Tuesday, May 31, 2011

Conroy's DE strategy

Senator Conroy released his much awaited National Digital Economy Strategy today.

The first interesting fact is the strategy #au20 is available on the nbn.gov.au website. On the belief that all acts are political I read this as the NBN is a Government strength so talking about the NBN is good.

There are three ways to talk about the strategy itself. The first is whether it is about the right thing, the second is how good it is as a strategy, and the third is the level of genuine commitment to it.

But it is bridge night - so you will just have to wait.

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Monday, May 30, 2011

Media Watch, iSelect and Charlie Brown

I ended my series of posts about the iSelect PR with one talking about an article in The Economist that flagged the specific issue of PR agents paying bloggers and experts to "spruke" their product.

Tonight the ABC's Media Watch picked up specifically on the Charlie Brown angle.

Adding up the unthinking reprinting of the release, the reporting of research not released and clearly unreliable and the dodgy promotion by a blogger/tech editor and you have in one piece everything wrong with PR and a lot of what passes as journalism.

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The excitement builds ...

I was I think justifiably critical of the way the Budget papers dealt with Australia's future. After discussing an economy in transition the most it could find to say was a throw-away line on the NBN.

As a number of papers in a special issue of the Telecommunications Journal of Australia have noted the NBN needs to be accompanied by other strategy elements.

Tomorrow we get to hear the details. As advised via Twitter;

Remember – Min. Conroy #CeBitAUS address webcast live from via http://bit.ly/mvITcH tomorrow morning 9am 31 May #nbn #digitaleconomy (see note below)

As a foretaste of what we should hope to hear, The Economist this week ran a special on Australia. It had a excellent summary of the numbers. This was added to with a little admonition, drawing on comparisons with California, about the opportunity we face;

Australians must now decide what sort of country they want their children to live in. They can enjoy their prosperity, squander what they do not consume and wait to see what the future brings; or they can actively set about creating the sort of society that other nations envy and want to emulate. California, for many people still the state of the future, may hold some lessons. Its history also includes a gold rush, an energy boom and the development of a thriving farm sector. It went on to reap the economic benefits of an excellent higher-education system and the knowledge industries this spawned. If Australia is to fulfil its promise, it too will have to unlock the full potential of its citizens’ brain power.

Australia cannot, of course, do exactly what California did (eg, create an aerospace industry and send the bill to the Pentagon). Nor would it want to: thanks to its addiction to ballot initiatives, Californian politics is a mess. But it could do more to develop the sort of open, dynamic and creative society that California has epitomised, drawing waves of energetic immigrants not just from other parts of America but from all over the world. Such societies, the ones in which young and enterprising people want to live, cannot be conjured up overnight by a single agent, least of all by government. They are created by the alchemy of artists, entrepreneurs, philanthropists, civic institutions and governments coming together in the right combination at the right moment. And for Australia, economically strong as never before, this is surely such a moment.

That really does sum up the challenge - and much of that can be rolled into the rubric of "the Digital Economy" if by that term we mean an entire economy transformed by the digital revolution, not a subset of it (as the current Government definition has it).

The challenge for Government is real. Even those with an excessive faith in markets see a requirement for Government action - if only to further de-regulate. The economist puts it differently saying;

...government should not seek to direct the chemistry, it should create the conditions for it. That means ensuring that the economy remains open, flexible and resilient, capable ...

And while critical of the relative torpor of our Government, they also understand it, writing;

Some politicians win power and do not know what to do with it. Others come to office determined to change everything and end up doing nothing. A respectable case can be made, in certain places at certain times, for concentrating on good management and making only a few big changes, but making them well. In Australia, this case rests not just on the thoroughness of the 1983-2003 reforms but on the fact that the economy has recently passed a stress test that all other rich countries’ economies to some degree failed. The global financial crisis did not pass Australia by, but neither did it drive it into recession.

The special has a cute 3 minute video that concludes with the same line as one of the articles;

The tyranny of distance, so long Australia’s enduring curse, has been turned on its head. It is now the Antipodean advantage of adjacency.

I wonder if "the Antipodean advantage of adjacency" will catch on ... Googling however only turned up regurgitations and this piece which says;

The behavioural economics/finance guy in me has to ask the question whether the Economist magazine did indeed set out to do a hatchet job on Australia but found the story so compelling they ended up pulping their initial intent. Seems like it has to be a chance, doesn’t it?

Anyhow, let's see how the Australian Government handles it when it does address those issues about being an "open, dynamic and creative society? We can but hope.

Note: Interestingly the mini-link in the DBCDE tweet takes you to the Government's NBN site (www.nbn.gov.au) which even has an Australian Government logo (in the mode mandated by John Howard - coat of arms, Australian Government {over} National Broadband Network)

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This Indy 500 result is reminiscent of recent Super Rugby results.

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"The Left" vs "The Right"

Gerard Henderson is a quality thinker who supports a diverse policy discussion at the Sydney Institute. Having attended a few events there I can attest that he is a very fair and inclusive Chair.

That said I think it is over-all a fair comment to make that in his personal writing - especially in the SMH and in his own writing for the institute - that he would generally be labelled a critic of "the Left". In particular he is unforgiving of former Communists who ignored the reality of Stalinist Russia, and of commentators of the left who attack the current Government from "the left".

He is also particularly renowned for his search for accuracy. His own Media Watch Dog originally appeared in print form and preceded the ABC show. It has a slightly different beat, not only focussing on inaccuracies and under-researched stories, but also in highlighting the all-too-obvious biases of some commentators/journalists.

This week's issue of MWD contains a classic piece of Gerard being Gerard. He notes the following in Nick Dyrenfurth and Tim Soutphommasane's book All That’s Left: What Labor Should Stand For:

…Quadrant devoted page after page to dissecting the Left, no accompanying explication of a positive conservative philosophy – or even disposition – was forthcoming on what it meant to be on the “Right”. So it is with the other standard bearers of the conservative commentariat. Whether it is Gerard Henderson, Janet Albrechtsen, Andrew Bolt or Christopher Pearson, there is only carping and invective. To be on the Right is to believe that Labor has returned to its socialist ways: that everything is symbolic and hollow; that political correctness has run riot; and, of course, that Judeo-Christian values are under threat.

He then proceeded to ask of the editors;

1.What is your evidence to support your assertion that I “believe that Labor has returned to its socialist ways”? Where did I ever write or say this – and when?
2. What is your evidence to support your assertion that I believe that “everything is symbolic and hollow”? Where did I ever write or say this – and when?
3.What is your evidence to support your assertion that I hold the view that “political correctness has run riot”. Where did I ever write or say this – and when?
4. What is your evidence to support your assertion that I hold the view that “Judeo-Christian values are under threat”? Where did I ever write or say this – and when?

If you cannot support your assertions with documented evidence, it will be obvious that you just invented these claims. In which case, how do you propose to correct your false assertions with respect to me?

However, I don't think the quoted text makes the claims asserted. To talk of "the Right" is as bad as talking of "the Left". The quoted passage makes some broad descriptions of the Right. The only thing it actually says about Henderson is that "there is only carping and invective", and that there is no exposition of what it means to be "Right".

The things which Henderson seeks to be proven with evidence are claims made about the Right in general and therefore have no need of justification as being views attributed specifically to him.

I must admit though to be quite amused by the inability of the authors to engage with him on this, and to be cautious about replying if their response is to be published.

The sad truth is that the book itself is a sorry reflection on the fact that the same accusations can these days be made about the Left. The Left is made up of a grab-bag rabble that professes "progressive" causes, has supplemented a hate of the USA specifically for a dislike of specific aspects of power and criticises capitalist market economies while sharing in the spoils (be they excessive government grants or simply a jolly good lifestyle).

