percentage of GDP) and that tax be raised as efficiently as possible.

The implementation of the scheme as an Emissions Trading Scheme is the response to all three of these criticisms. There are some who would argue that a more direct carbon tax or a more direct emissions limitation scheme would be better - but the ETS actually delivers the outcome through the economic methods hat should in theory be most favoured by the economic rationalists we thought populated the Liberal party.

Let's go through these.

Firstly, by implementing an emissions trading scheme Australia starts on a pathway that could be a GLOBAL emissions trading scheme. That means that in the long run the locational questions would be washed out - the cost to emit would average out across the planet. The sheme itself covers this by the compensation made available to trade exposed industries.

Secondly, to get to a global system veryone has to act. Being 1.5% makes us sound small - just like being 2% of the global economy does. But in reality we are in the top twenty economies and polluters. We have an obligation to be among the leaders. Further, we have an international credibility problem created by the Howard Government. They led the Kyoto discussions in many ays and got significant concessions and still didn't sign. We need to be going to Copenhagen saying "We are acting - you need to act too."

Thirdly, the idea of creating amarket in emissions simply is that the cost of carbon should be fully embedded in the price of products as finally consumed. That is, this scheme is a market driven scheme that delivers on the full Smith/Hayek demands that the invisible hand of consumer preference should guide production choices.

Finally, to the denialists, there is a simple response. The first is that waiting for incontrovertible evidence of warming before acting will be way too late. The second is that acting to put a higher price on the consumption of fossil fuels can be no bad thing as it will encourage greater efficiency in the consumption of a limited resource. Further, global relations would be fundamentally changed if we could reduce our reliance on oil.

In his column in today's AFR John Roskam from the IPA (article not on their site yet) highlights the fact that these Liberals opposing the ETS are deviating from the wish of he business community which is saying it wants certainty over the arrangements. Roskam is trying to make some political point by also pointing out that business supported the stimulus package. Indeed his claim is;

The split between the Liberals and big business says more about big business than it does about the Liberal Party. These days the objective of the organisations that represent big business is more likely to be to maintain a working relationship with the government of the day.

This is in effect a charge that business supports a "corpoartist" state. This charge, at least on the ETS, is wrong. It is business and the Government that are pursuing the "neoliberal" agenda of using markets. The Liberal is divided - those opposing the CPRS are either excessively short sighted on the question of global resource management or re willfully objecting to a neoliberal solution to a global problem.

The Liberals....

The single best description of the current turmoil comes from the ABC. Chris Uhlmann comes up with the line;

There is an Australian inversion of Catch-22: if you want to lead the Liberal Party now you must be insane and shouldn't be allowed to.

His analysis is good, especially the problem for Joe Hockey. Joe needs to resist the temptation to run - the party room needs to know their choice is Malcolm or Tony. If Tony wins the moderates can bask in the knowledge that the coming electoral defeat will kill off the only credible conservatie leader for good.

But it does show what we've always known. As both Malcolm and Tony want to lead the Liberal party they are both insane!

Do we need 4 NBNs?

In the telco trade press there was some commentary following a report by Southern Cross Equities. I haven't read the full research but I gather the conclusion is that the NBN as a wholesale only access network means competitive advantage will come from core network, or brand. The research concluded therefore that Telstra, iiNet and Austar (Austar?) are well placed to benefit from the NBN.

The report highlights one of the current imponderables in the NBN discussion, which is exactly where the boundary points between the NBN as an access network and vrious core networks will exist. More importantly, should NBN Co be a participant in the national backhaul market as well as the access market.

It is hard to conclude that NBN Co should be allowed to be vertically integrated in backhaul and access and to at the same time compete in the national backhaul market, for exactly the same reasons that current policy rejects the access player participating in retail services.

But leaving "backhaul" to a competitive market also is a nightmare because of the differences between routes. As I've previously noted distance and traffic density are really important. In fact, the biggest issue for getting "equivalent prices" acrosss Australia isn't the differential cost of access but the differential of backhaul. It is also nonsense to suggest that "competitive supply" is a good outcome when the issue is lack of demand to meet the cost of ione fibre.

This suggests that a national strategy of one backhaul network still makes sense, priced at the same cost per megabit no matter where it is delivered. But that one "backhaul" network probably shouldn't be part of the NBN access network for the reasons above. This ultimately is the structure of the proposal that was put to the Government for NBN 1.0 by Axia.

So we need two NBNs at least - the national NBN in fibre access and the national NBN in backhaul. But there are still two more we need.

The first is to realise that exactly the same economic factors that mean we need one fibre access network are starting to come to play in mobiles. The two factors are that higher speed networks require wider allocations of contiguous spectrum. The ongoing fragmentation of spectrum for competitive carriers just doesn't suit the technology. The second is the existing inefficiency - the fact that a user can experience congestion i an area covered by a base station that is underutilised. The latter factior has seen its expression in the desire regularly expressed by regional consumers for roaming, as again noted by the RTR.

This issue now meets the challenge of using "advanced wireless" for the NBN. A couple of facts are relevant. The first is that the regional needs are best met using lower frequency spectrum for propagation. The second is that the areas that need to be served by the NBN wireless are not viable as stand alone wireless networks, they are better as additional sites on a single network.

This suggests that the govrnment coul take an NBN approach to future spectrum allocation. In particular when the 700 MHz (digital dividend) spectrum is allocated it should be allocated as one national lot that includes a must build condition as well as a must wholesale condition. To make the lot attractive it could include an allocation of the 2.5 GHz as well. Indeed it seems likely that the best outcome in 2.5 will be to seek only two licencees not three or more. The existing 1.8 GHz and 900 MHz allocations could be refarmed to provide a third operator with an LTE capability.

This requires the Government to think harder about the policy issues in spectrum.

But the same inefficient use of spectrum issues are now emerging in television broadcasting. In the analogue days there was a logic between the association between a 7 MHz frequency slot and a "channel" of broadcasting, but with digital the 7 MHz slot ca be used for different combinations of channels depending on coding. But each licencee using a 7MHz slot can have spare data capacity that is "going to waste". There has been insufficient discussion about why we are operating digital television through a separate multiplex for each licencee rather than combining all signals into one multiplex. The efficiencies are greater than in just frequency utlisation, but in frequency utilisation they are large.

So is there a logical policy for four NBNs - fibre access, backhaul, mobile and digital television? These are efficiency questions that all ultimately pit a static productive efficiency against a dynamic allocative efficiency argument.*

I'm not sure I know the answer. The outline here is not meant to be advocacy for these positions as such, but they do seem to be the kinds of discussions we should be having.

* Note the usual policy discourse defines three kinds of efficiency, allocative, productive and dynamic. I dispute that there are three - instead there are really four - there are the classic productve and allocative efficiency both of which are "static" fficiencies described by whether what happens in a specific point of time is efficient. The other are dynamic productive and allocative efficiency - the latter being the one most commonly thought of as "dynamic" efficiency which is choices over time about when to invest. At the CPRF Ben Frens gave a paper in which he referred to a concet of "governance" efficiency which he referred to as spectrum sharing and flexibility. I think this is the concept of dynamic productive effociency.

