Thursday, September 29, 2011

More on the ABS Internet Activity Statistics

The old adage referred to in my earlier post on these statistics was the "lies, damned lies and statistics" line. The point being that popularity wasn't just based on subscriber numbers but also on downloads.

The other interesting thing to do is to compare the ABS stats to other data sources.

This release is the first time in a while that the stats have actually given a distribution of all the ISPs by size. The interesting thing is to compare this to the number of service providers that are members of the TIO that claim to be ISPs or TISPs (the latter meaning they provide telephone and Internet services - like Telstra).

The chart below shows that the ABS numbers are well below the total number of merely ISPs let alone those service providers who are either ISPs or TISPs.

The chart might suggest significant under-counting by the ABS. Another comparison we can do is between the ABS fixed broadband number and the total fixed broadband services on either Optus HFC network or Telstra's HFC or copper network. The latter appear in Telstra's results as part of their retail SIOs with HFC, as the fixed BB wholesale, the ULL and the SSS numbers.

The closeness between the two data series is probably not really a good thing as the Telstra+Optus data leaves out Transact and others. But still - the gap is not terribly massive.

Understanding DSL is a little bit harder as you need to estimate how much of Telstra's Fixed BB SIOs are DSL and how many cable. I've used the crude approach of subtracting the Optus HFC number from the ABS total cable and fibre number to get a Telstra retail estimate. The Optus data is their on-net and off-net DSL base. The Telstra and Optus numbers are stacked, the ABS line is their total DSL.

A similar analysis can be done of broadband mobile wireless. Once again the Optus number is stacked on the Telstra one, while the ABS line is total market. The remainder is essentially Vodafone, resellers (except Virgin which is consolidated in the Optus number I believe) and the vividwireless base.

Finally the narrowband data can be compared, as it is below using the same approach.

Adding other providers is problematic as some don't release a lot of data, but I will expand the data set. I might not republish till after the ABS releases the December 2011 data in about April next year.

Novae Meridianae Demetae Dexter delenda est

Wednesday, September 28, 2011

Socialist Objective

As if I wasn't busy enough.

Watching the increasingly idiotic prancing of members of the ALP discussing reform and "Labor values" I've decided it is really time that the ALP's socialist objective gets analysed once again. That really is its values and they are not often enough espoused.

So I've started another blog called Socialist Objective. I'm hoping I might find other authors interested in joining that one.

My post today discusses Peter Costello's column in this morning's SMH. I assert that the Liberals deify collectives just as much as Labor (should) - but it is the collective called big business.

Novae Meridianae Demetae Dexter delenda est

New statistics - old adage

As I foreshadowed the ABS has today released the Internet Activity in Australia data that updates us a year on the ACCC report released last week.

Not that you'd know immediately from the media release which was titled "Mobile wireless connections more popular than DSL". This raises the important question of what we mean by "more popular". What they go on to say is there are now more wireless broadband services than DSL.

The graph they provide on their highlights page is a version of the proportions of internet connections by technology. Mine appears below.

As a proportion DSL looks like it is a technology the use of which is declining. The better picture is obtained by a graph of the actual service numbers by technology, shown below.

Indeed there are more wireless services than DSL, but not actually more than fixed when the 912 thousand cable and fibre services are considered. These are included in Other in the graph - which includes the 106 thousand satellite services. Interestingly both satellite and cable numbers declined over the last half year while DSL numbers continued to increase.

But popularity implies use not just existence. And it is here that the information noted with such relish in the ACCC's report becomes important.

The amount of data downloaded per service (the data is all data for the preceding three months) continues to rise rapidly for fixed broadband services but is relatively static for wireless. To put it into overall context - 254,947 terabytes were downloaded by fixed customers, while only 19,149 terabytes were downloaded by wireless.

I know which I would choose to define as popular.

Finally for this post I continue to wonder about the veracity of the ABS statistic. It is derived from data provided by ISPs, but the latest release has for the irst time in two and a half years revealed the number of ISPs by size category with a total of 421. The TIO counted 205 members as straight ISPs and a further 405 as Telephone and Internet Service Providers as at 1 January 2011.

I want to understand the source of that discrepancy.

Novae Meridianae Demetae Dexter delenda est

Josh Gans sets the challenge

Joshua Gans seems very pleased that his whole interview with Alan Jones went to air.

He made a point that no submission to the ACCC has said "Gans and Hausman are idiots". That is true - my comments thus far have been reserved for my iTnews column titled When smart people say dumb things.

Meanwhile other submissions in the same proceedings are reported to claim that Telstra's separation proposals do not go far enough.

It is an unfortunate fact for Optus that there is such a thing as the public record. The fact that Telstra's structural separation is progressive over the life of the NBN deployment is not new; it is a consequence of the legislative prescription.