Meanwhile I am becoming quite disappointed in MWD. The same small set of easy targets (Fran Kelly, Deborah Cameron, Malcolm Fraser, the Age amongst the leaders) is targeted issue after issue. If leftist media bias is as all-pervasive as some would have us believe, surely there should be a much wider array of targets for analysis.
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Politics or journalism - let's blame someone

It is common to moan about the current state of politics. This isn't uniquely an Australian position though.

The question though is "who is at fault?" One popular view puts it down to an under-educated electorate.

DragOnista has a different take. Writing for The King's Tribune she thinks the solution is better political reporting, which in turn she thinks would come from teaching political history to journalists.

The idea fails on its own logic. There is no evidence that different/better political reporting would improve the thing commercial media needs, that being readers or viewers to sell to advertisers. What sells is what they already report - politics as horse race or politics as celebrity.

The first part is why in the two years after an election the media obsesses about leadership and possible challenges, and goes overboard on polls. The second part is why any column inches at all are devoted to J. Gillard's marital status.

My own view is that the lack of political engagement is a function of never having it so good. Let's face it, we've had 65 years without a major war. In Australia we've had twenty years of uninterrupted economic growth. Ultimately there is a degree of consensus around managing the economy as "guided capitalism" in the greater "liberal" tradition.

There is also a small amount of market game theory at work too. Just as I don't need every consumer to do endless price comparisons to get the outcome as if consumers do, so I only need enough citizens to monitor politics. Basically the free-riders know that the policy wonks will wake them up if they are needed.

Of course the problem with that is that it can be easy to wake them up the wrong way (great big tax) if we didn't wake them up properly to begin with (we are all going to die).

The message is for those who want to get greater political engagement, don't moan, don't complain about the journalists. Hone a message that explains why you need your fellow citizens engaged on something concrete.

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How bad can the right get?

It is a dreadfully hard line the Government has to tread on gambling reform. It is clear the public doesn't want "nanny-statism" like we used to have that outlawed almost all forms of gambling and resulted in a vibrant illegal industry (SP bookies and then the lovely illegal casinos that used to be dotted over Sydney).

But it is equally clear that the public is heartily sick of the social costs caused by problem gambling, and that the victims of this crime are the family members - especially children - of those addicted.

Therefore measures to require "pre-commitment" technology look like they achieve the right balance.

But today we read that the NSW Secretary of the Liquor and Hospitality workers union ("United Voice" more below) is lobbying against the proposal because it will put club workers out of jobs.

The evidence apparently cited by Tara Moriarty isn't some detailed research of her own, it is simply relying on the assertions of club managers. In her letter to the Prime Minister she is reported to state "the Twin Towns Services Club at Tweed Heads on the Gold Coast had told the union workers would lose their permanent employment status and suffer cuts in hours if the pre-commitment scheme went ahead." and that "workers at the Halekulani Bowling Club on the NSW central coast have been told their jobs are not secure".

Once upon a time the idea of unions and the labour movement was to act in the interests of workers generally, not only sectionally. The labour movement would traditionally support programs that limit the harm to workers, especially forms of gambling that make the bosses rich and the workers poor.

Poker machines are just that, highly addictive and as a form of revenue raising for Government highly regressive. They are not exclusively in clubs. Those in pubs are lining the pockets of private individuals - and corporations like Woolworths which continues to acquire pub licences.

And the "licenced clubs" are no longer the quaint local community hub with a few pokies to provide entertainment. They are fully fledged casinos now operating through ever expanding corporate structures. The amalgamations have been fuelled in part by the declining attractiveness of clubs. But despite being "not for profit" the growing revenues fuel payments to managers, consultants and various hangers-on.

But a NSW Right union clearly sees its mission as to lobby on behalf of the bosses against the interests of workers.

As for that crazy name "united Voice", exactly what part of the modern marketing theory of "branding" is consistent with any model of a political and/or industrial movement designed to advocate for workers. This is the model of a union that exists to create jobs for the political class.

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Saturday, May 28, 2011

On Gambling Part 2

Senator Conroy had to send a Departmental officer to give his speech to RadComms 2011. We were informed he was attending a meeting of State Ministers on gambling. Given that his cancellation to the ACMA looked moderately late, it can be assumed his presence at the meeting was a late addition.

But why was he there?

Simply because they announced a twelve month option for better self-regulation of gambling advertising .. or they will regulate.

Seems like a totally new idea - the newspapers don't refer to it as having been discussed at all.

The only place I've seen it has been this blog on 11 April. I'll fantacise for a da that I really had this much influence... I'm sure someone will correct me.

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Cable franchises

One counter-model to a Government owned NBN is the idea of geographic franchises. Economists love it because it creates the illusion of competition...after all if I want good internet I'll live somewhere where it is good.

It just doesn't work that way as this story from Seattle reveals.

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Wednesday, May 25, 2011

The farce of "cutting red tape"

I stewed for days after seeing the Eligible Revenue Threshold consultation issued by DBCDE as part of Telecommunications regulatory reform.

In a nut-shell, telecommunications carriers are required to submit an annual return of their "eligible revenue" which is all their (and related companies revenue) from which is deducted non-telecommunications revenue, revenue from equipment sales and content, and payments to other licenced carriers.

The instrument being consulted on has been a long time coming. While the USO regime was canvassed in the Blue Book, the idea of the Eligible Revenue Return as an impost was not raised in any submission by a carrier.

The ACMA did however comment on what it considers an "onerous" administrative task.

The proposed instrument has been trumpeted as a "reduction in red tape". This is a classic case of policy makers mouthing a slogan created by free-market theorists, it creates the illusion of acting to deregulate markets while achieving very little. Indeed, the measure often used by de-regulationists is the cumulative number of pages of law and regulation - the proposal actually increases the number of pages.

The proposal chooses a number of $25M as the boundary for which an ERR is required, claiming this is harmonised with Corporations Act requirements. This is an apparent reference to the requirements for a corporation to have audited accounts.

In reality every corporation is required to count its revenue (and costs) and provide them to Government as a tax return. The difference is that a company tax return is not required to be audited. The ACMA insists on the ERRs being audited.

It is the cost of audit that creates the impost on business. No auditor knows how to do it, since an audit only says the procedures followed are right not the numbers. The other consequence is the increase in the cost of the USO, NRS and funding the regulators on the remaining carriers. This is not red tape reduction as much as cost shifting.

Meanwhile the Budget Papers reveal;

The Government will provide $3.4 million over two years for the Australian Communications and Media Authority to conduct a revenue assurance project to improve the management of existing administered revenues and increase revenue collections.

The revenue assurance project will involve a new audit and assurance program for broadcasting licence fees, expanded quality assurance and industry monitoring for revenue streams, and a new outreach program to engage and educate industry members with obligations to pay broadcasting licence fees under the Broadcasting Services Act 1992. There are no changes to existing statutory requirements for payment of broadcasting licence fees.

I couldn't quite bring myself to make a submission because I don't represent anyone and the people to whom I would be submitting had previously heard my views. This is, quite simply, A-grade nonsense. But it was an initiative from Parliament House to respond to the requirements from the Minister for Deregulation to "do something".

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More on PR

Little did I know that this week's Economist magazine had a great column on public relations and the relationship with journalists.

It helps that it is fuelled by the recent Google/Facebook fracas. But it notes the ever increasing rise in the number of PR practitioners as the number of journalists decline.

It in particular also targeted the role of "bloggers" as "trusted influencers, which made the use of Charlie Brown in that iSelect release all the more informative.

The article beautifully summarizes the essentials of the PR task;

There are few new tricks in public relations. Mud-slinging against a client’s rivals; offering newspapers ready-made articles containing plugs for a client’s products; cutting off reporters who write negative stories and rewarding malleable ones with exclusives; bribing experts to lend their reputation to a client’s cause: examples of all these and more can be found way back in the industry’s century-long history. But the increasingly thin staffing of newsrooms seems to be encouraging the spinners to be more shameless than ever with such tactics.

(The significance of trusted influencers was reportedly first identified in a 1928 book Propaganda.)

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Consumer behaviour, economics and research methodology

I've had some fun with the iSelect media release that purported that the "iSelect Broadband Report" had been released but wasn't.

I now want to talk about its central thesis, the comment attributed to Charlie Brown that;

Australians need to do their homework on broadband before signing up to a new contract. It doesn't need to be time consuming or difficult - if you use an online comparison service, you can evaluate plans based on your actual needs to find the best one for you.

This, of course, means use a site like iSelect. The size of the prize seems to be quite impressive - the whole $141,313,506.15 that they absurdly tell us will be saved. As I've elsewhere noted we are given no information on how this amount is derived.

We aren't even told over what time period this saving is made, but it looks to be an annual amount. Still a big number, but we are also told there are 7.5 million households subscribing to the internet. That's a saving of under $20 per household.

Economists who talk about anything other than theoretical non-existent markets will tell you that "search costs" are a significant factor in consumer behaviour, and that consumers will use other things, like brand and referral as substitutes. The iSelect research tells us that, on average, we shouldn't exert more than $20 worth of extra search costs in choosing broadband provider.

Their pitch of course is that their site significantly improves your search capability. Having had a look at it it is a proposition that certainly wouldn't be true for me, though it may be for other consumers.

More significantly the release reveals that "Not surprisingly, most people (66 per cent) say that reliability and maintaining connection are the most important features of a home internet service." This is something that price comparison sites provide no assistance with.

The release also says "Less than a quarter (24 per cent) understand how the speed of their broadband connection is measured (megabits per second), yet 86 per cent say speed is very or extremely important to them." This means the consumers are actually savvy, because the access speed tells you nothing about the contention ratios in the ISPs network. Users judge speed by how fast things happen on their screen not how many bits can flow from their modem to a network access point per second.

There also seems to be an unexplained discrepancy. The release cites the ABS statistic of 7.5M households with a non-dial up connection. Technically speaking this is reported by the ABS as 7.595 and should be rounded up and represents the bulk of the 9.739 million non-dial-up connections.

But the ABS also reports download stats. They report 191,655 Terabytes of data downloaded for the entire three months prior to the report date (31 Dec 2010). That is a grand total of 19 GB of download for the entire quarter for every broadband connection, or just over 6 GB per month.

Yet the iSelect release asserts "Australians are on average downloading more than 48 gigabytes of data per household per month." This is a massive discrepancy between the result from the iSelect research (presumably based on user self-reporting) and the ABS statistic (which is based on data provided by ISPs). Two potential causes of that discrepancy could be errors in the self-reporting of download usage or a very statistically non-representative sample.

The position marginally improves though if the vast gap between fixed and wireless downloads is included (see graph) but 31 GNB in a quarter is still less than 25% of the rate claimed by iSelect.

I'm not sure I have the energy for another round of questions to iSelect.

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An even more recent update on iselect

The nice man from iSelect Corporate Affairs has just rung me to inform me that he disagrees that the media release purports that there is something more to read. The proposition is that "the research has been released through the media release".

I am grateful for the information. He has at least pointed me to the full release on the company website. It is interesting how this varies from the versions on various newsfeed sites like Press King. I am also aware that at least one media organisation only received a version through one of these sites that did not include the footnotes on how the research was conducted.

These footnotes make interesting reading. The third footnote provides details on how the "research" was conducted (naming the firm and as a sample of 1000 households). Three of the footnotes though look like the additions of a zealous fact checker. Three amounts in the release ($141M overspend, 368 million gigabytes and $200 for data) are carefully reproduced as actual numbers to the last cent or Gigabyte below. It is hard to know which is really more misleading - given that the representation to the cent represents an assertion of accuracy beyond the bounds of the survey methodology. The correct way to footnote the data points from a survey is to quote the data point and the estimated sampling error.

I will stand by my view that the first and third paras of the release assert that a thing called the "iSelect Broadband Report" has actually been released, not just a set of data drawn from that research.

But my real gripe is with the media outlets that churned out the data from this release without asking to see the basis of the report. I am still at a loss to understand the basis of the assertion of the $141M overspend. My guess is that the research asked people what their current plan and usage was, looked up the best plan on the iSelect site and made the straight comparison. But we don't know because we are not told.

I will save for another post a comment on the economics.

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An update on the iselect PR

In my post about PR I promised to update my readers when I heard back about my request for the research that iselect was claimed to have released.

This prompted a call to me by their Corporate Affairs Manager today who wanted to know what exactly I want and why I might want it. I advanced the proposition that while I was most interested in being able to interrogate the claimed "$141M overspend", how it had been estimated and its veracity, I was particularly seeking the "research" which the PR claimed had been "released".

I advanced the somewhat odd idea that you can't claim to have released something without actually having done so. The nice Corporate Affairs man has to consult with "other people" to see how he deals with my request.

The nice man also managed to completely deflate my ego by asking exactly who I am and what my company does. I explained that he can find out about the regulatory management services I offer at the Havyatt Associates website, that I am a blogger and that I write an occassional column for itNews. I further explained that my inquiry wasn't being made on behalf of anyone else, just my own interest.

It did provide an interesting insight though - they can't be tracking themselves too well. Googling the exact phrase "iselect" for the last 24 hours had yesterday's blogpost as the last item on the page.

Note: In case you think I'm being a little harsh, I can tell you that I have been responsible for very similar releases that want to refer to research data. I have in the past had to explain to my employers that if you say the research is released then you have to release it.

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The Financial Crisis and the Law

Seriously good piece on Bloomberg explaining why we shouldn't expect any of the execs involved in Wall Streets great crash to be put in gaol.

Of course, it has appeared in a financial news source and could be accused of pandering to its audience. It also at times relies a little too much on the distinction between civil and criminal offences, and the standard of proof of the latter.

But the case is well made that the execs were not actively defrauding anyone, and that risk taking that proves wrong should not be punished as a crime.

These points are both valid. However, there is a case to be made about the diligence of the executives and boards of most of these firms. It is abundantly clear that none of them accurately understood the level of risk they were exposing their firms to and there is ample evidence that they failed on the duty to inquire.

These would be civil not criminal actions, and they could be brought as class actions by shareholders or creditors who suffered loss as a consequence. But it should not require individuals to organise these actions, this is the role of corporate regulators.

Personally I don't think these execs deserve to be in gaol - it was the system that was guilty (by which I mostly mean the irrational faith in markets). But it does irk me that they all still have the money they got paid in salary and bonuses for supposedly how well they ran their businesses.

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Further to my further gratuitous advice to the ALP it really does look like Wayne Swan is terminal as Treasurer.

Reshuffle in the Winter recess is a must! Macklin and Ferguson pensioned off, Swan to a large social portfolio and Shorten to Treasurer. If Swan won't go quietly then a challenge to him as Deputy by Combet or Shorten, and if it comes to that dump him from the Ministry.

PS The most telling line in the article "his propensity to always go for a political line or put down in an interview or in parliament led the Treasurer into trouble"...it sums up not only Swan, but the way the Government crafts so much of its narrative.

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Tuesday, May 24, 2011

Who would have thought it

Back in the mid 2000s when I worked for Telecom New Zealand subsidiary AAPT I tried to convince Telecom that structural separation would be in its strategic interest, and that following that separation Telstra would be able to be forced to follow. This culminated in my 2008 paper for the TJA.

At the same time I was advocating in Canberra that while structural separation was desirable it was hard to force onto incumbent telcos but would be possible at the time of new investment in fibre access networks.

Now, on top of the developments with the NBN and Telstra in Australia comes news that Telecom NZ subsidiary Chorus has won the FTTH contract for most of the country and will "de-merge". That this announcement was made by Paul Reynolds is somewhat interesting. In her book Bird on a Wire former CEO Teresa Gattung makes the claim that Telecom was close to separating before her departure but the incoming CEO from the UK placated the Board and convinced them that the line could be held at operational separation.

