Thursday, July 21, 2011

Where is Malcolm's Policy?

I'd dearly love to comment on Malcolm Turnbull's new broadband policy as announced to CEDA yesterday.  Unfortunately I wasn't there.  But more surprisingly the very media astute Turnbull doesn't seem to have published the speech yet.

Various parts of the tech media have covered it.  ZDnet reported it as a faster scaled back NBN.  Rob Burgess of Business Spectator reckons that Turnbull pulled two of the three planks supporting the NBN away.

From what I can figure out Turnbull is now saying that it is important to have a plan to improve broadband services in Australia.  That's a big change since through most of the Senate NBN Committee hearings the coalition stance was we don't need a faster network and all its for is entertainment.

Turnbull's plan is also supposedly based on the idea that Telstra should continue to face structural separation. He doesn't tell us, however, how that will be achieved - or would have been achieved without the NBN.  It is also a big change from coalition opposition to the structural separation bill that they labelled "a gun to Telstra's head".

His next big step is apparently to ask the Productivity Commission to do a "cost-benefit analysis" to choose the best technology mix and include FTTN.  I'm still prepared to stake my hat on that analysis coming to the same conclusion - if done properly - as the Government's Expert Panel.  That is, that FTTN is at best an intermediate step, and the extra upfront investment isn't worth it in the long run.  But the plan may have more credibility if he were to hire people who do CBA for a living - like business people - not people who spend their lives telling other people to do CBAs - that is the PC.

By the way, I wonder if Patricia Scott, former Secretary of the department and Chair of the Expert Panel but now Commissioner at the PC would get to run the inquiry.

There is no evidence that Telstra would have any interest in renegotiating its agreement to pursue a structurally separated FTTN build.  If the Government under the coalition were to say no FTTH NBN then Telstra would revert to their NBN Mark 1 position - no access to our copper in a structurally separated model.

The bit I want to see more of is the notion of a "voucher" system for regional services.  It sounds like crazy classic neo-liberal orthodoxy - like vouchers for schools etc.  There are scale economies in this stuff.  the vouchers are useless unless everybody spends their voucher on the same supplier...that is why we have Government as a way to co-ordinate action.

Turnbull's plan is not "credible" because, as far as i Can figure out, it really is exactly the same as the coalition non-plan from 2005 to 2007.  It just looks credible because Malcolm comes across better than Tony Smith or Bruce Bilson ever did.

Novae Meridianae Demetae Dexter delenda est


Anonymous said...

Not sure why you would expect business people to be experienced at doing the kind of social cost benefit analysis suited to a public/government project. Business would tend to look at it as a business, whereas a social cost benefit analysis would attempt to incorporate welfare more generally.

David Havyatt said...

Absolutely agree re distinction between a business case (NPV of private cost and benefits) versus social cost benefit of the project.

I'll resist the long lecture on why CBA is value laden and makes invalid assumptions about the nature of preferences. My point was more that the PC is not a CBA shop - maybe an economics consultancy, treasury, finance - but not the PC.

So agree with the critique of "business people" and should perhaps said "practical people".

More specifically those who favour CBAs think they should be part of the proposal - not that the Government should send every proposal to the PC to do it. The Productivity Commission is the wrong place for this work.

Mind you if the Howard Government hadn't killed the Bureau of Transport and Communication Economics and replaced it with the PC we would have a perfectly good place to do the work.