I was (sort of) wrong ... NBN Select Committee

I noted the notice of motion that the Senate Select Committee on the National Broadband Network was seeking an extension of time to report and speculated this was a committee that just goes on.

In the end the motion was only seeking an extension from 23 November to 25 November. The reasons can be gleaned in the final report in the comments from Senator Ludlum. The draft report presented by the Secreteriat to the Committee had undergone significant changes by the majority (coalition) Senators, and Senator Ludlum needed therefore extra time to add his dissenting report.

In the end the report wasn't tabled till 26 November, and with it a motion was moved to adopt recommendation twelve of the report. The discussion in Hansard notes that the Government thought the further matters were more appropriately referred to the relevant (standing) references committee. The subtle difference between the two is who chairs them. Membership is not really that significant as lots of Senators not members of committees regularly "participate".

Recommendation 12 read;

That the Senate agree to extend the Select Committee on the National
Broadband Network, under the following revised terms of reference:
a) That the resolution of the Senate of 25 June 2008, as amended, appointing the
Select Committee on the National Broadband Network, be further amended:
(2A) The Committee is to examine the findings of the National Broadband
Network Implementation Study, the Government’s response to the
Implementation Study and any subsequent implications of that report for the
National Broadband Network policy.

An interesting part of this resolution is that it added a reference but did not amend the reporting date (as already amended) for the Committee. The current terms of reference specify the amended reporting date of 25 November 2009. So on my question - should I bother with the submission I finally think I want to make - I am no clearer. I think a Senate Select Committee cannot undertake further inquiries even if additional material has ben added to the ToR if it doesn't have a reporting date set for the future. And unless Senators sort this out today then the Committee can't do anything till February.

When wrong means...advertising

Telstra through BigPond has become the latest ISP to try to monetise customers mistyping of URLs (or following broken links).

The idea is simple, your ISP runs a DNS server that your browser goes and queries when it is trying to find a web page (the DNS relates domain names as they appear in URLs to the IP addresses that routers atually use to make connections). When the server identifies that there is no match for the domain name then normally an error is returned to you - and what happens depends on your own browser settings.

The monetisation comes by sending mistyped requests off to search and producing a search page with typical sponsored links. There is a more advanced version of cyber-squatters who actually register the domain names of frequently mistyped domains (a good example is aple.com).

ISPs, of course, justify it as being a "service" to users. I guess personally I don't really mind because I will ignore the returned page anyway. But is it really just indicative of the whole damned relationship between telcos and customers? Isn't it really just abuse of the position of a service provider to attempt to profit from a customer's misfortune?

Thoughts....

Broad and broadband

Much is being made over some recent comments by the CEO of AAPT Paul Broad that criticise Government policy making with respect to the National Broadband Network (the NBN). These comments are really part of a long running critique by Broad, and also reflect yet another strategic error by Telecom New Zealand with its AAPT asset.

I've found three Broad comments on the NBN to reference. The first was at the time of the bids for NBn 1.0 closing where Broad questioned the need for the additional speed. More significantly he indicated that the need for more broadband could be simply solved as;

There's willingness from all industry participants in this debate to pull a chair up to the table and ensure the access rules we play by prevent any one player obtaining an advantage.

This rather naive view was followed by an immediate criticism once the NBN morphed into NBN 2.0 (the FTTP) where he appeared on Lateline Business and criticised the economics of the proposal. At core however was his comment;

Getting speed into parts of the economy, where it hasn't got speed: right thing to do. But, please, don't duplicate what's already out there. Recognise that we've actually grown speed in this market considerably in the last two or three years, leveraged what we've done, incrementally changed the investment profiles that all of us have made. And we as a nation'll be better off.

His most recent comments appeared in the Oz where he claimed there was no need for the NBN and that it really was just a ploy to separate Telstra, saying;

The NBN is absolute rubbish. It is a political ploy to separate Telstra. It is a political tool to beat Telstra up with because (former Labor government communications minister Kim) Beazley got it wrong all these years ago when they formed Telstra. This is a way of trying to correct it.

Apart from the fact that the real decision not to separate was made by the Howard government (at privatisation) this statement is big on the claim that the NBN is only about industry structure.

The reality is that since its inception the NBN has been a plan with TWO goals. The first is to create the national broadband infrastructure needed for the 21st Century, the second has been to correct the market structure issues in the industry (that lay at the heart of Broad's first set of criticisms). The need for intervention to achieve the infrastructure outcome has been clear ever since Telstra announced in 2005 that it wanted to speed up the CAN, but do so in a way that denied their existing wholesale customers access or did so without regulation. The need for intervention was further revealed by the policy cock-up of the Howard Government in proposing to conduct a tender for policy outcomes (the plan of the original expert panel).

The structural issue is one where the ALP had looked before under Lindsay Tanner as shadow minister and recognised the practical difficulties of achieving a separation. Instead they turned their minds to the concept of a prospective separation, that is achieving separation at the time of the construction of new network.

Neither the need for speed nor the structural conundrum alone is the motivation for the NBN policy, it is both.

The really interesting question is why the CEO of AAPT has become the leader of the anti-NBN cheer squad. The answer can be found in the long stream of strategic errors made by TCNZ with AAPT.

The first of these was to acquire only 80% and leave the remaining 20% that was largely in the hands of management, this set up some interesting debates about conflict. The second was to buy a company that had come into play through a placement of 15% new equity to fund capital programs, and then not really be prepared to further invest. The third was to immediately fragment the business with two "Trans-Tasman" business units in mobile and internet created. These businesses, especially the internet one, proceeded to make a series of decisions that stalled AAPT's entry in its own name into the residential broadband market. The mobiles business ditched its original CDMA vendor Samsung to go with the vendor in NZ Lucent, a decision that failed to recognise that the Australian network requirement was more like the network Samsung built for Hutchison (Orange) than Lucent was building for Telecom.

These errors saw AAPT abandon its "CLEC" strategy that had required the capital funding. The next five years saw a dedicated focus to implementing an "infrastructure light" telco model. This included the decision to invest in a new customer service platform in Hyperbaric. A key feature of that platform was its ability to provide service in an infrastructure light model.

AAPT did very well in this cycle, growing both revenue and profit as the big lumps of underperforming investments and abandoned projects worked through the system, including the CDMA cost and the LMDS cost.

It did not, however, do well enough to justify the original price paid by TCNZ at the top of the telco boom. Part of its success was its developing relationship with Telstra as a wholesale customer. A focus on clearing disputes and positioning AAPT as an effective channel worked well. The failure in the strategy was to keep asking for too much, to seek new input prices on the promise of finalling getting to inking a longer term strategic relationship. This left AAPT exposed. When sentiment at Telstra changed against wholesale, AAPT had no medium term protection, and, indeed, some contacts at Telstra who had grown sick of the AAPT negotiating stance.