To the Senate committee inquiry into that Bill Optus submitted;

If implemented in its present form, Optus considers that the reform package will provide the foundation for stronger competition to emerge in the fixed line sector.

The Competitive Carriers Coalition was at least alert to the issue, but recognised the difficulty of concluding both a functional and structural separation. They submitted;

The CCC suggests that the ACCC be given guidance that any undertakings show how the management of Telstra’s wholesale business will be organized to remove incentives to iscriminate during the period of a staged separation, and to that the guidance detail certain minimum requirements.

However, the facts as I understand them is that the legislation was not so amended.

Meanwhile, I'm really looking forward to round 2 of Jones and Gans. Jones invited Gans to agree that the ACCC was an inadequate regulator as it hadn't acted on the Coles/Woolies duopoloy nor "shop-a-dockets". I suspect Gans' view here is closer to the ACCC than Jones - though I also wonder if anyone has explained the Metcash decision to Jones.

Note: I must admit to finding a certain irony to the joint submission by Professors Hausman and Gans. I had an "altercation" in a previous life with Hausman. He had written a submission for Optus on regulation of mobile terminating access. I commissioned Josh Gans to write a report on the Hausman submission.

Needless to say he did an excellent much so that Professor Hausman complained to my parent company about "friendly fire" as he had written a very similar report for them in New Zealand. And yes, the Commerce Commission did in the end use the report I commissioned from Josh Gans to critique my parent company's position.

The point is not so much that it is now strange to see the two writing a submission together as that matters of economics are, indeed, things on which even great minds can differ.

Novae Meridianae Demetae Dexter delenda est

Tuesday, September 27, 2011

Life imitates art

The ACCC has prosecuted a group of firms for selling ads in magazines that were never to be produced.

That business model was part of Wayne Hope's ABC TV comedy Very Small Business.

I wonder which came first - the satire or the actual business?

Novae Meridianae Demetae Dexter delenda est

Monday, September 26, 2011

Stirrings on the left and another think tank

So the ALP Left is finding its voice supposedly through a new website launched last night. Unfortunately I can't find the website. The news reports are all about a campaign to reinvigorate the party rank and file - but direct election of delegates to National Conference achieves nothing without reducing the union block vote.

Meanwhile Paul Howes is reportedly launching a new think tank called The McKell Institute.

Howes said;

Labor in NSW always had the philosophy of making the market work for people, of civilising capitalism. That is still the driving force behind social democracy but in the past 10 years there hasn't been a clear ideological split between social democrats and conservatives. There is a crisis of identity for social democracy globally.

"Civilising capitalism" is a long way from the "democratic socialisation of the means of production, distribution and exchange", the ALP's stated objective.

The clear ideological split that has been missing is between social democrats and neo-liberals - not conservatives. That split doesn't get created merely by civilising capitalism, it comes by recognising that a market economy does not need to give a privileged position to capital and needs to target the instruments of the State at limiting any individual or collective's ability to exercise power over others. That is the distinction between the socialisation of the market and merely civilising capitalism.

Meanwhile, by recollection, Paul Howes own personal contribution to "Five Big Policy Ideas" in the Right's journal Voice was a new program to populate the Kimberley. If you ever wanted something not differentiated from the coalition and irrelevant to the cause of the oppressed that would be it.

Novae Meridianae Demetae Dexter delenda est

Italian 4G Spectrum "auctions"

News reports that Italy has raised 2.6B euros for the sale of its 800 MHz spectrm (digital dividend) with only three of the four existing operators being successful. The auctions for some remaining 1800 GHz and 200 Ghz along with all the 2.6 GHz will resume this week.

In bidding to Friday the 2.6 GHz has raised under 500 million euros. The relativity between the two bands woon't really be known until the auction completes.

For comparison to the French auction the population of Italy is 60 million.

The Italian and French prices should be comparable, but, as an analysis of all European auctions notes

Attempting to make sense of these results requires the consideration of a great many factors. The timing of the auctions is important as some occurred before the start of the on-going financial crisis. The licence conditions attached to the spectrum, such as coverage requirement, should also be considered. These vary from regulator to regulator and the more onerous the coverage requirements, for example, the less valuable the spectrum.

Despite a reasonable number of 2.6GHz auctions having taken place, it is almost impossible to draw any firm conclusions, especially as the design of each auction is also subtly different. This can have a major impact on participant’s bidding strategies and ultimately the price paid. As a result, for any operator facing a 2.6GHz auction, little conclusive insight can be drawn from the results of the 2.6GHz spectrum auctions to date. Therefore in order to prepare for an auction a country, operator and auction specific business case will be required to value the spectrum and to allow the operator to bid with confidence.

Bizarrely the author still asserts "the final price paid in an efficient auction will be determined by relative levels of spectrum supply and demand"

Novae Meridianae Demetae Dexter delenda est

The re-reporting of statistics

The ACCC for some reason is not particularly quick at getting its reports on telecommunications out.

Last week it announced that its 2009-10 Telecommunications reports had been tabled in the Parliament.

Why the ACCC needs fifteen months from the end of the year to get this out hasn't been explained. They do have to do some work on price indices using data they can only obtain at 30 June, but it seems a very long time. Can you imagine running a business with data that is over a year old?

But the stunning part is the coverage. The ACCC's release said;

Subscription numbers for both fixed and mobile services suggest that while mobile take-up continues to grow, this is not necessarily at the cost of fixed line services. ... Fixed broadband remains the dominant technology for downloading data, accounting for 91 per cent of data volumes.

This download information was the bit reported by the SMH, ZDnet and iTWire.

However, the ACCC report is not new data - it is simply repeating and interpreting ABS data. Furthermore they are reporting only the June 2010 data while the ABS website released December data in April and advises the June 2011 data will be released in two days time - September 28.

For the record the per service download data and the total of fixed vs wireless broadband is shown in the chart below.

This demonstrates the core point that while wireless is popular it is mostly as an auxilliary not main service.

I look forward to updating the graph on Wednesday!!!!!

Novae Meridianae Demetae Dexter delenda est

Neo-liberalism and morality

Two items in the SMH this morning on different topics both point to the failings of neo-liberalism.

Paul Sheehan lays the blame for our economic crisis on the privileged and profligate generation known as the baby boomers . Alexander McCall Smith elsewhere blames the bad behaviour witnessed in the London riots on moral pluralism - the idea that there is no such thing as a general right or wrong.

The blame for both can be attributed to the faith of neo-liberalism, an excessive belief in individual choice and freedom from regulation. Even Sheehan noted the failure of regulation in curbing the excesses of derivative trading.

Neo-liberalism deviates from classical liberalism in its rejection of the principle known as the Golden Rule, “Do to others as you would have them do to you.” That rule is necessary to both develop and maintain an organised society.

It was this set of neo-liberal beliefs that led Margaret Thatcher to assert “There is no such thing as society”. That was not true when she said it, but the unguarded embrace of neo-liberalism will certainly make it so. (As is their aim given the equating of society with "collectivism"

On a slightly different note but related to the values that really underpin Christianity, Kristina Kenneally has outlined why she supports gay marriage. She does so mostly by invoking the simple Gospel message of 'love one another as I have loved you'.

Novae Meridianae Demetae Dexter delenda est

Friday, September 23, 2011

NBN Pricing

I provided a detailed analysis of the coalition claims about NBN prices today for iTnews. I step through each of the three claims made, the one based on a top od the range ADSL vs NBN prices from Internode, the bottom of the range comparison for iiNet and the mythical 5% price rises.

I also touched on the underlying issue of people unable to comprehend how that much capital can be spent without needing dearer prices and the myth that it has been competition that has reduced prices.

In my earlier drafts I had a comment that the tech media had largely ignored the comments, but today a few decided to prove me wrong.

First off the blocks Stan Beer asserted that the NBN would cost you more - entirely based on the monopoly argument.

Stan concedes the point that 70% of premises get their broadband from private monopoly twisted copper - but then in a leap of illogic says prices are kept down because it is heavily regulated and subject to competitive pressures. The level of downstream competition in the NBN vs ADSL world increases not decreases due to structural separation. The NBN is as heavily regulated as the copper network.

The HFC networks are not being mandated to shut - they are doing so as commercial transactions. The Government is prohibitting competitive overbuild just as, by the way, every Government on the planet bar Australia's did for HFC. The network is sub-additive in costs and competition is therefore inefficient.

Finally there is no mandation that wireless can't be sold in competition to the NBN, neither Optus nor Vodafone are constrained. Telstra is only narrowly constrained by the limitation on marketng wireless as an alternative to fixed line broadband during switchover. These last two points I made in last week's iTnews column.

Another rambling set of non sequiters was later published on iTnews today. It asserted that announcing prices now was providers playing politics and sucking up to the Minister. Certainly there was a degree of the reverse - fighting NBN pricing - in the original Internode prices but they did get CVC price reductions.

But there are prospective customers soon (none of the release sites are yet accepting commercial customers) and so providers need prices. Also providers now it is much harder to increase rather than decrease prices - I guarantee they are not low-balling.

The article otherwise made assertions that the NBN Co must experience cost blow outs siting the BER, though the auditor-general found the BER worked well.

It also relied on the hand waving about competition.

