Tuesday, February 02, 2010


I was discussing with an old friend the other day the history of disputes at the University of Sydney. I'd brought up the quote from Paul Feyerabend (whose work gave this blog its name) that Sydney had one Opera House, one harbour bridge and two philosophy departments. (The article was I think reprinted in Science in a Free Society)

He was referring to the very famous "split" between Traditional and Modern and General Philosophy in the 1970s. We went on to detail other splits, including between theoretical and other chemists that resulted in a wall being built to separate staff, between Pure and pplied Mathematics creating two (artificial) departments, a split in English, and another that I can't recall now.

But the other famous one was the split in Economics, with the founding of the Department of Political Economy. This was another part of the cause for Marxist teaching, but also an early critique of the idea that "orthodox" economics could be called a fairytale.

That perhaps explains why a Sydney University Economics graduate has been quoted as saying;

I have never been as excited about economics as some of my colleagues; you know, I find economics is not for nothing known as the dismal science.

The speaker was apparently Tony Abbott according to a report on Niki Savva's new book.

Perhaps the young Tony should have tried the Political Economy course, then he might have a different view.

But the challenge to understand economics is perhaps small compared to the challenges of forecasting demand for just one product, broadband. The Age today has a story about the challenge being faced in Tasmania to get interest in the NBN. The network is being rolled out in rural parts of Tasmania that are not what we would call vibrant.

But these challenges are the same for the whole shooting match. As I recently wrote to the industry newsletter Communicatins Day (paraphrased).

The NBN is a necessary, but not sufficient, condition for productivity improvement.

Some have morphed the discussion about productivity into a discussion of decentralization and its cousin telework. Not only is productivity largely unrelated to workplace location, I remain concerned about the ongoing faith that widespread broadband availability is by its very nature a decentralizing influence.

The history of communication technologies is actually the reverse. Studies of the geographic impact of the telephone (see The social impact of the telephone by Ithiel de Sola Pool) in the US show that it was a cause of the development of larger cities and towns. The Australian experience with telephone penetration is that once the phone was ubiquitous organisations (notably banks) closed their service outlets and communicated with customers by phone. In general, if the technology allows you to conduct your business from anywhere, your choice of where is more likely to be where there are more people not less. As telemedicine becomes more practical, more specialists will leave country towns, not the reverse.

The assumption that the “long commute” is wasteful is also largely wrong. At least those on the train are usually engaged in some activity, even if only listening to music. That’s called relaxation, and we need it.

Where the ability to telecommute does come into its own though is in the ability to improve participation rates. It is a good way to effectively get a few extra hours of work from someone – be that unpaid overtime or the part-time at home participation of new parents.

That said, greater availability and use of broadband can result in further productivity improvements. To do so, however, businesses and individuals need to understand the opportunities even better than they do today, and we need to get to near ubiquitous penetration levels before most will be realized. The example used earlier of banks is telling, they did not invest in call centres at all until phone penetration (including with DTMF signaling) reached close to 100%. Similarly ten years ago businesses would say “why would I need a website” – which was a good question when only a small percentage of potential customers could or would access it.

To realize the productivity impacts we need a much better conversation about the productivity effects than we have had to date. Unfortunately, I don’t think large scale telecommuting is one of them.

This tirade was trying to address a number of things. Firstly that the benefits of the NBN will depend on ubiquity, and that telework and a magical decentralisation are over-hyped.

What I left out was a criticism of the insistence on talking about education and health. Even in the article about Tasmania cited the mayor said "I know the high school and the hospital are quite keen to have it." If it was about connecting hospitals and schools you ould build a totally different network.

The challenge of the NB is getting people to understand what its impacts will be. I'm very afraid that we'll get about half-way through and still have people saying "what is it for" before we get to the ubiquity necessary for a transformation.

No comments: