Wednesday, March 31, 2010

Hu and Telstra

How can I link the Stern Hu story and Telstra? Well it is made a lot easier by the fact Julie Bishop has put her thoughts in writing.

Understandably she devotes most of her column to berating the PM for claiming to have a "special relationship" with China and then not being able to use it in this case. This sort of ignores the fact that Rudd demonstrated that despite the claims of special relationship he does more to put the interests of Australia first, and does more to address human rights than his predecessors.

The coalition's approach to bribery seemed to be that whatever happened at AWB had nothing to do with them!

You can't use a "special relationship" to argue that your citizen's should not be subject to another country's laws. The Howard Government was a master of wanting the death sentence applied by our neighbours for terrorism acts, but not for drug smuggling.

You can argue that there is a consular agreement that has been breached. That is an element of detail I don't know enough about. I do have the sense that the Australian Government figured out early that the fundamentals of the case were established.

How does this relate to Telstra? Well, we keep hearing all about a ting called "sovereign risk", and that the whole investment climate would shift in Australia if the Government continues to pursue its stated objectives of creating competition and confiscating Telstra's monopoly rents (either by price regulation or by having them competed away). Those cassandras need to get a grip and contrast the issue to REAL sovereign risk as you see in the case of China. That is truly a country as Julie Bishop says where "Companies from Australia and around the world ... would be well advised to exercise a high degree of caution in their business dealings in future."

It will be a long, long time till someone writes that about Australia. In fact, not continuing the policy for greater competition would be the real risk, as regularly evidenced by the interest paid to the area by the US trade representative and Australia's obligations under GATT and the AUS-FTA.

A novel idea for Tasmania

The Tasmanian election has unsurprisingly delivered no clear winner. The speculation now is on which of the two major parties will be called on by the Governor to govern.

Let's assume it finishes 10, 10, 5 to ALP, Liberal and Greens. Both the ALP and Liberals have indicated that any deal with the Greens will not be a power sharing deal. The Governor needs to decide which MP is most likely to be able to form a Government.

The leading candidate is the Liberal leader on the assumption (1) he resolute was a repudiation of the ALP and (2) the ALP knows that whoever tries to govern with the Greens will wind up in a mess.

There is an alternative. The ALP could propose a coalition with the Greens in which the Grens leader is Premier and allocates portfolios between a 1 to 2 ratio of Ministers from both parties. The ALP in the long term have nothing to fear from a party to their left - as in the Greens. In fact that should use them to occupy more of the centre. Eventually the soft left will get disiusioned with the hard left of the Greens and return to the ALP.

So Premier Bartlett, you should give the Governor advice to offer Nick McKim the opportunity to form a Govrnment and tell McKim you will support him in coalition.

Tuesday, March 30, 2010

Coalition policy and other NBN fantasies

The coalition spokesman has decided to come clean and announce their policy position o the NBN. As reported in the Oz today;
Opposition communications spokesman Tony Smith said a Coalition government would adopt a non-interventionist approach to competitive broadband markets such as capital cities.

A true pity he didn't speak to any of his colleagues on this. The last Government actually found you couldn't leave the capital city broadband market to the market. In case he hasn't spoken to members from electorates where the exchanges were built in the 70s and 80s there are large areas that get no or poor ADSL coverage. Even the famous iiNet/Internode map of Sysdney stops at Parramatta.

That's why Telstra proposed an FTTN network, but demanded regulatory concessions. The G9/FANOC proposal also required regyulatory changes to be viable. As a consequence, inaction by Government is not an option. The last coalition Communications Minister (Senator Coonan) set about resolving this through what amounted to a "tender" for regulatory settings. The problem is and was that the private sector view of investment horizons draws you to an FTTN solution which involves significant investment that will need to be crapped when there is an eventual move to FTTH.

Meanwhile there is an interesting story on the ABC that suggests the NBN will "kill 25% of ASX listed companies". When you probe the story more it comes down to the fact the NBN has the potential to change the delivery model for service industries, about 25% of the ASX is made up of these service firms. The example in the article is executive coaching.

Let's hope that the article is right! The purpose of the NBN, inter alia, is to generate economic productivity. That means changes to business models. Firms that don't adapt will suffer. That is the point.

Anyone looking for a hint should check out the Cluetrain manifesto, which is now over a decade old. It is a manual on how the internet changes things.

I've developed my own summarised version of the manifesto, that might become a bigger work;

A spectre is haunting corporations, that is the spectre of consumerism. This is not the consumerism of Nader or lobbyiss, this is the consumerism of the empowered marketplace that changes the rules.

1. Markets are human conversations
Markets are conversations, they consist of humans who sound human. The tone of your voice is as communicative as the words that you speak.
2. The internet has made the network the dominant form of organization
The internet is enabling conversations that make the network the dominant form of organization, replacing both markets and hierarchies. The people in these networks are changed fundamentally – they are getting smarter, more informed and more organized than they were in markets or hierarchies.
3. People rely on their network not authority
People have figured out they get better information and support fro their network than from vendors. There are no secrets, the consumers rapidly know more about the product than the vendors.
4. Principles need to replace positions, and be at the centre of the conversation
Corporations’ homogenized voice that has been used to “motivate” the staff and “enthuse” the market sounds flat, hollow and unconvincing. Companies need to “lighten up”, not with affected humor but by adopting big values, a little humility, straight talk, and a genuine point of view. They need to replace “positioning” with adopting principles.
5. Loyalty is built on honest two-way communication
Brand loyalty is like a marriage and we forget that “divorce is always surpriseful” at our peril. Our partner can leave us before we know what we’ve done. Companies need to pay attention to all the clues their customers and staff provide. Companies can’t afford not to be honest with those they profess to care about.
6. Corporations need to belong to a community
Human communities are based on discourse – the conversation defines the community. Companies need to decide what community they want to be in and engage in the conversation.
7. The market and the company are not separate – they are one
There is not an external market and an internal hierarchy, there is one network of people playing multiple roles.
8. Marketing is not a mediator between the customer and the company
Customers and workers want to talk to the company that we’ve kept hidden behind a smokescreen of flacks and hucksters. Both want the same kind of open conversation with a partner they can trust. The customers want to be involved in all the conversations of the company, not just those mediated by “marketing” or market research.
9. The customer-centric organization is dead
The customer can’t be put at the centre of the organization, they need and want to be at every part of the organization.
10. The revolution is happening.
Responding to it is not a matter of strategic choice, it is a necessity.

Corporations of the world, act. You have nothing to lose but everything to gain.

The Hu wash-up

The case of Stern Hu makes for interesting reading, if only because parts of it verge on a modern day version of a Cold War novel.

Theories abound from, ranging from the claim that Hu and his colleagues were singled out because of the Chinalco snub, through to a suggestion in Crikey today that at heart the issue is over a power struggle between the current President and both his predecessor and planned successor.

Meanwhile the coalition has realised that there earlier attacks were a bit over the top, and that suggesting that PM Rudd should sort of demand Hu's release have been over-taken by facts. Julie Bishop has been more targeted on the question of whether China has stuck to the principles of the consular agreement between the countries.

Meanwhile I think Richard Farmer, also in Crikey, has nailed it. The best Australian response now is to seek the agreement of the Chinese for Stern Hu to be interviewed by the AFP to ascertain if there are charges against Rio Tinto to be brought under the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999.

Wednesday, March 24, 2010

Fantasy land

When I was growing up, fantasy land was just one of the places we could be taken to by Disney on a Sunday evening. I gather it is the name of a section of the theme park as well.

In Australia in 2010, fantasy land has become the province of journalists writing about telecommunications. The latest has been an effort by Malcolm Colless that reports that the PM has "roasted" Stephen Conroy over the NBN implementation study report.

Malcolm is a senior and respected industry figure who after a career as a journalist pursued a long career in management at News Corporation. Prior to returning to his craft as a columnist he was basically News’ chief lobbyist. I should declare an interest that I (at Telstra) worked closely with Malcolm in the lead up to Telstra and News doing the Foxtel deal.

It seems mighty strange that it is Malcolm Colless rather than a member of the press gallery who has received this tip about the PM and the Minister. It is probably about as reliable as the information we were told Senator Fielding had that Telstra was close to a deal. Or before that that the wholesale only carve out in the exposure draft NBN Co legislation was all about putting pressure on Telstra.

The pity of all this is that the Telstra management and Board do have an incredibly difficult task. As Jennifer Hewett reported in the Oz, Telstra really does need a deal here, but the Board has managed to get itself totally spooked about what their legal risks are.

The Board should though be asking management whether they are making their job easier or harder. While the CEO and Chair changed the members of the senior management team most directly involved in working out policy and strategy have not, and they mostly seem to be people who were relatively comfortable with the high risk game that Thodey's predecessor pursued. I know if I were a Board member I'd be encouraging the management to not be engaging in a strategy of brinkmanship. Every one of these stories merely increases the risk to them.

The only member of the team on engagement who is different is Conroy's former staffer, Tim Watts. His Facebook page says he has an up-coming Op Ed piece in the Australian - but it is more likely to be about one of his other myriad interest, including racism which I believe I blogged about before.

A similar critique is possible of the other side of the equation. There don't appear to be many points at which Conroy's Department has covered itself with glory. The ANAO report on NBN mark 1 reflected that there was advice the Department should have given the Minister sooner, I personally have criticised the fact the process was set up to create "competitive tension".

The malaise in our public service is widespread according to Robert Gottliebsen. Actually, from my own brief experience that malaise has spread from the Parliament down. The malaise has its source in the use of both Question Time and Estimates as political grandstanding rather than genuine holding to account.

The supposedly apolitical public service spends anywhere between 5 and 20 percent of its time being prepared for questions that are supposedly about "accountability" but are really about "politics". This creates the potential consequence that risk management becomes risk avoidance.

Unfortunately the media does not help, being almost totally devoid as it is of any capacity to provide policy analysis. Instead they report their views on who is "winning" a contest, be that between the parties or, in this case, between Telstra and the public interest.

Tuesday, March 23, 2010

Unashamed promotion

This blog is reserved for me and my personal, often idiosyncratic, views and is not a place where I pursue my daily trade.

However, yesterday was exciting with the commercial launch of Australia's first 4G wireless broadband network. Because it is in Perth those in the East will not be seeing the ad campaign, but through the wonders of technology (and YouTube) I can show the TVC here. (Please note I just cut and paste the YouTube instructions on how to embed this - I don't know why it is cut off - doesn't normally happen. Right click on it gives you an option to watch on YouuTube or go here.)

Reform and the USofA

Well, Barack Obama has won approval for his health plan, but only after satisfying some wavering Democrats that public money wouldn't be used to fund abortions.

Those of us in advanced civilised nations should applaud this reform in the US, and welcome them to the family of compassionate nations. Many script-writers of US medical shows will need to find new plot lines to replace the story line of the critical need patient unable to afford care.

That the reforms hinged upon the question of public funds for abortion is perhaps no sur[prise. NSW's last Australian Democrat politician, Arthur Chesterfield-Evans, attempted to make the public aware that there is no ability to get a publicly funded abortion in NSW even though the citizenry would presume this is the case. It is achieved through the manipulation by the State Government rather than by regulation.

It is a situation that needs to be rectified.

Meanwhile, we will know that the US has made it into the 21st century if Obama can pull off two other big reforms. The first would be to move to the metric system of weights and measures. The second would be gun control.

On a lighter note

Evidently Fiona O'Loughlin has faced some criticism following comments she made on Spicks and Specks last week re Bindi Irwin.

All I can say is that I hope Bindi's mum can in the future expect the same level of support from her daughter to that Biddy O'Loughlin has given hers.

I do love the final lines;

Biddy O'Loughlin encouraged fans and critics to attend her mum's show.

"I need some new boots," she said.

Monday, March 22, 2010

Ahhh Telstra and the demonstration of theories of value

Some years ago I crafted the line that "Telstra is like a giant broken washing machine - the only cycle that works is spin."

I think they are missing some of the magic they had in those days, but it is still distressing that we don't seem to be able to distinguish between "telecommunications policy" and "Telstra policy". That is probably the most damning indictement that can be made of the post 1997 telecommunications policy outcomes. While Richard Alston and his Liberal successors wanted to take all the claim for the competition reforms, they also need to take the blame for privatising the telco before they worked out the industry structure.

Our most recent discussions in the public sphere have revolved around the question of what value should be placed on Telstra's co-operation on the NBN. My first quick response to this has always been "nothing". The value to Telstra should be fully captured through a set of cash flows into the future - one from NBN Co to Telstra for use of exchanges and ducts, the other from Telstra to NBN Co for ongoing services. But it seems that what is being discussed is a lump sum for an asset.

It also seems that negotiation isn't progressing, despite the fact that the SMH (Ari Sharpe) reported on 16 March;

After meeting Telstra government relations chief James Shaw, the Family First senator said he believed a deal between the company and the government over Telstra involvement in the national broadband network was imminent, undermining the need for the bill to split the company.

The next day day Malcolm Maiden in the SMH had a tip that;

Political infighting about the government's proposed new national broadband network is continuing. Yet behind it the fact remains Telstra and the NBN Company are still far apart on the question of how much Telstra should be paid to co-operate with the network's construction.

Quite a dramatic step over one day! This story floated the preposterous idea that the gap between the value the NBN Co would put on the Telstra asset and that Telstra would place on it should be filled by the Government.

Maiden has been pleased to write on Saturday about Telstra's ASX release which provided the suggestion that Telstra does, indeed, fancy the idea of a gap closing payment by Government.

As Maiden seems to be so well placed we should consider with concern his suggestion that the USO will provide a mechanism for this strange extra payment. Maiden writes;

Nobody really disagrees: estimates of the true cost of servicing the USO range from $550 million to $1.7 million, a calculation Telstra made in 2007 when Sol Trujillo was chief executive and Donald McGauchie chairman.

I think we need to remind him that lots of people do disagree - that there is a thing called the intangible benefits of the USO. These intangibles are best summed up by the extent to which Telstra likes to take all the credit for servicing rural Australia as if they really do it because they care. Either they care or they don't - it is meaningless to claim you care when on the other hand you claim you'd run away if the law was changed.

ATUG award winning journalist Stephen Batholomeusz has done a great job in noting that Telstra needs to strike a deal or simply be carved out of future consideration. The NBN can and will be built without them, and Minister Conroy can limit their ability to compete merely through legislative instruments.

So what lies at the heart of these "valuation" gaps?

At its simplest the gaps represent the gap between an assessment of the value of an asset in use versus its value in exchange. The "value in use" is the classical net present value of the expected future cash flows of an asset. The value in exchange is the amount someone else is prepared to pay you for it.

Most times the numbers overlap the other way, we voluntarily participate in market exchange because the buyer places a higher value on the goods than the seller. But it is not always the case. One of the specific issues in the case of value in use is the reliability of the forward estimate. In this particular case Telstra's valuation probably includes an explicit provision for the value to Telstra if the NBN is not built. In NBN Co's case it is merely the actual asving they make on future costs.

This raises a really interesting question of the whole regulatory regime. In theory access prices for Telstra's network have been based on the "efficient forward looking cost" to provide the services. There should in that case be no gap. What Telstra is admitting is that their existing business model is one in which they continue to obtain above cost returns from their infrastructure. The valuation gap is the net present value of the mark-up they have obtained from market power.

The concept of "value" in economics has a long history. The poster boy of the neo-liberals actually subscribed to a Labour Theory of Value (as did both David Ricardo and Karl Marx). In this theory the value of a good is the cumulative labour necesary to create it. Actually the standard economic model would concur, because in equilibrium the price of everything equals its marginal and average cost. If everyuthing is in wequilibrium that means the same is true of the capital goods, and hence ultimately the price of everything equals the cost of the labor to produce it.

Unfortunately, in the real world, nothing is in equilibrium and almost no market approaches anything like the ideal. Consequently we continue to have real debates about "value".

And if we think economists have it tough, accountants have it worse. Should the assets of a firm be valued on their cash flows or "marked to market." How, for example, do you value a spectrum licence? By how muc the operator plans to make from it or how much someone is prepared to pay for it?

To avoid artificially inflating accounts on a future cash flow basis, many accounting standards require mark to market. This was true of the assets held by the SPV's in the finance sector, who suddenly saw their asset values plummet as sentiment towards various derivatives plummeted.

There probably is no "right answer." As Feyerabend would note it is important to use the appropriate theory at the appropriate time.

Telstra needs to figure out that their last valient effort to be paid out for siurrendering their market power is never going to happen.

Note: The writer owns Telstra shares.

Tuesday, March 16, 2010

A grab bag of telco bits

Life in telco land is really interesting of late. We've got discussion ongoing about the future of the 700 MHz spectrum and the 2.5 GHz spectrum, ongoing prognostications about the NBN and some really direct attacks on the politicians.

Let's start with some nice clean technolog talk and 4G wireless. Two consultations are ongoing, the Digital Dividend consultation by DBCDE and the review f the 2.5 Ghz band and the future of ENG conducted by the ACMA. The likely outcome of both is the allocation of 2*50 (or 45) MHz and 2 * 70 MHz of spectrum for IMT/WAS applications.

At this point the conversation gets less clear. Sometimes the discussion is focussed on 4G and sometimes on LTE. At least one player, Optus, uses a slide that clearly claims LTe as 4G. (see the Optus presentation at the 2.5 Ghz spectrum tune-up). In the mix are those that want to argue that 4G can only apply to those services that meet the IMT-Advanced specification, which LTE doesn't reach. Meanwhile LTE Advanced does. This is exactly the same position as WiMAX where 802.16e (the first mobile WiMAX standard) doesn't reach the IMT Advanced speeds, but 802.16m, now promised by Intel for 2012 (see also), does.

Meanwhile we still have some commentators, like this from Malcolm Colless peddling the line that;

As one industry expert predicted last night: "Within 10 years at the latest the use of 4G wireless services will show that Rudd's decision to extend the broadband rollout from the node into the home was just plain stupid."

It is a great pity the un-named expert wasn't named. The view contrasts with the comments of Ryan Stokes, who is after all launching Australia's first 4G network, at a recent conference. He said, in part;

There has been a lot of conjecture about the NBN and about wireless. Commentary has ranged from claiming that we don’t need the speeds the NBN will deliver, that the needs can be all met by wireless, to wireless having no future given the ubiquity of the fixed line service.
As we look to the future it is impossible to see a point at which demand for speed and data will suddenly slow.
There is no doubt in our minds that the growth in demand for bandwidth will continue to accelerate. Mike Quigley used a slide at the Realising our Broadband Future forum that showed the exponential growth that has occurred in access speeds to date. That chart indicates a need for 100 Mbps at about the time the NBN is completed and a need for 1 Gbps within the decade after that. The NBN will be able to be upgraded to meet those needs.
With all the will in the world and the developments that will occur with LTE Advanced and the next cycle of WiMAX in 802.16m, wireless networks for the most part won’t be able to meet these demands. Outside of certain metro and regional fixed wireless applications the core infrastructure we need is fibre based.

The slide he referred to ike Quigley subsequently used at the same conference. It is slide 5, and he goes on to compare the wired and mobile IP trafic on slide 8.

Meanwhile our Parliament has become a place where, quite frankly, not much happens. The Senate reportedly is delaying consideration of the separation Bill because Telstra and the government are close to a deal. It seems an unusual way to communicate market sensitive information, to have a government affairs professional brief a Senator who then briefs the media. But heck, this is the same company where someone made up a story that a part of the NBN Co exposure draft legislation was all about Telstra (it wasn't) and briefed the media with the intention of driving th Telstra share price down. I'd have to assume it wasn't a member of the management team.

Meanwhile we discover that the NBN Select Committee has decided to inquire into an Exposure Draft of legislation. It is clear such enquiry will not, nor can it, reduce requirement of scrutiny of the legislation when it is introduced. This is not only a waste of Parliamentary time, but a monumental waste of industry time. No amount of "regulatory red tape" is as intrusive as the intereference being run by the coalition on behalf of Telstra.

Far worse, this stunt could discourage the Government from further cases of providing exposure drafts of legislation. The contrast to the last telecommunications legislation of the Howard Government is monumental, a Bill introduced on which industry had about two days to prepare for a one day Committee hearing! This Bill hinged on subsequent Ministerial instruments on which a similarly truncated consultation was applied.

Is it any wonder that leading commentators have noted that the opposition communications spokesman was treated with near derision by the industry at the recent ATUG conference. It is not possible to comment further as the shadow has not yet posted his speech on his website.

In one of my less proud moments I attacked Bruce Billson for a similar performance at ATUG two years ago. The portfolio has suffered for far too long with it being treated as a portfolio for political point scoring, rather than reasoned policy debate. Fans of The West Wing would recall the episode where Josh and Toby are discussing Social Security reform, Toby thinks he can solve it and Josh doesn't want him to because it is too useful a campaign issue.

Meanwhile important things happen in the real world. One of the world's first 700 MHz LTE networks has been built by the Navajo Nation. When we get around to NBN Co discussions and Digital Dividend it might be worthwhile asking whether the Digital Dividend spectrum should be auctioned in the ordinary way, or whether NBN Co should be charged with building a wholesale only LTE network in regional Australia as a monopoly infrastructure provider. That was part of the DBCDE discussion paper. It will be interesting to see what responses were received.

On a final note in debate on the competition and consumer bill Senator Boyce highlighted that labor went to the last election saying "Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within the company." In case Senator Boyce hasn't noticed that is what the Bill before the Parliament does. It actually provides for full functional separation, but gives Telstra the opportunity to avoid that by chosing to structurally separate, and the latter they can do prospectively as the NBN is built. Is this the first time a Government has been criticised for introducing a Bill that fulfills an election commitment?

That said, the Bill would always have been better presented by putting the functional separation requirement first and then the structural separation alternative second.

Monday, March 15, 2010

Joe Hockey and Kate Lundy - a new Democrats

I've kept out of the internet filter debate in my own name a bit, but I am pleased to see how well it has progressed. Now that Stephen Conroy is clear that the only webpages he wants to block are those that would be "Refused Classification."

This has brought out critics from both sides. Kate Lundy on her blog has suggested a non-mandatory (or opt-in) filter.

More recently Joe Hockey in a speech on liberyy said;

Similarly, we see the current Federal government seeking to introduce laws that will effectively censor the Internet. Of course we all want to stop unlawful material being viewed on the Internet. There are appropriate protections that are in place for that. But I have personal responsibility as a parent. If I want to stop my children from viewing other material that I feel is inappropriate then that is my responsibility to do something about it – not that of the government.