At this point AAPT was faced by a choice. Work harder on rebuilding the relationship, or make the call on buying infrastructure. At this time a third option was presented to TCNZ - sell the AAPT entity. This strategy was pursued but resulted in the party who had first approached TCNZ to acquire not even formally bidding at the end. TCNZ found no satisfactory buyer, but decided to instead buy one of its suitors, PowerTel, and make the decision that it was getting into the infrastructure business.

One of the key reasons AAPT stayed infrastructure light was that AAPT recognised that broadband over ULL was at best an interim technology and that a move to FTTN was almost certain. This was clear from the industry fights in 1999 and 2000 over the migration of loops from exchanges to pillars. This took some time to be realised - but from 2005 it was clear that something would happen.

Indeed through the period that TCNZ first tried to sell AAPT and then buy PowerTel there was not only the Telstra proposal, but the counter proposal from what was the G9 but became Terria. It appears that though PowerTel and AAPT were both part of this consortium, it was the belief of some that the combined entity did not need the partnership and (in TCNZ) a belief that nothing would happen.

They were wrong on both counts. Paul Broad's pronouncements on the NBN should be interpretted for what they are - the commentary of a CEO who has backed the wrong strategy.

The Committee that never ends

I was thinking of making a late submission to the Senate select committee on the NBN and noted on the website that today is the reporting date.

However, I note from the Dynamic Red that today there will be two motions today;

No. 641 – Chair of the Select Committee on the National Broadband Network (Senator Fisher) – Extension of time to report
No. 642 – Chair of the Select Committee on the National Broadband Network (Senator Fisher) – Authorising the committee to hold a private meeting otherwise than in accordance with standing order 33(1) during the sitting of the Senate today.

I have no idea whether they are seeking a short extension, or another long one on the basis that they need to see the Implementation Study first. In any case if the extension is more than four days then the report might as well be delayed to February (though it could be tabled out of session).

Customer Service Again

Further to my post two days ago, Paul Sheehan in the SMH has recounted his own recent telco horror story.

A part of that is his frustration with offshore "call centres". It does seem to me that this is a triumph of efficiency over effectiveness. That is, all our customer calls cost us a lot of money so let's bring the cost per call down rather than the harder task of reducing the need to call.

All customers will tell you, the best customer service is when I don't have to ring you.

Broadband penetration - econometric wars

The FCC in the US published research by the Berkman Centre at Harvard to assess the impact of certain policy parameters on the speed of broadband adoption.

This research has been much criticised, with one particular criticism by George Ford focussing on the econometrics involved.

The issue has a particular Australian resonance because the original econometric model used is one developed by our own John de Ridder who first presented this work at the 2006 Communications Policy and Research Forum.

At issue is the appropriate econometric techniques to be used in estimating broadband demand, with the study utilising a simple OLS approach estimating demand only, rather than a simultaneous version that estimates demand and supply. I do not propose to enter that debate at all, except to note that this debate reflects an ongoing problem with almost all econometric studies. That is, the degrees of fredom available to researchers.

It also highlights another factor which is the relationship between published results and data sets. The Berkman report acknowledges John for making the data set available. I am surprised that in the age of the Internet it is not manadatory (or at least the expected norm) for datasets (unless confidential and the confidential detail cannot be "masked") to be published online.

The question for me is whether Panel data can ever be meaningfully used in either form to assess factors that determine an adoption rate. My reasoning is simple, that all adoption cycles follow some kind of S-curve and it is the shape of the curve that needs to be "explained" and that the points on the curve (the observed data) need to be first fitted to the curve and then the parameters of the curve estimated through a second exercise. Put another way, what needs to be explained is not the adoption level, but the rate of adoption.

Using Panel data (i.e. cross section data) in either of the methods used above carries an implicit assumption about what effects the shape of the curve.

First let's consider why adoption follows an S-shaped curve. I can identify three simple factors that would individually result in S-shaped adoption curves. The first is a simple demand effect, and the relationship of demand to income. Assuming price remains unchanged there will be an adoption process as progressively more people for whom the product is of interest can afford to buy it - that is as relative incme increases compared to supply costs.

The second is a supply effect, that the well known concept of the "experience curve" in production means that the cost of supply declines with increases in cumulative production. That is mathematically a similar effect to the above, but is driven by decline in cost rather than increae in income.

The third, and perhaps most important, is a variety of network effect. In the study of economic dynamics a simple exercise is to develop an adoption model that assumes that an individual's propensity to acquire a service is proportional to how many other people have already acquired it. This generates the simplest of all adoption curves, the logistic curve. This model also provides an interesting interpretation of the often claimed great Australian propensity to adopt. In practice Australian adoption curves start out very slowly, and then increase rapidly. An interpretation of this is that Australians are more influenced by what others do than other countries. In popular culture it looks like fast adoption because it progresses rapidly once it starts, but this ignores the slow start.

Fitting adoption to S-shaped curves suffers from a lack of clarity about what is the appropriate form of the curve, the fact that as a non-linear estimate it requires the study to choose some initial values and the fact that the "fit" may not be unique. The flip side is that the cumulative OECD data provides some very good data for the analysis - that shows all countries with some kind of S-curve with vastly varying slopes.

Finally, one has to wonder whether trying to use econometric analysis to determine the effectiveness of different policy settings on broadband adoption isn't just an overall inappropriate application of a tool. The data set cannot be adjusted forv the varying quality of the product, nor the complicated pricing structures.

Full credit to John for trying the initial study, I thought it was dodgy then and I still do. But equally I think the Ford conclusions are equally dodgy.

Note: Many thanks to Grahame Lynch of Communications Day for bringin the controversy to my attention through the pages of his newsletter.

Data retention and telco providers

Mark Newton has made a bit of a name for himself as a campaigner against the ALP's internet filter policy. He has now written to New Matilda on the subject of privacy.

What has caught Newton's attention is a proposed law in the UK requiring data retention by telco providers of all data that they have about customers. The bad news is that store and forward type communications like e-mail do spend their time on servers, whereas phone calls don't. But for communications that don't spend time there there will still be a requirement to "log" them.

This is not realy the dramatic erosion of freedoms described because this has always been the case for phone calls that were charged on an "event" basis. t is new for other forms of communication. It is notionally as well protected as access to the existing phone call log.

For a person who works in Australian Comms Newton might like to know that similar data retention proposals have been hanging around in the Australian space since the Blunn Review. Personally, I don't have a concern about this level of "monitoring". It actually already happens on our physical movements hrough CCTV.

What will be important will be both how well it is protected, both physically and lgally. The latter needs to include serious penalties for disclosure - such disclosure may be far from a victimless crime.