The financial models in the two countries are different, and the timescales are different. But now in Australia and New Zealand the former incumbents will not own the access network.

For the financial press, watch this space. Telstra's strategy in the medium term has to be to find a buyer for Telstra Clear. That could be very easily Vodafone or SingTel. It could very easily be one of the up and coming Australian Service Providers like iiNet or TPG.

Once divested of Clear and with separation progressing Telstra can then move to a merger of the retail companies. It would suit their objectives in the corporate market and would provide reasonable leverage for both in the residential market (growing the addressable market of the same applications and services). the Telecom and Telstra mobile networks also now fit well together.

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More gratuitous advice for the ALP

I know I'm on safe ground giving advice to the ALP, as they don't listen. So I know I'll never have to face the task of explaining how they failed after following my advice, and will always be able to say "If only they had listened ..." {and join the ranks of the great seer Bob Ellis}.

The current discussion is all about the crisis in Julia Gillard's leadership. Writing in Business Spectator Rob Burgess rightly points out that any move on the Gillard leadership would be terminal. He also points out the risk inherent in the large number of former NSW operatives now without gigs trying to influence Canberra. (There is a counter-view that the factional warriors that used to be on Ministerial staff to do factional work now have to have real jobs and hence no time).

There is no doubt that the Gillard Government needs to improve its narrative. Intriguingly just before the decision to roll Kevin Rudd I couldn't find a real weakness in the Ministry at large, yet now they seem to be everywhere. One glaring gap is the role Lindsay Tanner used to play as Minister for Finance and convincing spokesperson on everything.

Moving Penny Wong from Climate Change to Finance was a good move to get a different voice on climate change. She is also clearly very administratively good, but her personality is far more suited to something like Attorney-General.

More generally though the overall Ministry List shows the tendency to the State ALP disease of meaningless titles and administrative blancmange. Five Ministers with portfolios within PM&C is not so much a luxury as a farce. Meanwhile Senator Conroy carries DBCDE without so much as a Parl Sec. Most of these have actual real jobs as well, but it means that the administrative process is unnecessarily complex.

It is also time to move on a few of the old stagers. Jenny Macklin should be retired and Simon Crean needs to replace John Faulkner's role as Special Minister of State and Cabinet Secretary. Martin Ferguson is another who needs to be tapped now. The long snazzy titles need to stripped - Kim Carr as Minister for Industry and Science would be the same as Minister for Innovation, Industry, Science and Research, Senator Conroy as Minister for Communication would be the same as Minister for Broadband, Communication and the Digital Economy.

Climate Change and the Environment are not and cannot be different portfolios. Agriculture, Fisheries, Forestry, Resources and Energy should be one Ministry with a junior Minister assigned part thereof.

Deregulation belonged in the Finance portfolio only because it was a special interest of Lindsay Tanner's, but it is really part of Treasury. And that is the last real problem - Wayne Swan has
like so many of his colleagues been a very capable administrator of the budget and economic management. But he doesn't inspire confidence and the public has no idea what he says or does.

The ALP needs to create a strong praetorian around Gillard. A leadership team of Gillard, Smith, Rudd, Crean (as Special Minister of State), and Combet needs some extra spine on the Treasury/economy front. Given where he sits as Assistant Treasurer and given his ambition (and given that really Combet or Shorten is the logical next leader after Gillard retires as a long term successful PM or loses an election) Shorten should probably be given the Treasuer's gig.

This small group needs to lead the communication program of projecting the ALP's leadership credentials.

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DE - The Excitement Builds

Only a week to go till Stephen Conroy is due to unveil his Digital Economy strategy - at CeBIT is the expectation. While I said some unkind things about how poorly the Budget papers dealt with the DE agenda, I'm led to believe that the strategy will be substantive.

I am currently writing a piece that talks about the narrative of the "Digital Economy" more generally though. Hopefully it will be ready to appear just after the strategy.

But Australia is not alone in ruminating on DE issues.

In France President Sarkosy is hosting a two-day forum which will bring opposing views of the need to regulate the internet economy. In canada the former Government CIO has said all three levels of government will have to be more collaborative and focused if they want to realize their goals around improving service delivery.

Meanwhile closer to home Malaysia is reportedly "embarking on an innovative digital economy framework that will culminate in the development of a Digital Malaysia Masterplan". In the USA though the latest call is for skilling minorities for digital entrepreneurship (which I think means something other than giving authority the finger in novel ways).

The Digital Economy is definitely "in vogue".

What does Senator Conroy have in store for us?

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The simple guide to PR

Product comparison website iselect has provided a very instructive guide on how to do PR - especially in the IT industry.

They issued a release through get2press that referred to "research released today" in the "iselect Broadband Report". It was received by media organisations with no contact details, other than a link to the iselect broadband comparison website.

Nowhere in the release nor on the website is there a copy of the "recently released" research. The release was also available on PRWeb.

A Google search for the exact phrase "iselect broadband report" scored just under sixty hits, some of which were repeats. The story was carried by news.com, ibtimes, itwire, knowfirst, Yahoo, helstra, The Courier Mail, QuickSales, NineMSN, and Adelaide Now.

Some of these don't purport to be anything other than "rip and read" sites but the others are representing that they do IT journalism. Read the content of the stories and see exactly how much journalism there is versus "churnalism".

Meanwhile I've found a contact for the release and have at least asked for a copy of the actual research report that the release claims has been "released".

Hopefully exposing the light of scrutiny on PR based on citing headline grabbing lines from otherwise unavailable reports will turn this from good PR to very bad PR indeed.

(Note: I'll keep you posted if I get a reply from my request for the report)

Novae Meridianae Demetae Dexter delenda est

The Rapture - Part 2

So - surprise surprise - no Rapture!

I guess we should have expected that - look at Mathew 24:36.

Or as one of my daughters put it "I'm pretty sure God doesn't give clues."

Novae Meridianae Demetae Dexter delenda est


News that IBM has passed Microsoft's market cap is not really surprising.

IBM remains one of the great but misunderstood stories of corporate strategy. In the bad old days before the PC there used to be IBM and the BUNCH (Burroughs, UNIVAC, NCR, Control Data and Honeywell I think). IBM has maintained its position against all challenges while much of the rest disappeared through mergers.

The story of IBM and the PC is usually told as the story of an opportunity missed. They outsourced the operating system, they created a standard they couldn't dominate, they were out-performed by others in manufacturing.

These stories fail to recognise the huge challenge faced by a closed-system (SNA) mainframe manufacturer by the PC. The challenge is well described by Clayton Christensen's analysis of the related hard drive industry in "The Innovator's Dilemma". How do you invest in a technology that you think will cannibalise your existing business?

The answer is simple. Create the business unit separate from the main business, limit your investment as much as possible by outsourcing (e.g. the operating system), and create a self-supporting "eco-system" - part of the magic of the IBM PC was its very open architecture and the active encouragement of third-party add-on hardware, the complete opposite of Big Blue itself in those days. The outcome was that, in a field replete with various attempts at desktop systems, the IBM PC became the standard.

But the PC division's greatest impact was not in being a business unit on its own, but the ability it gave IBM to adapt. Most significantly because of the PC division IBM was prepared to embrace the new open access architectures, and its business adapted accordingly.

Meanwhile Microsoft really is a one-trick pony. In common with the rest of the software industry a lot of their capability is leveraging brand and distribution. Much of the core program content of large software firms comes from acquisition rather than cdevelopment.

And the large software companies are rapidly coming to the end of the cycle where their proprietary systems have unique advantages. It is really remarkable just how much you can achieve with reliable Open Source software these days.

The IBM PC story is not one of a failed investment in PCs and then a company made good, it is instead the story of the only mainframe provider who successfully navigated the technological transformation of the desktop.