And this was the view of the Howard Government which proposed PC-based internet filters – a policy which I have always strongly supported. But what we have in the government’s Internet filtering proposals is a scheme that is likely to be unworkable in practice. But more perniciously it is a scheme that will create the infrastructure for government censorship on a broader scale. Protecting liberty is about protecting freedoms against both known and future threats. Some may argue that we can surely trust a democratically-elected government in Australia to never try to introduce more wide-spread censorship. I am not so sure!

It is interesting that Hockey falls for one of the Conroy confusions, Refused Classification is not the same as illegal. It seems that Joe, in defence of liberty, thinks that it should be his job as a parent to decide what otherwise refused classification material his kids see.

Both Lundy and Hockey look to me like they need to change party. The only party I can see that has a policy that they'd agree with are the Australian Democrats, who now call for;

the introduction of a simplified classification system that can be applied to all media, including new media forms as they are developed. This consistent classification scheme will enable consumers, in particular parents of young adolescents, to be able to identify what kind of content they can expect to see regardless of whether the media is a magazine, movie, television program, game or website.
The Classification Board will be asked to review and standardise the classification categories so there is no differentiation between media. As part of the review the Australian Democrats will require the removal of the 'refused classification' category, replacing this blanket category with informative categories that allow informed decisions or simply extending the existing R18+ and X18+ categories to
cover all legal material currently refused classification.

The Democrats have long been on the search for a new high profile saviour - the next Don Chipp. Maybe they have two.

The flunky fights back

Extraotrdinary. David Smith, sole defender of truth, does it again.

Smith, apart from being a former flunky to the GG, has also become a contributor of note to Quadrant. In that role he has played a bit of a role in defending the idea that there is one correct history. Quadrant of course, and its current editor, Keith Windshuttle, have been fond of regarding any written record as superior to any oral record.

But in refuting Malcolm Fraser's claim Smith goes one further than those who are criticised by his Quadrant fellow travellers.

The argument goes that, because John Kerr did not tell him that the conversation with Fraser included the two disputed points, they cannot have occurred. So we are asked to believe that the absence of heresay evidence is more significant than the evidence of a person who was present and who has a note that purports to be contemporaneous with the conversation.

That Kerr and Fraser may have denied it in the immediately following period, and that Kerr may have left it out of his briefing to Smith, are merely consistent with their concern that the conversation was improper. Would this be the first time people had lied to hide a misdeed?

PS Meanwhile Fraser's co-author Margaret Simons and Gerard Henderson have been having a separate stoush that has been reported in both Crikey and Media Watch Dog. Henderson has asked the pefectly reasonable question of why the time and date on the note is in a different pen than the rest. The supposed answer is that Fraser dated it later that day, but is now relying on a thirty year old memory to make that claim.

It is however interesting to note that Smith claims the extra two conditions were not discussed later at Government House, which means they either were discussed on the phone call or that this note was merely Fraser's idea of what he planned to offer but was never asked to.

At the moment I'm favouring the version in the Fraser book. Ether way, the evidence remains that Kerr handled the situation abomoinably. He should never have ambushed Whitlam. No "advice" from Whitlam as PM was ever enough to stop the GG withdrawing his Commission, and it is entirely unlikly that a "race to the palace" would have seen the Queen remove Kerr' commission.

PPS Perhaps Richard Nixon had the right idea and all conversation in the head of state's offices should be recorded.

Wednesday, March 10, 2010

Scientists be humble

I've just come from a lunch at which US science journalist and author Chris Mooney spoke about the war on science in the US. At the end a question was asked what advice Chris would give a young scientist on what to do to combat he war.

He replied "be prepared". I think the better answer is "be humble." Science has taken to lecturing evryone else, the worst example being the approach of the "new atheists". Scientists need to acknowledge that their "knowledge" is fallible, that it is not absolute truth but just the closest we have to something we can believe is true. On the very day of the speech an elephant in Sydney gave birth to a baby that had been pronounced dead by the veterinary experts - was it as dead as Lazarus.

The physics of Newton is wrong, the evolution of Darwin is wrong.

In the climate change debate scientists need to be humble and NOT say the science proves that the planet is warming and instead say there is a complete theory that is well supported by evidence. The two possible errors are to not act and the theory is right, or to act but the theory is wrong. It is not hard to demonstrate that these risks are assymetric, and that action is required.

Science, be humble and you wll be more successful in policy.

Faith, hope and love

In the ongoing discussion between "new atheists" and "intelligent design theory" I come to the position of reflecting on my own position.