Telcos, customer service and regulation

Thanks for asking, the paper I mentioned I was giving at the CPRF went well. While the paper will appear in a volume of papers there, it is already available under speeches on my website.

The paper didn't really reach very dramatic conclusions as my survey data wasn't large or random, resulting in limited ability to make conclusions about the significance of the findings. It does appear that service provider employees and consumers share the same views of what good customer service looks like, and that telcos don't provide it.

The new hypothesis I have is that there is a fundamental flaw in the model of a modern telco, both in the factory approach to customer service (or call) centres and the idea that telco products are too complicated for even the staff tpo understand them.

The latter was a theme in the paper following mine by Elaine Lally and David Rowe titled "Impossible choices: complexity and dissatisfaction" that builds on an earlier paper they titled "Preparing for a Broadband World". The paper was very good and concluded that confusion is an issue and the solution might be found in "choice architecture". This includes the stuff in the book Nudge that I was first alerted to by Lindsay Tanner.

The idea might be appropriate, but I return to the issue in my paper which is how do we get the appropriate behavioural change in providers to implement choice architectures. Legislation is a very blunt instrument for this.

It was strange to note therefore an article in this weekend's Australian Financial Review by Tony Boyd titled The Most Hated Companies: Meet the confusolpoly. In it Boyd recounts his own recent customer service experience and writes;

Optus says technology products are complex to administer and sometimes this results in confusion in matters such as billing or movement from one service to another. It admits it needs to lifet its game.

It is unclear whether this is a telco admitting that complexity is impeding its customer service agents or merely its customers.

The article continues to compare and contrast the responsess of the three biggest providers, and the "tough talk" of the ACMA Chair Chris Chapman at ACCAN CEO Allan Asher. It is Asher that uses the "confusoply" term invented by Scott Adams, but first applied to telcos in Australia by Joshua Gans (at an ACCC conference).

The ACCAN itself recently conducted a half-day seminar on Responsive Regulation. After a few set pieces by regulatory types, most of which focused on the general idea that their mission was to make markets work for consumers (the ACCAN plan) there were four commentators at the end. These provide the four "alternative" views to the thrust for competition in telecommunications.

The first is the group that simply believes regulation is a necessity and that, despite evidence to the contrary, it works.

The second is the simple rejection of "economic" goals instead of social goals.

The third is to focus on the 5% of vulnerable customers and argue that competition will ignore them.

The final one is that competition depends on marketers, and that their approach is actually anti-consumer as they prefer a confused customer.

The beauty is that there is a grain of truth in all of these, but that the real challenge does lie in the learnings of behavioural economics as noted by Lally. But it is not just a better underrstanding that consumers aren't the model of rational decision makers assumed in theory, but understanding that providers aren't either.

The one thing I know is that you can't regulate for improved customer service.

There is no jihad on neoliberalism

I recently had cause to find agreement with Henry Ergas. Thankfully after his latest column a more normal situation has returned.

He asserts that "this government has elevated its attacks on neo-liberalism into a jihad". Apart from the fact that that is potentially highly offensive - to muslims at least for mis-using the term jihad, and to government for suggesting that anyone needs to be actually killed - it is his defence of neo-liberalism that is disturbing.

Firstly he continues with his ongoing thought that the GFC just showed that markets are rational because irrationality eorrection. He continues to be dismissive of the stimulus plans globally, partly because the GFC has bottomed before the money as spent. In both of these assertions he ompletely underestimates the role of the human factor of confidence. Allowing the global economy to fully bottom out created the risk of a complete lack of confidence in all the institutions of the capitalist state. The last time that happened we saw great movement to fascist and communist states. At the same time the (credible) promise of stimulus konomic activity up because people as a whole were less fearful.

If I go back to my comment about Hooke there is much to be said in a complex dynamic system for dampening all the forces. Unrestrained markets do lurch i unpredictable ways. We are probably better to accept slightly lower rates of overall long run progress if the cost is avoiding savage short-term downturns that have an uneven distribution of effect.

There is no government campaign against capitalism or markets. There is a desire to adopt a more measured stance to how we understand the operation of markets and how we can better manage their own excesses. There is certainly no jihad.

The States and all that

I find the discussion of the Australian Federation a fascinating topic. There is almost no one you will find that will tell you they think the Australian system of Government is optimal.

Most will agree that the current division of responsibility between the States and the Federal parliament are anachronistic at best, and totally dysfunctional at worst. You just look at the mis-fit between planning aged care and hospitals.

Most will agree that were you to have States there is no logic about the current boundaries of them, especially the fact that the vast inland is entirely run by coastal capital cities. Equally populations rely upon service delivery from capitals that aren't their closest.

A few, like Tony Abbott will suggest constructive moves to rectify this. His proposal for an extra part of section 51 of the Constitution to allow unilateral Federal takeove of powers looks both practical and achievable.

As Craig Emerson hhas recently noted plans to abolish the states are doomed to fail. Importantly the kind of referendum mentioned in the article wouldn't of itself aboloish the states, a federal referendum could expunge all reference to the States, it could provide the Federal parliament the power to make laws about anything, but it can't actually abolish a state.

Meanwhile the head of the department of PM&C Terry Moran has been flagging Federal Government frustration with the ongoing process of reform through COAG. In her article Michelle Grattan notes that;

In a September round table involving several former premiers, Bracks made some pointed criticisms of the COAG process - namely an overcrowded program and the problem presented by the ministerial councils. ''There is probably too much all at once in terms of the COAG reform agenda … it needs to be prioritised and scheduled,'' Bracks said. The ministerial councils were ''blocks to reform'' because ''the vested interests come out there''; he urged scrapping most of them.

John Wanna, politics professor at the Australian National University and an expert on federalism, says the system is at ''a crossroads. It's not clear yet that we've embraced a new federalism. There's a lot of discussion about a new agenda for federalism - which is collaborative, co-operative and with governments deciding where each level can add value. We've heard the talk, but we're not yet seeing a lot of evidence of outcomes in benefits for the community.'' But, he adds, it may take 10 to 20-years - a timetable that doesn't quite fit the Rudd temperament.

The issue confronting COAG is also that it struggles to maintain one agenda, because everything changes quite regularly. It only takes one government to change to shift the whole agenda. The comment by Bracks about Ministerial Councils is perhaps the most important. These need to be simplified from the current list. There is also probably a case for institutionalising the secretariat of COAG and Ministerial Councils under COAG, rather than under PM&C and the variouis Federal Departments. The COAG Reform Council has its own Secretariat, but it is also hard to see the relationship any more between the reform council and COAG itself.

But the last word on Federalism is that we need to remember the concept of adding states - there are still some who will remind us of the space reserved for New Zealand and why there is a Canverra suburb named after a New Zealand plant. Federalism is a really good way of bringing disparate sovereign states together to form a new state. It worked in the USA, it worked here. In many ways it is a process underway in Europe. It seems self-evident that it is a process that all the Pacific Island states need to undertake together, and then with Australia and New Zealand create a Federation of the South Pacific.

But things that seem logical do not alwats come about.

Customer Service

Just as I put the finishing touches to my paper for the Communications Policy and Research Forum I found that Shirli Kirshner has made a guest blog post entitledThe gift of complaints – how to turn misery into brand equity.

It is interesting that Shirli, who knows a thing or two about disputes and telcos, has a view of turning complaint management to an advantage. The analysis of telcos is that no one is doing this at all well. In part that might reflect the fact, even included by example in Shirli's post, that bad news stories are carried more than good.

But ultimately the good example Shirli uses of good service - a Virgin customer service rep - didn't need to be "empowered" by management, the circumstance could still be a tightly scripted case where the decision is still controlled by the process, just the process is better able to predict what circumstances might affect the agent.

Telcos need to undertake fundamental redesign of their customer service functions that needs to be focussed on the language of the transaction, not just the metrics of call handling performance. A good step would be to go back to calling the institutions "customer service centres" rather than "call centres" - focus on what they do not how they do it. And there is nothing about "sales" that means it can't live in a customer service centre - after all, one of the most important parts of customer service is making sure I get the right product for my needs.

Remembrance Day

My lead comment in Crikey says it all.

High Court and drunks

An interesting article about a High Court case. To understand thios post you'll need to read the article (the post is an expanded version of my online comment).

I think the matter here is that only one of three potential legal issues was covered, duty of care. Short answer is the High Court probably got it right in that the publican did exercise his duty of care - he did try to stop the patron driving.

We could perhaps go further in defining the responsibilities of someone legally serving drugs that will result in diminished responsibility. Would the same decision be made if an anaethetist had administered drugs that made a patient drowsy and of impaired judgement and had handed back to the patient the keys knowing the patient planned to drive?

The alternative case may have been a breach of contract, the patron had agreed with the publican to be served alcohol on the condition that the publican retained the keys. I just don't know if enough of the elements of contract exsted in that agreement.

But the really interesting question is that the Court really only ruled that the publican did not have an obligation to not hand over the keys. It did not, contrary to the implication in the article, rule that the publican had to hand over the keys (see note below). That is, the publican may have been safe from the charge of false imprisonment by not handing over the keys, he just didn't have to not hand them over. To take the fire analogy further, while the legal defence of necessity means you can break into a burning house to save a life, it does not oblige you to do so. The pity will be if the judgement results in RSA training being perverted to misrepresent the judgement.

The judgement itself contains a really beautiful summary of the basis for the decision;
The Proprietor and the Licensee must succeed for each of three independent reasons. First, even if there was a duty of care, and even if it was breached, it has not been shown that the breach caused the death. Secondly, even if there was a duty of care, it was not breached. Thirdly, there was no duty of care.

On the more intricate matter of the doctrine of necessity, the judgement said;
The second and third alleged breaches involve the difficulty that deflecting, delaying or stalling Mr Scott, apart from the deception which it would probably require and which itself might have irritated Mr Scott, could not have lasted very long. If it lasted for any length of time, it would have involved non-compliance with Mr Scott's desire to exercise his legal rights to possession of the motorcycle. It would be unlikely, given Mr Scott's mood, that the Licensee could maintain a posture of open non-compliance for long, for a point would soon have been reached at which any manifestation of resistance by the Licensee to returning the motorcycle would involve the actual commission of a tort in refusing possession and would provoke Mr Scott into an attempt to vindicate his rights by self-help. The Licensee could not lawfully detain Mr Scott, or his wife's motorcycle, or the keys to it. Deflecting, delaying or stalling would have been as ineffective as offering counselling to Mrs Cole in Cole v South Tweed Heads Rugby League Football Club Ltd, or persuading her to regain her sobriety in a quiet place before departing from the Club.

I maintain as a non-lawyer that these words don't actually go to the defence of necessity, for the simple reason that it is a defence. That is, breaking into the burning house still includes an unlawful act, trespass. The defence is not that a law was not broken, merely that the breaking of the law was justified. But the fact that it would require a law to be broken does obviate the duty of care, I cannot have an obligation under law to break the law.

As I note it will be a great pity if this part of the judgement is used to prohibit people from refusing to "hand over the keys."

The Immigration Conundrum

There is nothing quite so absurd as seeing the Liberal Party, supposedly the party of free markets and economic rationalism, waging a new campaign against refugees, and indeed migrants in any form.

When you sign up to these economic theories one of the first things you learn to do is to treat labour as simply an input in production processes, not as a derivative of human body, mind and spirit. Pretty soon you learn that efficiency is maximised by high labour mobility so that labour can find a market for its consumption, and producers can find labour for their activities. So the economic rationalist favours migration.

A complaint about migration is all the more bizarre coming from Kevin Andrews, the man who bought you WorkChoices. Remember that, a legislative program designed to make sure real workers were treated exactly the way the theory says they should be.

The fascinating thing is, of course, that really the Liberals ran a real scam of maintaining high levels of immigration to access mobile worjkers. However they hid it behind education programs, but the secret kept from Australians but known to everyone else was that once here on a student visa it was virtually guaranteed that it would be converted to permanent residency. (As one commentator said, "These courses are sold by agents operating throughout Asia, openly selling permanent residency, not education. The standard commission paid to them is 15 per cent, but lately some of the newer Chinese and Indian-owned colleges have been paying up to 40 per cent commission.")

Now the Government is tightening up on things the education providers are getting squeezed. While we should probably not care, this has its own flow on effects. Poorly run colleges that suddenly close drain overseas confidence in the whole sector.

But all those taxi drivers that can't talk English that the Australian Transport Council (Ministers from the States, Territories and Commonwealth) just pontificaed about - probably students.

But if you want to talk about queue jumping - especially for the so-called "economic refugee" surely it was the education scam that was the easiest way to do it.

Which just might mean that there is an increased flow of boat borne refugess arriving, but not because the rules on what happens to boat arrivals were weakened but because the rules on education visas and skills lists were tightened.

Intelligence squared debate on the catholic church

I've just watched the five parts of the Intelligence Squared debate on the motion that "The catholic church is a force for good in the world." Really interesting format from the BBC where they do an entry poll and then a poll after the debate - very dramatic outcome (I won't spoil it for you).


The link above is the whole show - below is it in five YouTube sections.
Part 1
Part 2
Part 3
Part 4
Part 5

You do have to love Christopher Hitchens and Stephen Fry.

The extraordinary events at residential colleges

There has been much in the news over the last few days about the culture at the colleges at the University of Sydney, in particular, St Pauls. As an Old Pauline I must admit to not at all being surprised by this.

In my own experience (1975, 1976) there was much about the college culture that was abhorant, strarting with the idea of initiation of Freshers through to an attitude to women that verged on the primitive. In my era a large proportion of the college came from single sex boarding schools and from regional areas, and brought with them the culture of the B&S Ball.

I was no wowser in College. I knew how to let myself into the Womens' College rather than be signed in at the front, I held some of the best late night parties in my college room, and I could be relied on to get horribly drunk at Rawson Cup and other special dinners. I did not however participate in any of the events that involved intimidation of fellow residents nor the deneigration of women.

The current matter in part revolves around a Facebook group that apparently positioned itself as "pro rape" or at least verged on doing so going under a title of "Define Consent". The Warden in his defence of this has rightly pointed out that this site was not condoned by the college, that the college does not censor the students social networks and that the college is not in loco parentis.

However, in his defence the Warden seems to express no understanding that the culture that lies at the heart of the site is indeed something over which the college has control. There is a degree to which the colleges as businesses are confronted with a marketing problem. The community at large might be horrified by this culture, but the target market - both students and to a degree their parents - actually revels in it. As such a single college taking action faces the risk of financial disadvantage versus the colleges that don't.

In the late 1970s and early 1980s the bulk of the outrage was directed at St Andrews College, which seemed to resolve some of the issues by ceasing to be a male only college. There is some suggestion that move was made for financial rather than cultural reasons, but it did have the effect of slightly civilizing that college. However the stories over recent days have noted similar concerns at other colleges.

That this is cultural is the point made by one former female college student. The simple and accurate point she makes is;

The focus now needs to shift to how we change a dangerous misogynistic culture. There are a raft of positive changes that can take place, the first being an acknowledgement, by everyone involved in college life, that there is, indeed, a problem with the college system.

As we've seen the warden of the college hasn't reached that point yet, and no doubt his lawyers have told him that he can't admit there might be a problem for fear of the liability that would cause.

I suppose the only point left to note is that we should not be surprised about a mysogonistic culture at an institution named after the great mysoginist St Paul!

The price of evidence based policy

An interesting item in today's SMH that the Realising Our Broadband Future conference will cost $528,498. Interesting that the sum is so precise so far out from the event - but I haven't looked at the "tender document" referred to in the article to comment more.

I did venture earlier that one could take a cynical view of this conference, but if we don't is this a reasonable figure? I guess the interesting comparison is how much money other participants in the sector can command.

The recently formed ACCAN is everyone's envy in consumer land because they have an annual budget of $2M. By recollection the industry body Communications Alliance has a budget of not much more than that (maybe 50% more). There was one broadband conference organised by CommsAlliance and Telstra that was rumoured to have cost that much, but funded by Telstra.

If we are living in a world in which "money talks", the question is how do we really engage in meaningful conversation if the only way to achieve it is at conferences that are financially unviable for anything but Government or large firms?

Just a question....

Finding the Left

There has been much recent discussion about trying to identify what it means to be "on the left" these days. The OZ ran a series of forgettable articles under the title "What's Left?", which is incidentally also the title of a great book on the topic by Nick Cohen.

Cohen's thesis is that he can't identify with a "left" that has redefined itself to be "anti-American" and hence aligns itself with various fascist states merely because they too are "anti-American". He correctly punctures the theory that "my enemy's enemy is my friend", and questions how defence of Iraq from the US could be a "left" agenda.

It doesn't help the left cause that it can be so easily characterised as being, well, flakey. Gerard Henderson writing in the SMH has justly criticised the Sydney Peace Prize winner John Pilger. Quite frankly I find Pilger an embarrassment of the first order. I've never really been able to find an essential philosophy inherent in his writing just a desire to criticise the ruling classes - the neo-Trotskyite strategy that the revolutionary needs to align himself with every cause that opposes the state.

This strategem is what Nick Minchin seems to believe lies at the heart of climate change activism. He said on Four Corners "For the extreme left it provides the opportunity to do what they've always wanted to do - to sort of de-industrialise the Western world. The collapse of communism was a disaster for the left and really they embraced environmentalism as their new religion. For years the left internationally have been very successful in exploiting people's innate fears about global warming and climate change."

Nick might be interested to learn that the theory of climate change was actually first publicly sprouted by one part of the industrial complex - the nuclear power industry - against another - the fossil fuel industry.

But perhaps he needs to also learn the lesson of the left with respect to fascism, just because a theory is being supported by the left doesn't make it wrong. On climate change it remains the fact that the underlying theory is incredibly convincing, and that waiting for sufficient evidence before acting is too late. But there are also benefits in acting. There is the ongoing need to diversify energy sources because the energy crisis that will ensue if we have demand continuing to grow when known reserves cease increasing will make the oil shocks of the 1970s look inconsequential. There is also the additional benefit of being able to change geoploitics but not being dependent on the "oil-rich" Middle Eastern states.

The left stands for concepts of political and economic equality that should transcend national boundaries. It believes in the ongoing role of the state in pursuit of this goal, domestically and internationally. The "socialisation of the means of production, distribution and exchange" does not require that these activities are controlled by the state, but that their pursuit serves social goals. (Your typical market theorist actually justifies their theories by trying to demonstrate that a free market results in the "socially optimal" outcome).

I do not recognise the left in the writings of John Pilger or in a conspiracy on climate change.

Branding political parties and the Nationals

There has been a great deal of recent public speculation about the state of the Liberal/National coalition in Federal politics, much of it seemingly fed by Liberals who are trying to pressure the Nationals to (in management speak) "get on the bus or get off the journey". Today Michelle Grattan joins the fray with a piece that concludes that the winner from a separation of the two parties would be the ALP.

I am not so sure I agree. It is certainly one thing the Liberals keep reminding the Nationals of, that in the history of "three cornered contests" the Liberal candidate usually wins what was a previously National seat. However, on the flip side the Nationals have been increasingly challenged by strong regional "independents" who have pushed an old fashioned regions vs cities agenda. (I used the quotes because both Federally and in NSW there has been a degree of loose co-operation between these independents).

One consequence of the declining position of the Nationals has been the reduction i the portfolios they can claim, including communications which was long a cherished portfolio amongst the Country Party. That then means that they effectively lose their voice on issues of significant regional importance.

When confronted by a "three cornered contest" the regional voter is ultimately offered two candidates constrained to the same policy, one of whom belongs to the party of the leader of the Opposition or (more recently) PM. It is not the fact the Nationals lose that is astonishing, it is th fact that they remain competitive. In the seats where the voters choice is the ALP, a coalition candidate or a strong candidate campaigning on regional values it is the third candidate who wins.

The challenge as Grattan points out is how the merged Queensland party, the LNP, will brand itself for the election.

Here they might look to NSW Labor. NSW Labor has long realised that Government is won or lost in NSW on the basis of regional seats. They have created an entity called Country Labor for campaigning in the regions, an entity that has its own logo and conference.