Novae Meridianae Demetae Dexter delenda est

Friday, May 20, 2011

The Rapture

I guess since I don't live in the US and see the billboards I can be excused for not knowing about the prediction that The Rapture is happening tomorrow, at least according to Harold Camping.

Evidently it all starts tomorrow with giant earthquakes and then unbelievers dies till October. The evidence has been carefully explained by Scientific American. In brief the dude has decided that 5, 10 and 17 are special numbers and that this Saturday is the square of the product of those numbers days after the day he assigns to the crucifixion of Jesus.

I put a very crude post up about the SBS show Letters and Numbers earlier. That show has two sections - in one you try to make the longest word you can out of the letters randomly drawn. In the other the challenge is to compute a given number out of a similarly randomly drawn set of numbers. This is really what Campling has done.

The prediction reminds me, however, of a plaque my wife and I found in New Zealand once. The plaque is in Windsor Reserve Devenport.

I've previously assumed that it was a plaque to commemorate some previous failed Rapture prediction.  However, I find that I'm not the first person to blog about it and that the plaque itself is an item readily available throughout the US and you can (normally) buy one on line.

Ah well, so ends another mystery (though how the plaque wound up in a public park is still a unexplained).

I think on Monday I'll start selling a line of "On this site on 21 May 2011 nothing happened" plaques.

Novae Meridianae Demetae Dexter delenda est

Middle-power diplomacy and cyberspace.

The release by President Obama of the US "International Strategy for Cyberspace" was greeted by some in the Australian commentariat as flagging that the strategy stood in stark contrast to Australia's efforts to introduce a mandatory Internet filter.

Today in Crikey Bernard Keane notes (behind paywall) "the main media message for which seemed to be that the US reserved the right to respond to cyber attacks with real-world attacks if necessary."

However, he goes on to note that "the principles espoused in the strategy document clash fundamentally with the enthusiasm of the Obama administration ... to act as the enforcement arm of the US copyright industry." After discussing the processes the US is attempting to use through treaties he notes "The attitude of the Obama Administration to the "PROTECT IP" bill before Congress will also be instructive. This bipartisan bill ... would mandate an internet filter for the United States by requiring ISPs to block the DNS for sites alleged to be engaged in "infringing" activities by the copyright industry."

It is all too easy in the Internet space to grab hold of a half-truth and then wilfully or unwittingly misrepresent it.

But in the context of our vary own Convergence Review we have an opportunity to consider how we would at least like the Internet to work.

In the case of television the TV broadcaster makes an assessment of the content against an agreed set of criteria and puts a rating on the show. Where the show is "live" the production process is designed to ensure that it stays within rating, and there are "kill switch" mechanisms if it doesn't (and on talk-back radio a delay to ensure the offending bit can be suppressed before going to air).

Domain name owners have the same ability to control the content on their site. Even the big social media sites have a take down policy of things that they get alerted to. That means it would be theoretically possible to put a classification system in the DNS to advertise to browsers the classification of a site.

In TV land certain classifications can only be shown at certain times. The Internet equivalent would be permissions established in the browser that stopped it from navigating to sites with certain ratings.

Now at this point there will be howling that the Internet is global and that we can't "regulate it". I don't want to. But I'd like to think that we could have an informed contribution to make. Why is it that only the US publishes pontifications such as this? Where is the Australian strategy?

More importantly why are we not taking the opportunity to practice middle-power diplomacy in this space?

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Speaks for itself

Letters and Numbers is quite an entertaining show on SBS - but a random draw of letters can have interesting results.

Novae Meridianae Demetae Dexter delenda est

On-Line Opinion and The Conversation or On distributions and variance

A colleague recently suggested that I should consider writing for On-Line Opinion as a way of getting my views more coverage. Separately Josh Gans has tweeted about The Conversation. So today I've had a bit of a look at both.

On-Line Opinion is self described as "Australia's e-journal of social and policy debate". It has been going for about six years now and is "professionally" edited though contributions are unpaid. The Conversation is very different having been started by former Age editor Andrew Jaspan, and drawing exclusively from academics for content and even using an *.edu.au domain.

Both carry the kind of material usually reserved for the Opinion pages of major newspapers, but reflect the fact that these are becoming mono-voice regions (follow the party line) and are declining in availability anyway.

They vary from the on-line "news" sources like Business Spectator, or Crikey in being exclusively opinion.

Anyhow, two items from On-Line opinion caught my attention, one questions whether markets can provide food security, while the other asserts that the world can't rely on alternative energy sources.

Ultimately both these items rest on the observation of the unpredictable variability of the weather. Food security can't be guaranteed by markets for the simple reason that the amount that is globally planned to be grown might not match the demand globally produced because of weather events. That problem exists, however, with or without international food trade. It just means that the impact of weather events is different and may not be felt in the location of the event, but elsewhere. A loss of production in a wealthy country results in more exports from a poorer country resulting in food shortages.

The energy case is equally built around the argument that the wind doesn't always blow and the sun doesn't always shine. In common with most such arguments it makes assumptions that existing storage technologies are as energy efficient and as price efficient as they'll ever get - they aren't of course. It also dismisses each storage solution because it alone could not handle the storage task, whereas in reality the combined use could.

But variability and distributions are indeed everywhere. Elsewhere today there have been reports about the float of LinkedIn and surprise about comments reported from their prospectus that "...a substantial majority of our members do not visit our website on a monthly basis, and a substantial majority of our page views are generated by a minority of our members." Indeed there is a small minority of users that make up the dominant usage. One could say .... "derr".

The question though is exactly what kinds of distributions they are. Lots of people have started to realise that the normal or Gaussian distribution is an abstraction that isn't particularly normal at all. So books like Black Swan and The Long Tail talk about other kinds of distributions. Unfortunately these too readily make assumptions about other kinds of distributions (notably Pareto or Power Law) ignoring that the small deviations from these that occur in things like log-normal distributions also happen in the hard to measure tail.

Meanwhile The Conversation had a learned article on Julia Gillard's voice and speech. It in part concludes that one of the difficulties is that the PM controls her speech too well, and it lacks sufficient variability to be engaging and convincing. Because the mode of speech is so unusual it is regarded as being artificial.

I've added these two to my daily reading list but I suspect I'm going to find more of these kinds of stories than things that provide any new insights.

Novae Meridianae Demetae Dexter delenda est


Former Victorian Premier Jeff Kennett has opined today that we are seeing the beginning of the end for The Age.

The reality is that if it happens to The Age it will happen to the SMH too.

I personally cannot understand the reluctance of Fairfax to go harder on the idea of shared content, including a single Canberra Press Gallery. My only difference would be that I'd kill the AFR at the same time.

The AFR should become the business section of the two broadsheet papers. It really serves no other purpose.

The five print titles of The Age, SMH, Canberra Times and the Illawarra and Newcastle Heralds (I think they still exist) could be joined by print versions of the Fairfax online initiatives in WA and Qld, and probably the addition of an Adelaide one.

The online strategy needs to more actively embrace the use of other "mastheads". The "National Times" is an effective combined masthead for the opinion of The Age and SMH, but bizarrely does not yet run to the Canberra Times. Their tech sections, motoring etc can be similarly branded (OK I know some of them might already be).

Ultimately the selling point to journalists is the ability to continue to fund "quality journalism" by increasing the audience of every writer.

The strategy needs to start at the news and information content and work its way out to brands, not the reverse. Ultimately that means a complete restructure of the editorial arrangements - there is a national editor for business who knows how many pages he has in each title and decides what goes in them. Yes there might be less business news in the smaller papers, but those readers can access the online content.

And heck, you could really print in each and every paper a unique code for access to the day's paid content, and at the content end restrict that to being able to be accessed by only one IP address and for that day only. You can also restrict the number of page views so a robot or proxy can't access the rest.

Finally, get over the paywall fixation on archived content. Anything over a month old should be readily available - you build your brand that way.