It has always appeared to me that the attempt by anyone who "believes" to try to support their belief by "fact", be that discovering the historic Christ or intelligen desgn, belittles their faith. The historic "fact" doesn't help the need to find bits to ignore - the hstoric Christ, for example, never spoke against slavery. And intelligent design fails both because of Bertrand Russells response to Parry (??) on the "watchmaker" argument of who made the watch? If the desin needs a maker, then the maker needs a maker. The "odds" of the universe turnng out just like it is are not all these astronomcal numbrs that some design theorists quote, but 1. The odds of getting six heads in a row at a coin toss before hand are 1 in two to the power of six. But after I've tossed six heads they are 1.

The question on the existence of the spiritual is one of faith, and it is one of faith because it IS unknowable.

Given the choice between a rational world and a world with a "spiritual intelligence" the difference is that in the latter there is hope.

And finally there is love. The reason to adopt the Christian faith is that, compaed to all others, it works. And it works by preaching a message of lve.

Faith, hope and love - that is it!

Tuesday, March 02, 2010

Facets of telco regulation

The CEO of ACCAN, Alan Asher, when discussing the status of telco regulation in Australia will at times note the lack of effective enforcement action by our regulators. Meanwhile Communications Alliance CEO Anne Hurley upset some of her members when in response to the Government consultation on Australian Consumer Law she suggested that the telco sector should only face one consumer regulator not two.

Today there is a report that one telco has admitted to the ACCC that its sales practices were likely to mislead customers, and that it had referred consumer debts to debt collection agencies while disputed over the "slamming" that had occurred.

The interesting point is that while these actions fall foul of the general prohibitions in the Trade Practices Act, they are each specificinstances of breaches of the relevant industry codes. In particular they are breaches of the Consumer Protection Code provisions on sales practices, complaint handling and credit management.

The question is why are the matters being dealt with by the ACCC under the general powers rather than the ACMA under the specific powers.

Meanwhile there are also a report of the ACMA prosecuting a telco over actions in breach of the Do Not Call register legislation when the same behaviour was dealt with under enforcement by the ACCC. Clearly in this case it is different aspects of the conduct being prosecuted - ringing the wrong people versus saying the wrong things.

Both cases involve a telco employing a selling agent, a case which always creates compliance challenges. In the latter case the telco claims it is being pursued over practices that it has fixed. It ultimately raises the question of how compliance programs should work and how much protection a firm should ge from them.

By their very natue sales activities are not directly supervised and "agents" (be they individuals within a sales organisation or a outsourced agency) can have incentives to "break the rules". As a consequence breaches are almost certain to occur - just as the law against fraud doesn't mean there isn't lots of fraud, or the law against theft doesn't stop lots of petty cash tins being light.

In those cases the enforcement action is usually brought directly on the contravening individual, but compliance with the TPA or telco codes is a responsibility of the principal not the agent.

It was in recognition of this fact that the ACCC played a leading role in the creation of an Australian Standard for compliance programs. The ACCC at least informally considers the approach to compliance in its decisions on whether to prosecute. I don't think the ACMA has developed as sophisticated a view. Certainly consumer advocates seem to be unaware of the distinction.

Ultimately the issue is how well you as a firm communicate the compliance message, train staff or agents on compliance and legal obligations, construct incentive schemes so that non-compliance can't be rewarded and finally manage the complaint process so that complaints that indicate non-compliance are aggressively used to identify "rogue" agents. It is unfortunately the latter that is most usually deficient with telcos all too often wanting to believe that the customer's claim of misleading conduct is just a cover for wanting to brake a contract.

Meanwhile in Europe regulators have taken decisve action on the latest source of mobile "bill shock" - high data roaming charges. Could Australia apply to be part of Europe for this?

Monday, March 01, 2010

National Curricula or Standard Texts?

The PM and Deputy PM have released first four draft national curricula (English, Maths, Science and History)for K-12. In doing so they have stated that;

Having an online curriculum means the curriculum will be dynamic, and easily updated, in contrast with the static, hard-copy format. The Australian Curriculum will be among the world's first curriculum delivered online.

From next year, students from all states and territories will be able to move schools, school systems and states and be taught the same knowledge, skills and understanding as part of a curriculum for the 21st Century.

In doing so they started a consultation process that can be accessed through this website. This is an interesting example of Gov 2.0 consultation that has the annoying feature that you have to register to participate. Maybe on the theme of identifiers we need to have an identifier we can use to acess any Government consultation. (I didn't mind registering except for when registering as "community member", "organisation {or was it instititution}" was still a mandatory field and the rules on password standards were only revealed if you didn't meet them).

The site has a little video explaining the overall approach. The Chair, Barry McGaw said, there is still a desire for flexibility in the classroom. The individual subjects had these emphases.

Science - less quantity more quality. Not four strands, return to more traditional sciences. Students have been losing interest, recapture interest. Provide opportunity to get excited, and opportunity for trachers to use it.