The LNP in particular, and the coalition as a whole need to get the idea that there is a natural separation between the "non-socialist" parties of the city and the bush. "Coalition" in opposition is a nonsense. The two parties either need to fully merge but create the "Nationals" brand as the exclusive brand under which they campaign in the regions, including separate policy; or they need to fully separate and have three cornered contests against sitting members of both sides. My money is on the Nationals knocking off all the country Liberals, and possibly some independents too.

All that having been said, you could say "what does he know?" After all I did join the Democrats just before their sad demise. That demise had many causes, but in the list were the failure of the Democrats to stay clear on their position instead becoming participants in "governing" against principle, and an inability to share in a common interest rather than self-interest (most, if not all,of them did research that showed they had a better chance as themselves than as Democrats - but rather than take the message to build the Democrat brand they hid it).

The people of regional Australia do need representatives other than those who believe in a quiet system of patronage and sheltered workshops (the modern ALP) or those who believe the purpose of the State is to enhance the well-being of corporations (the modern Liberals). If not the Nationals, then who?

Note: The last two descriptions were for dramatic effect, both parties are deeper than that and include many fine well-intentioned individual members.

Two short notes and a Government conference

I'm doing one of those periodic tidy ups around my desk. I am a great note taker at conferences and meetings but often they don't go anywhere. ut there are two notes I made at a broadband conference this year - the sources of which I have not retained.

The first says "The Internet is 'a-national' not 'international'". There are some who would dispute that in that the Internet is by physical architecture still US-centric and by information architecture still anglophonic central. However, the distinction being made is important. The governance issues of the Internet are not merely beyond the boundaries of nations but also beyond the boundaries of the standard relations between nations. This is the same distinction as is sometimes sought when trying to describe really big corporations - we moved from international corportations (based in one country but trading in many), to multinational (having many homes in different nations) and finally transnational (transcending nations). But maybe a-national is better (beyond the concept of nation). I suspect this is one of the issues I'm going to discover Bobbitt discusses.

The second reads "Infrastructure - you dig holes and put it down - it is also how you kill a dog". Which I think is a little statement about the attitude we have to infrastructure - that we can think of the infrastructure as an end in itself rather than an enablement of something else.

On which I will note the Government's new conference Realising our Broadband Future. The purpose of the conference, with increasing degrees of cynicism, could be stated as;

1. An appropriate move by the Government as we progress to build the NBN to ensure we have a national agenda to realize the opportunities it produces,

2. An attempt by the Government to refocus discussion on the NBN away from the cost and onto the benefits, in part as a substitute for a full cost/benefit analsis, or

3. Just “bread and circuses”, a diversion from the debate over NBN costs, refugees, the economy to reinforce the Government’s positioning as being concerned with realizing the promise of the future as well as managing the demands of today.

Being the eternal optimist that I am I choose to believe that it is option 1 (though Paul Budde will no doubt insist that it is actually only the Government's response to his call for trans-sectoral thinking).
Readers views would be most welcome!

Books, Hooke and economics

In an otherwise very entertaining article on historic books Miranda Devine makes the following statement;

Hooke accused Newton of commandeering his work, and as a result Newton wrote him out of Principia. Their rivalry probably drove both men to greater things but history only remembers one. Hooke was brilliant. He was also reportedly very short, covered in smallpox scars and crippled with scoliosis. No picture of him exists, and it is said the only portrait, housed at the Royal Society, disappeared when Newton became president.

It was in his last barbed letter to Hooke that Newton's most famous quote appears: "If I have seen further it is by standing on the shoulders of Giants." Newton's malicious point, biographers say, is that Hooke, being short, is not one of the giants to which Newton refers.

This is a witty portrayal of the relationship between Hooke and Newton, but errs in claiming that "history only remembers one". In fact, history remembers Hooke well, especially through Hooke's Law. This law is best known as stating that the force on a spring is proportional to the extent it is stretched. This has its most common application in a simple spring scales wherein a spring is stretched by a weight placed upon it and thus the force exerted can be assesed by how much the spring stretches (and relying on gravitational force being the same across the planet the mass can be derived).

The point at which the spring sits is an equilibrium of the force of gravity and the force of the spring. The law can then be used to calculate the oscillations that will be followed by a spring that is temporarily stretched beyond its equilibrium then released - it will oscillate around its equilibrium point though losses from various factors (heat loss in the spring, atmospheric resistance) will eventually bring the spring to rest at its equlibrium.

In fact Hooke's Law is probably one of the best examples for showing how the attempts by economists to create a science by mimicking physics has thus far failed. Economics abounds with analyses that will demonstrate the direction of a force. An economy or market subject to a "shock" can be shown to head in a cetain direction (price movements, quantity traded etc) to return to equilibrium. But nowhere does it explain in theory the magnitude of these forces.

To the extent that the economic forecasting "biz" does so, it does it on the basis of complex models that have been calibrated by understanding the path of correction in the past.

There are some further interesting consequences. For example, if you create a system of thre or more springs attached to one object on a plane surface so that no two springs are directly opposed, and displace the object so that it is no longer in equilibrium, the behaviour of the object can (I think) become chaotic within the mathematical meaning of the term.

Robert Hooke has only been forgotten by those who don't really want to understand science.

Feeling sorry for Malcolm Turnbull

One really has to feel sorry for Malcolm Turnbull for this exchange with Allan Jones. You really should listen to it.

The first part was the Jones haranguing on refugees. Jones gave a perfectly good example of how the public was "conned" by the Pacific solution. You see the Pacific solution still saw 95% of the individuals accepted as refugees in Australia, and at the same time processing on Christmas Island is part of the Pacific solution.

Then poor Malcolm got subjected to minutes of Jones talking to climate change deniers. Love these two lines from Malcolm;
"You might as well say that about your old friend John Howard."
"Everyone's conned except you and Lord Munkton."

Can iiNet win?

The AFACT vs iiNEt court case has now wound into day 11. itNews has been giving a day by day report of the "action".

I have not made a detailed study of the case, but one wonders really whether an iiNet win does much good for industry. In other places around the world there is already action taking place to legislate to require a process of ISPs acting to protect copyright, the UK being the best example. If AFACT don't win the case, haven't they just improved their lobbying position?

I like a comment made by a barrister about the Pirate Party that "In Sweden there appears to be a feeling among a significant part of the population that the internet is a territory where copyright laws do not apply." I know the Pirate Party Australia exists - I don't know how they are going on registration.

It will be an interesting conundrum for the Government.

Note: These are personal thoughts and should not be considered as an advocacy on this issue either way.

What to do about privatised monopolies

There have been very few voices that have lasted out the last two decades by consistently arguing that telecommunications should remain a monopoly under Government ownership. Kenneth Davidson however is one, as shown by his latest contribution.

He doesn't i his spray really get to the point of telling us though why we should love a privatised monopolist, just why we should hate competitors.

Annoyingly he pursues the myth that Telstra's competitors have only cherry picked in the cities. If we go back to the first part of this competition, fixed line voice calls and mobile phones, we can see errors in the analysis.