I'm not in the newspaper biz ... probably for a reason. but there look to be many more creative ways to get more bang for the buck than outsourcing sub-editing (the latter being something management consultants rather than management would dream up).

Novae Meridianae Demetae Dexter delenda est

This is funny and cruel

Thanks to Stephen King for pointing out this cute clip called "Vodafail the musical".

I'm not sharing it to have a dig at them - I think somehow that their network issues have been over-stated. Plus I think the combination of a bit of customer churn and new network investments means that the VF network is about to be very very good.

(Interesting discussion can be had here about the timing of investments. A similar issue existed at Telstra once where they didn't invest in more "head room" on their Bigpond servers, a virus infecting their customers created a traffic spike and brought down the service. The story goes that they paid out more in compensation than the capital investment that they had delayed - and had to make the capital investment.

Anyone who thinks running a telco is easy should ask a telco engineer, a marketer and a CFO to explain how you make investment decisions!)

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For the IT/comms types who read this blog, I suggest you read Josh Gans on Bitcoin to see commentary on it as money rather than IT.

Bottom line, I think, is that there is a market for a true "virtual currency", but that any private model suffers the same problem as does a private model of a "physical" currency. If you have a precious metal base you need to be convincing that you have enough metal, beyond that you are relying on a Government guarantee.

And I'm trying to figure out who earns the seigniorage - the difference between the value of money and what it costs to make it (recently the Australian Government has run into a problem with negative seigniorage on the 5c coin).

Novae Meridianae Demetae Dexter delenda est

Thursday, May 19, 2011

Julia Gillard doesn't follow my advice!

I'm channelling my inner shock jock here, and expressing my outrage that the Prime Minister simply just doesn't do as I tell her.

I advised her via this blog to stop giving airtime to the leader of the opposition, saying;

Stop referring to coalition spokespersons by name. at most use their titles. Mr Abbott is never Mr Abbott, he is the leader of the opposition, Joe Hockey is just the shadow treasurer. Using their titles will show up the absence of substance.

Also as far as possible try to refer to them as "the alternative government" or simply "coalition" rather than opposition or liberals. Don't feed their brand.

And above all just don't mention them if you can avoid it. When asked about the carbon tax explain it without trying to talk about other points of view. Talking about the coalition means ascribing to them a policy credibility that they don't have on their own.

Then at the launch of the NBN she goes and mentions him a zillion times.

Let's face it there are people out there who doubt the worth of the NBN. Don't feed Abbott by giving him the position of being the logical home. Acknowledge the concerns of those who might doubt the value, identify the value and move on.

Meanwhile her comments have largely overshadowed the good work the shadow Treasurer did in admitting that once there is a Telstra/NBN Co agreement there really isn't a viable alternative policy for the coalition. This perhaps reflects the reality that their coalition partners are probably telling them they have no hope in regional Australia without it.

Novae Meridianae Demetae Dexter delenda est

Trains and the North West

Looks like the SMH doesn't plan to publish my letter on the North-west rail line, so I'll blog instead.

The decision to change the North-West rail from an above ground interchange to a through connection under Epping is not new. This revision was made under the previous Government before the project was scrapped in the face of opposition from the residents of leafy Cheltenham prior to the 2007 election.

A memorable quote from a public meeting at the time was the resident who said “if people want a train line they should live in Cheltenham, not in the North West”.

We again see the potential utility of public transport investments being compromised by objections posing as environmental concerns. This follows the loss of one station on the Epping Chatswood section due to the decision to go under rather than over the Lane Cove River.

The decision however does not reduce the utility of the line. The Strathfield-Central section of the network is heavily congested. Bringing more trains up the North Shore line is a better option.

But the best option is the final NW line plan that incorporated a new harbour crossing and additional CBD stations. The last proposal - before it was scrapped due to the loss of funding from electricity privatisation - was for a tunnel to the East of the existing crossings.

In the context of the Barrangaroo development however I wonder whether sufficient consideration has been given to a rail crossing to the West. This could use the existing track behind Luna Park to access the tunnel to the North. to the south the tunnel could continue under Barrangaroo providing the possibility for a station closer to this development than Wynyard. A further station could be located near Darling Harbour. From there there are alternatives of connecting to Central or swinging West to connect to the White Bay goods line which could then be used for passenger heavy rail.

Ultimately though we don't need a string of separately announced plans for different lines. We need a forward commitment that says $X will be spent EVERY YEAR building new tracks around Sydney. We could then include extensions of the eastern suburbs line, additional branches in the West and a line up the Northern Penninsula.

Finally, let me note that prior to the 2003 State election the Liberals took up the cause of every resident who claimed the Epping-Chatswood line would damage property prices for affected residents. It hasn't. Will they apologise for the fear-mongering.

Novae Meridianae Demetae Dexter delenda est

Empathy for Optus

Optus yesterday was fined $178,200 over adds for a "Max Cap" plan in July and August last year. Reporting on the story in the SMH Lucy Battersby says that Optus doesn't agree with the claim that the ads were misleading but moved to replace them immediately.

In an opinion piece also in the SMH Elizabeth Knight writes;

The reality is that the ACCC spends a ridiculous amount of time dealing with exaggerated or plain fictional marketing claims made by telcos. It is hard to find someone who hasn't got some beef about their telco service provider or mobile phone bill.

Given that she then recites some of the language that David Howarth so delightfully ridiculed as I noted in a column for itNews it may surprise you that I feel some empathy for Optus.

The reason is simply that there is so much inconsistency in the operation of the law of misleading and deceptive conduct. Optus in this case was pursued by the ACCC and took the decision to change their practice to avoid a lengthy argument. The fine they have been asked to pay is less than the annual salary of their corporate counsels.

Meanwhile last December Optus initiated its own action against Vodafone over the latter's "infinite" plans. They were unsuccessful in gaining an injunction and have since dropped the matter. But it was the judgement in the injunction that was extraordinary.

Elizabeth Knight notes that "It's true that the more sophisticated consumer understands that there are plenty of calls that are not covered by a cap, but in some cases the fine print exclusions are a fraction the size of the headline marketing claims."

But Justice Nicholas stated in his judgement (at para 19);

It also needs to be remembered that ordinary and reasonable consumers, who might be expected to take some care of their own interests, are likely to do more than simply rely upon these particular television commercials in deciding whether or not to sign up to the respondent’s plan. These types of plans typically involve a contractual commitment of a year or more in duration and are invariably the subject of terms and conditions which relate to matters of detail of the kind that the applicant’s complaints focus upon.

According to this decision it doesn't really matter how much the actual terms vary from the advertised terms because the customer is LOCKED IN TO those terms the customer has an increased obligation to read and understand the full terms before acquiring the service.

Optus not only lost but has been required to pay Vodafone's costs. It would be interesting to know which amount is higher, the fine they just received or the cost of their failed litigation.

Personally I think Optus over-stated the case; they listed all the call types not included in the Voda plans. A focus only on 1800 and 13/1300 (in line with ACCAN's Fair Calls for All campaign may have been easier to argue.

So in defence of telcos and others, it is very hard to win the internal battle on compliance when the external rules are vague and inconsistently interpreted.

Novae Meridianae Demetae Dexter delenda est

Wednesday, May 18, 2011

Quigley and "gobbers"

I've had my say on twitter and elsewhere online about the character assasination of Mike Quigley. Today the SMH has joined the fray with an editorial. In doing so they join everyone else in saying there is no allegation about Quigley, but that the issue should have been identified in the recruitment process, writing;

But Quigley's NBN candidature needed to be judged against a clear appreciation of his previous experience. That taxpayers are staking $36 billion in this project demands complete transparency. It should not have been for Quigley to decide what history was relevant. And if he was too forgetful, the federal government's own inquiries should have filled the gaps. That they did not is not surprising.

There is a perverted logic in arguing that a recruitment process should have identified a matter about someone for which they were NOT being investigated.