History - work for a wide diversity of students. Increasing Australia's understanding of the region, understand better through a "world history" perspective. Big theme is question of "sustainability" - (huh)?

Mathematics - inclusive of everyone - everyone able to do it till at least the end of Year 9. There should be less in it! Students will "engage" in mathematics in he classroom.

English - intensifying the continuity of learning across time. Deal with fewer texts more deeply. Teachers making choices of texts.

The curriculum documents have two key elements, content descriptors and achievement standards. Content descriptions include knowledge skill and understanding expected together with elaborations. Achievement standards specify the quality of learning expected.

The ambition of national curricula to facilitate the educational experience of kids moving interstate is fine. But the test will be in exactly how much the "flexibility" is retained. Currently a kid can be exposed to the same thematic content in any of a number of years and can experience the problem of repeating or missing something just moving suburb. This is the "price" of flexibility.

I worry about the whole flexibility thing and the idea that more kids can be inspired by going deeper but narrower, or that the syllabus is so simple that anyone can do it. The unfortunate reality is that the best students can and should get a lot more than this.

The ambition of an "on-line curriculum" is interesting. At least it makes it far more accessible to parents. The real challenge will be the attendent curriculum resources.

As a kid we had textbooks - they laid out the content in its logical order. Even a substitute teacher knew where to pick up from. In the new world order this doesn't happen. In Maths in NSW they introduced a new curriculum in the mid 80s for primary school that needed lots of resources of things to count, make shapes of etc and so different schools would have different stuff.

Without textbooks there has been an explosion in the industry of "black line masters" which get photocopied for kids to learn from (do exercises on).

A realy sensible approach would see the extension of the curriculum site to include (a) a textbook (b) a resource of additional "black line masters" and (c) the inclusion of additional resources including SHORT videos that support aspects of the curriculum, and extension material. (It is possible to provide extension material in most of these curricula areas that is not just accelerating the kids further. There are a plethora of interesting things in number and geometry that don't get later touched on. In the sciences there are lots of extra interpretations).

I also note that there is already concern that teachers (history in this case) won't have the capacity to master the new syllabus. Greater use of the curricula website to provide content could go a long long way!

It is also disappointing that there is nothing in the maths curriculu that talks about (in years 7 to 10)demonstrating the real world application of every element of this. The use of ICT also seems to be poorly conceived - by year 10 a student should be learning how the concepts of mathematics underpin the operation of a computer.

I need to read the Maths and History syllabus in more detail to see if it addresses Lindsay Tanner's call for better maths and science inspiration. I also think a $2M program as also announced today won't go far on helping get kids excited about science just by more teaching about climate change.

Ethics, culture and the new world order

I've written a few times about Philip Bobbit and Terror and Consent. He has a really detailed set of theses about the progression of history, the interplay between strategy (as in miltary or external strategy), technology and the constitutional order.

The latest phase he identifies is the "market state". It is a state that follows on from the "nation state" and the change is a consequence of the technologies that won the "long war" for parliamentary democracy (in 1990). Those technologies were nuclear weapons, and high speed communications and information processing.

This phase he maintains creates the need to think differently about strategy and constitutional order and whether a boundary ca be maintained between them. A related theme is the reaction of certain nations to the imposition of other values.

Three stories today highlight these issues.

The first is an item calling on Israel's friends to condemn it for state sponsored terrorism. This addresses ultimately the question of the vexed problem of non-nation international terrorist groups and how nations respond. The former are engaging in a "war" yet the latter are expected to respond within the confines of accepted "constitutional order".

The US to this day regrets that they didn't act like Istrael and "took out" Osama bin Laden when they had the chance before 2001. Perhaps the missing part is creating an appropriate framework for determining when the state action can be invoked, not if.

The second example is a really simple one of the international scope of Gogle, and the report that Google execs have been convicted in Italy over the actions of someone posting a video - subsequently taken down - of a disabled teenager being bulied. This reflects the inability of existing order to address the technology.

We've had our own recent issues with something similar with the approach taken to Facebook, with comments from Qld Premiere Bligh and the five questions posed to Facebook by the Punch.

Meanwhile we have perfctly reasonable "moralising" about the treatment of women in Malaysia. This particular case opens up the absurdity of culturally relative enforceable moral codes, the application of Sharia law to women in Malaysia is as unacceptable as the application of tribal law to Australian indigenies.

The project for a modern secular ethics is becoming more urgent. It has to be secular because it has to apply to all geographies and all religions. It has to accept that individuals have the freedom to hld their own beliefs.

Only with a modern secular ethics can we build a global political philosophy within which a new definition of the role of the individual state can be developed.