Prior to competition long distance calls were charged in price bands based on distance. Following on from competition, these bands have been eliminated with all long distance calls charged at the same rate. Firms like AAPT that entered tis market early were always actually more successful i regional Australia than the cities because regional Australians had more long distance calls as a proportion of their phone bills. This was despite the fact that buying the fixed line access (PSTN OTA) was always dearer in regional Australia.

When it was decided to allocate two additional licences for GSM mobiles, the two licencees (Optus and Vodafone) had "must build" conditions o their licences. These required coverage of 80% of the population of Australia. However, once operators got to these levels they competed in the metro markets by quoting how much coverage they had. City customers who might never go into the regions still valued a phone that would be more useful when the time came. Mobile networks built out into the regions not because the base stations would ever attract a commercial traffic level, but because they needed to compete to secure metro customers on the coverage promise.

The nonsense about never seeing competitors in the bush just reflects what the Government has realised, that there is no logic in facilities based competition of the fixed line network. Splitting Telstra is a way to preserve this monopoly while fostering competition in services.

On politics - and the very confusing Mr Rudd

The PM has kept up his strange ways, with yet another appointment of a former opponent to a Government post, this time Peter Costello to the Future Fund. One story quotes a cabinet minister saying "Just once I'd like to end cabinet without giving a job to a bloody Tory." This was said about a different appointment, but the list is indeed long.

The Opposition Leader has laid the claim that "it does show the complete hypocrisy of Kevin Rudd on economic matters." He claimed Rudd has demonised the Howard-Costello team as an example of the neo-liberals who brought on the global financial crisis, and that Rudd also contends that Costello blew the proceeds of the mining boom and made no provision for long-term infrastructure and other productivity-based spending.

While it is not quite the same argument it does recall the occassion when the then NSW Education Minister Rodney Cavalier was asked about the BHP shares he disclosed in his register of parliamentary interests. Cavalier replied "there is nothing in the socialist scriptures which says that someone should impoverish themselves during the capitalist phase."

So to the point that Rudd may be critical of "extreme capitalism" and that Costello is identified with it, there may be no problem appointing him to a job that effectively requires such an extreme capitalist - acting only to maximise returns. The wider point made by Turnbull (and Keating) is really that Rudd and the ALP's criticism is really that Costello actually wasn't a good Treasurer and therefore he shouldn't be appointed.

The reality is that the Government has accepted and acknowledged that we had 11 plus years of good economic management under Howard/Costello, but that it could be better. The need for the PM to resort to the line that being attacked by both Turnbull and Keating means he must be getting it pretty right is the problem Alan Kohler has written about, though he comes to it from a different direction.

Kohler suggests that the Rudd appointments reveal that Rudd "has decided to admit that politics is an insincere, superficial theatrical performance by those involved – a Punch and Judy show that hides the serious machinery of government." The argument being that these people he has just appointed were only recently being accused of being incompetents of the first order by those who have appointed them.

Kohler, however, goes on to give a better diagnosis of the problem, and this is that;

What the opposition says is given equal coverage to what the government does. Even-handed media coverage is all very well, but the opposition’s response to a government action or policy is simply not as important as the action itself.

The result of equal reporting of both sides of the game is that the government is under-reported and the opposition is over-reported, which in turn leads to the business of government being overlooked and the theatre of politics dominating.

This is in reality fair comment. In particular the media seems to think its role in "holding Government to account" is merely to hold a megaphone up for oppositions, rather than detailed policy reviews of their own. This is never clearer than in election campaigns when policy announcements are met with stories about either what the party is hoping to achieve politically through the policy or how it will be received in the polls. There is scarcely any coverage of what the policy actually means as policy.

A fairly perfect example of that would be the ALP's NBN policy announced in early 2007. Media commentary was on the implications for the election, not on what delivery would entail. Two years later and that is still largely the media coverage.

I have a friend who says that main stream political reporting is now nothing more than "reporting on politics as a horse race, or as celebrity".

Of course, it is easy to blame the media as I (and Kohler) have done. he challenge is to figure out how to effect change. Maybe a blog dedicated to policy analysis not politics would be a good idea.

The German Question

An interesting item in the Times Literary Supplement about Margaret Thatcher and her concerns about German reunification. It includes the interesting observation that she used to carry a map of Germany's 1937 borders to describe the "German problem".

It is perhaps hard from the perspective of the early twentieth century to understand this, but political leaders twenty years ago were still a generation who remembered WWII as a personal experience, even if only through contemporary news, the agony of the injured and wouded, and the devastation of bombed cities.

The build up to that war can be ascribed entirely to the "German problem", being the issue that emerges once unification of the German people in one nation state became both a goal and reality. It is easy to believe that the partition of Germany after WWII between East and West was very much a concious decision by the victors to ensure that German ambition was thwarted, and that consigning many peoples of East Germany and Eastern Europe to Russian (and hence Communist) dominance was a small price to pay for that stability.

In hindsight it seems clear that the West German engagement in the European Union made reunification less a threat, Germany no longer has the ability to pursue an independent course from its European colleagues. A Secondary concern was wether the contagion of the East German economy could have sufficiently damaged overall German economic performance and hence the whole EU.

Thatcher's final concern was the impact of reunification on Russia. She foresaw correctly that it would bring Gorbachov down, but the reaction was one of seeking more aggressive reform, whereas the concern was a return to a more hard line communist stance.

The German question is an interesting read. Two books I've read recently put it in perspective. The first of these was E O Lorimer's What Hitler Wants (published as a Penguin special just before 1939). The second was A J P Taylor's The Course of German History, published just before the end of the war.

These two books make an interesting pair, the latter providing a historical analysis for the interpretation of Lorimer's book. As a school student I read Mein Kampf as a background in history, but did not realise that the book itself only appeared in English translation after the war. Hitler refused to authorise an English translation and very few English could read German.

While these two together create the image of a German problem that had stretched for two hundred years, a standard interpretation that lasted till at least when I was young, more recent studies suggest an alternative.

Niall Fergusson's The War of the World builds the theme that there was in fact one war that ran from 1914 to 1990. Fergusson's theme is that the world just before this was a master of globalisation with international trade and travel on an almost seemless basis, and poses the question what went wrong.

The same theme starts Phillip Bobbitt's The Shield of Achilles, in which he describes the Long War as being between the contending "constitutional orders" of fascism, communism and parliamentarianism. Bobbitt builds a theory of history that links changes in constitutional order to changes in military capability and foretells a more terrifying future.

I haven't yet finished reading either book. I'm indebted to my friend Mathew for suggesting I read Bobbitt's Terror and Consent in which he argues "we need to reforge links that previous societies have made between law and strategy; to realize how the evolution of modern states has now produced a globally networked terrorism that will change as fast as we can identify it." I stopped reading after a few pages because the book makes so many references to the earlier work I thought I should put it in sequence.

I will return to it.