It would not, of course, be the first time such a thing has happened. There was an infamous case of Telstra appointing a Chief Technology Officer who had faked his CV to include a doctorate, disclosed only when his new staff wanted to write a story for an in house magazine about him.

The interesting governance question is that we know the Commonwealth paid a large sum of money to an executive recruitment mob (Egon Zehnder) for the staffing of the NBN Board. If there is a question of why the issue wasn't known is this one for the head hunter rather than the Government? After all what more can a Minister do than pay for the best professional advice available.

Meanwhile the SMH also carries a great story about people who comment on blogs. Rick Gekoski notes "the number of readers' comments that are splenetic, ranging from the snide dismissal to the full-on rant. I wonder why so many of these commenters are angry and self-righteous, so anxious to spit out their insults?"

Adding "Spitting is what it is, and one can feel spat at. I like to call this phenomenon Gobbing. There are a multitude of gobbers."

He identifies six characteristics of gobbers; They have a peculiar name, not a real one, and rarely a pictur, they are in a perma-rage with regard to almost everything; they apparently lack any other forum in which to express themselves; their response comes so quickly - Skim! Spit! Click! - that it can hardly be considered the result of thinking; they like sarcasm and eschew irony; and they are unable to distinguish an argument from an assertion...if answered back, they spit harder.

Of course, bloggers like me dream of having our share of "gobbers".

As an example of the form look at the comments (including mine) on this article on the Turnbull/Quigley exchange.

Novae Meridianae Demetae Dexter delenda est

Tuesday, May 17, 2011

The economic value of broadband

Is it worth investing in the NBN? What are the benefits? These big questions are largely impenetrable. But so is any decision about the future that has to be made. We employ a number of techniques to do so. Anticipating the "wisdom of crowds" we use a thing called "democracy" to try to reflect the communal will or opinion) of the people.

But there are other more scientific tools one can use. One of these is an econometric model, whereby the correlation between certain past events is measured, and controlled for other factors, and a relationship established.

A new paper in The Economic Journal by researchers at the University of Munich (partially funded by Deutsche Telecom) provides a convincing case that higher broadband penetration indeed raises economic growth rates.

The paper "Broadband Infrastructure and Economic Growth" uses OECD Broadband penetration data and a number of models to determine a 10 percentage point increase in broadband penetration raises annual per capita growth by 0.9 to 1.5 percent.

The study is incredibly robust and controls for workforce size, workforce capability and rate of capital formation. They discuss a favourite topic of mine, that is broadband as a General Purpose Technology (or GPT). They summarise this nicely;

High-speed internet via broadband infrastructure facilitates the spatial distribution of large batches of information that previously had to be collocated, which in turn allows new business models, entrepreneurial activities and collaboration of firms producing specialised inputs. This can lead to lower entry barriers and higher market transparency, increasing both labour productivity (also through better job matching) and market competition and ultimately economic growth.

They note that their first simple association between growth and penetration could be due to reverse causation (growing economies can spend more on broadband through higher disposable income or investment by the state0) and omitted variables (the diffusion of broadband has occurred at the same time as other diffusions).

In their modelling to overcome these issues the researchers provide the first model I've seen that matches the individual country broadband diffusion curves with a predicted (logistic) diffusion curve. The paper is worth looking at for this (Figure 1) alone.

Of course, for the NBN the case needs to be made that even faster broadband means even faster growth. There are two ways to think of this. The first is that "even faster broadband" is a new GPT that should be expected to have similar benefits - after all Broadband penetration growth is slowing and so therefore is its contribution to growth.

Another way would be to add the OECD's data series on speeds as another variable to the model. Unfortunately that data set doesn't go back quite so far.

This is, however, an important paper. It is worth reading and building on.

Novae Meridianae Demetae Dexter delenda est

Skills, VET and migration

I have to confess to being totally bamboozled by a lot of the debate on national worforce planning.

Skills Australia has published what it calls a "roadmap for vocational education and training", which on analysis sounds like a real plan. On reading it though there is little more than an appeal to the standard neo-classical response of a "voucher system".

Meanwhile the Budget included some good initiatives on recognising workplace gained competencies in VET accreditation. But as I noted in my blog post the brochure for "Building Australia's Future Workforce" had mostly people in hard hats. Very few ICT type jobs there, but there was one chef.

So how do we do workforce planning? I know that Tourism Australia is currently conducting a massive survey using Deloitte Access Economics.

I discovered today that Innovation and Business Skills Australia has published its 2011 Environment Scan. The report notes in part;

Continuing rise of the digital economy

Ongoing developments in digital infrastructure, products and services are providing a platform for continuing development of the digital economy in Australia. As many commentators predict, the digital economy continues to change the business we do and the way we do it.

The industries in which the digital economy is likely to expand most rapidly, through business and service takeup of the capacity offered by the high speed broadband network, are e-health, education services, e-finance and business services, logistics and transport and media and entertainment.

The challenge for both the VET system and business users will be to understand and pitch skills acquisition accurately to meet the needs of businesses, services and individuals. The demand for digital literacy is expected to shadow business engagement with high speed broadband and related user skills development.

and later

Skills shortages have been specifically reported in IT systems architecture, information management strategy development, e-security and in the management of IT services.

Skilling in the telecommunications sector in the short term is substantially dependent on the style and nature of the NBN build and implementation. Immediate skills needs for the ‘roll past’ of the fibre, may be met through heightened government and industry recruitment and training, however the skills to effectively connect, support and integrate business and household functions, using the highspeed broadband capacity, remains a significant issue for the IT and telecommunication sectors.

This raises the really interesting question of who the heck IBSA is. Its membership list includes a large number of unions, professional associations (including ACS) and training provider organisations. It also includes a number of industry associations, including the big AIG and ACCI. But it doesn't directly include any of the ICT associations, AIIA, IIA, AIMIA, CommsAlliance, AMTA or IIA.

It is one of eleven such Industry Skills Councils, which cover disparate groups.

An issue with the ISC approach as distinct from the survey from Tourism Australia is the focus exclusively on the very amorphous concept of VET to the exclusion of the Higher Education component.

What's also missing is the recognition that a consequence of the digital economy is the greater reliance on markets rather than hierarchies for obtaining skills. More people fulfil multiple roles across different sectors - because the technology enables the rapid identification of opportunities and negotiation of terms.

I suspect there is a long way to go to turn the whole VET model around.

Which provides a nice segue to comment on a comment on my budget post. Anonymous wrote

EBN "ill-concieved". Not at all. AARNet is and will continue to be a mile ahead of the NBN - and the poor old VET community will now continue to have network access that is nowhere near as good as their University brothers - and worse even than many high-schools.

I guess we should keep blue collars blue ;-)

This requires a response. Firstly AARNet is primarily a research, not a teaching, network. VET almost by definition doesn't.

Secondly, while the commercial NBN offering that we know and love today is 100Mbps to everywhere, the product roadmap includes 1Gbps for major sites like VET. And this will upgrade.

Thirdly, where the connectivity for VET is important is with their students not with each other. Big pipes to public networks are more important than big pipes in a private network to each other.

Finally, the writer might like to explain all those hard hats in the workforce brochure.

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Monday, May 16, 2011


Hmmm. First the KANZ broadband summit, now the joint committee on the NBN.

I've now twice tried listening to a committee or event on a live broadcast and twittered a commentary on the way through. Becomes interesting as an exercise, cause I've got two audiences - people I know who are there or also listening, and people who aren't. So it becomes hard to craft a tweet.

But it sure is fun!

Novae Meridianae Demetae Dexter delenda est

Mobile coverage and information in markets

In his Twisted Wire podcast last week Phil Dobbie raises the question of how consumers should be informed about the coverage available on mobile networks. On positing the idea of a consolidated detailed map of coverage Telstra’s Max Jennings said;

I don’t think so. It’s a very competitive industry in this country, and it’s in each of the operators interest to (a) publish correct data about coverage and performance and (b) to maintain that performance level over time. Now the coverage maps won’t indicate performance per se, they’ll indicate where the signal is available; but the capacity side of the equation is also extremely important.

Your customers will very quickly tell you if you are not meeting the expectations that were delivered to the customer at the time of purchase and they have the opportunity to walk to one or two or however many operators that exist selling mobile services.

I don’t think it needs to be regulated. I think the competitive forces within the industry will sort that issue out.

The discussion reveals a good example of the naive faith in competition and markets promoted by telcos. As I've outlined elsewhere the discussion ignores what is known in economics (after Akerlof's paper as the "market for lemons". More recently research shows that the problem of the efficiency deviation of lemons markets is increased by increasing competition.

The position described by Max of a customer being able to change network after the fact of finding poor coverage reflects the failure to understand that the consumer can't do that because of a lack of information about the alternative.

The suggestion ignores the high switching costs for customers as well. There is not only the problem of time commitment now but the very fragmented spectrum model that really you want to keep your phone on the network you bought it for.

But the buzzword in customer experience these days is "reducing customer effort" with its own score. The attitude of let customers buy and then experience the coverage doesn't reduce customer effort.

It is a bit disappointing because when Max and I worked together in the Corporate Customer Division of Telstra the research then conducted on customers by PA Consulting revealed that reducing the effort they had to put into managing telecommunications was a big driver of assessment of the quality of customer service. That in turn fed part of the assessment of the attractiveness of our long term agreements (called Strategic Partnership Agreements).

Max and Phil went on to share a joke about how Vodafone was already witnessing a big churn driven by poor coverage experience. Vodafone has now developed a coverage checker that conveniently uses Google Maps. It has however already received negative comments as the coverage shown isn't what is reported.

The site carries the usual disclaimer about such predictive models. Over time the site could get better by being adjusted by the actual experience at actual places. (one of which can also one how high off the ground you are - ever noticed poorer coverage on the higher floors of a building). I sympathise with the carriers and the difficulty of actually defining a coverage expectation, given all the factors that can affect it. But I feel for their customers far more.

But let's face it, Vodafone has felt driven to this situation because of a small disaster with coverage. Telstra and Optus have no need to respond.

Real world markets don't work like they do in economics or MBA courses - firms and policy makers need to recognise that.

Novae Meridianae Demetae Dexter delenda est


I didn't vote but I agree with the SBS Australian poll that awarded Eurovision to Ireland rather than Azerbaijan.

The win by Azerbaijan will put a focus on this former Soviet republic. Anyone who watched the telecast will have seen the construction job the Germans did to convert a 40,000 seat football stadium over six weeks into a giant TV studio. Azerbiajan is an energy rich state, but like many such states it has dramatic inequality and 40 percent of the population live below the property line.

These people are outside the capital Baku, and it is there that the event will be hosted. And if you ever wanted an excuse to go to watch Eurovision, the Wikitravel guide to Baku seems it could be quite interesting.

Novae Meridianae Demetae Dexter delenda est

Sharing the presses

In the long history of newspapers the relationship between owning a title and owning a press have existed under different models.

The classic model of the original "gazette" was of one person who wrote the stories, typeset them himself and then printed the paper. Ownership of a press was very important. But as presses grew to being large capital investments and had capacity beyond the requirement of just the titles of the owner, capacity on those presses have been sold to others.

For example, Fairfax pays others to print the AFR in states other than Vic and NSW.

Often this is for bespoke rather than competitive titles, and more usually through smaller presses. But declining circulation and shrinking classified volumes means that the large presses of the majors have increasing spare capacity.

It is no surprise, therefore, that News and Fairfax are reported to be close to a deal to share printing presses in Sydney and Melbourne.

While this should be welcomed on technical efficiency grounds it creates a risk of what is known as hold-up. If the deal results in Fairfax being a client of News it creates the possibility that sometime in the future News increases the price it charges Fairfax (unreasonably).

There are solutions to this, either by specifying all future prices in the contract or by empowering an arbiter of future pricing (the latter being exactly what an access regime is). Fairfax should have some protection as the News presses will become a monopoly.

The deal would technically meet the acquisition rules of s50 of the Competition and Consumer Act. As just noted the new business is a monopoly. To gain approval for the deal the Fairfax group could seek to produce a new national title that would increase competition in some markets.

It will be interesting to see how the ACCC eventually responds to any proposal that emerges.

Novae Meridianae Demetae Dexter delenda est

A crazy suggestion for the Gillard Government

Phillip Corey in the SMH this morning reckons "If this government had a duck, it would drown."

He was commenting on yet more bad poll numbers for the Government and how even a good budget has been harshly treated (and hoe the Tele can on one day accuse the budget of not being tough enough and on the next day criticise the modest restraint of "middle-class welfare".)

But he really nails the Government's malaise when he writes;

The government's inability to sell its policies and defend itself, combined with muddling its messages, especially over asylum seekers, is compounding its woes. So is its infatuation with Abbott and his inconsistencies. Yes, Labor needs to put the acid on him more than a government usually would for an opposition leader because it is just a heartbeat from a byelection and a change of government - but there is a limit.

It is rare, if not non-existent, now for the Prime Minister or a minister to give an interview or a press conference and, without prompting, to start talking about Abbott. They appear intimidated. It is little wonder that Abbott feels he has only to reinforce the negatives.

Here is a suggestion for the ALP, much of which is straight out of the spin book they should understand.

Stop referring to coalition spokespersons by name. at most use their titles. Mr Abbott is never Mr Abbott, he is the leader of the opposition, Joe Hockey is just the shadow treasurer. Using their titles will show up the absence of substance.

Also as far as possible try to refer to them as "the alternative government" or simply "coalition" rather than opposition or liberals. Don't feed their brand.

And above all just don't mention them if you can avoid it. When asked about the carbon tax explain it without trying to talk about other points of view. Talking about the coalition means ascribing to them a policy credibility that they don't have on their own.

And on the way through find a really good media coach for Wayne Swan. he is having too many "John Kerin" moments. Ministers should accept that the public accepts they don't know everything. So when asked "when was the last time the ALP brought in a budget surplus" either say "I'm not focussed on the past, but on the present and the future. The Government took the budget into deficit to provide stimulus to the economy. As a consequence we have only 4.5% unemployment, not nearly 10% like the US and many other developed countries. The task now is to return to surplus and this budget outlines how we will achieve that."

There is almost no question a journalist can come up with that you can't have a response to. But the responses need to be a bit better than just parrotting the official "phrase of the day".

Novae Meridianae Demetae Dexter delenda est

Thursday, May 12, 2011

Why we shouldn't worry about the set-top box program

The Government's budget announcement of over $300M to fund in home assistance for pensioners to install digital set-top boxes has drawn plenty of criticism, mostly of this kind that repeats the assertions that this will be like the home insulation and BER programs.

The problem with this is that there really are a lot of myths about these two programs.

The Australian National Audit Office found that the BER program worked and worked well.
The issue of course was that to work as a stimulus it had to be a rushed program, and that as a consequence not all the controls as good as they might have otherwise been. The program also didn't fix smelly toilet blocks because it was designed to be new expenditure and not to simply displace State expenditure with Federal expenditure.

This week analysis of the CSIRO data on the home insulation program revealed that the instance of house fire due to insulation installation was LOWER during the program than it had been before!

So we really should be quite relaxed about the set-top box program - the Federal Government's record is actually good, not bad!

Two other facts are that fully 11% of the project expenditure ($42M) goes to Human Services to ascertain whether a household is eligible for the program. The second is that DBCDE programs are traditionally under-spent. This is likely to be the same. No longer is it just a matter of getting digital signal. TV - especially sport and news - is being shot and given sur- and sub- titles on the assumption of a 16:9 aspect ratio. Most consumers will move to new TVs for these reasons, and not access the set-top box route.

Novae Meridianae Demetae Dexter delenda est