Then dear Renai le May commented about the total price construct and asserted that it was too much framed by ADSL thinking while the NBN is really a "giant LAN".

The problem is that the NBN is exactly like ADSL in overall network architecture - each ISP is a hierarchy of star networks of CVC and backhaul costs. They interconnect at 2 or 3 points not all 120 POIs. That means the cost model is just the same as it is for ADSL and speed and download are proxies for the cost of CVC and backhaul transmission required for each customer.

I actually had coffee with Market Clarity's Shara Evans yesterday. She was showing me her NBN Bandwidth and Price Scenario Model. Anyone really wanting to understand the cost structure of NBN services should consider acquiring the model (it is quite reasonably priced given the model complexity).

It has been said that the only certainties in life are death and taxes. To that I would add NBN FUD.

Novae Meridianae Demetae Dexter delenda est

The ALP does listen to me

Great little video on Tony Abbott by the ALP

However, I take the credit. I blogged the idea on 22 August! (And the clip includes a news item dated 28 August).

Novae Meridianae Demetae Dexter delenda est

France 4G spectrum "auctions"

As Australia's radiocommunications regulator the ACMA announces the use of a convoluted auction system for the 2.5GHz and 700MHz bands the French regulator has completed and allocation of the 2.5 GHz band (which they call 2.6GHz).

While the Australian auction is tagged as the 4G auction, there is nothing that actually ties the frequency to the technology. This is actually a benefit as we've already seen Telstra and Optus commiting to use existing 1.8GHz allocations for 4G. This "refarming" is not permitted in all jurisdictions despite the significant cost savings.

The French spectrum is restricted to use for 4G which they have described as "mobile networks whose maximum data rate must be at least 60 Mbps" which they assert is "significantly faster than currently available 3G connections." The Telstra HSPA network actually gets very close to that. It is also a weird concept to refer to the minimum level that the maximum speed can be.

The winners are France's existing four major mobile operators. The French system also allows the regulator to consider operator commitments to provide host MVNO's on their network.

The French announced this as;

The procedure therefore achieved its objectives of increasing competition in the mobile market by allocating 2.6 GHz-band spectrum between mobile network operators in a balanced fashion, and of obtaining significant commitments with respect to the hosting of mobile virtual network operators (under a full MVNO model).

The allocation of these frequencies also translated into a strong valuation of State property, bringing in the sum of €936 million – compared to the reserve price of €700 million.

The French model seems to be more about sealed bids rather than open auction. In other words taking the approach that you are allocating mobile licences rather than spectrum licences can be just as fruitful for generating competition and revenue.

The second stage will be the allocation of their Digital Dividend (what they call 800MHz and we call 700MHz). The interesting piece is the number here. France has a population of about 62M versus 22M for Oz, and one Euro riht now buys 1.38 $Oz so on an equivalent $'s per MHz pop basis the Australian 2.5 GHz should raise $458M.

The question is how many interested parties there will be, and whether the ability to refarm the existing 1.8 GHz reduces the mobile operators' interest. Australian prices are also likely to be lower because of the greater cost of building networks in Australia (that is, the population density).

Note: Section 60 of the Radcomms Act allows that the auction rules may include limits on the amount any one person may acquire, such limits to be set by the ACMA only on the direction of the Minister. The provision was added by Act No.41 of 1997. I know that on previous ocassions the Minister has sought the advice of the ACCC before determining the limits but it appears that is not mandated by the legislation. Good question for Conroy though - what is he going to do about competition limits.

Also good question to ask Conroy is how spectrum renewal discussions as announced to AMTA in March 2010 are going.....

Novae Meridianae Demetae Dexter delenda est


In a whimsical article in the Age Keith Dunstan bemoans the sale of Fosters. Asking where did it all go wrong he lays the blame at making all the beers taste the same.

Certainly the end of localisation in beers changed the way the global brewing business operated. But that perhaps followed the growing trend for more frequent internal migration and overall more general international travel.

If your local served Carlton Draught and you never went anywhere else then beer was Carlton.

The second big inroad was the cycle in the 1970s and 1980s of the "discount" beer brands...Courage and swan leading. Making price rather than taste a discriminating factor changed the game. Suddenly getting big and getting scale counted.

Carlton United Breweries had achieved that already in Melbourne. To the North Toohey's, Tooths and Castlemain got swallowed up, amalgamated with NZ's Lion and sold to the Japanese.

CUB fell under the control of John Elliott, former McKinsey consultant. He understood the need to get big and broke CUB out of its domestic bounds. As foreign brands arrived in Australia Elliott set out to "Fosterise" the world. When you think about it there is no real reason why a beer can't be as successful as Coca-Cola in creating a single global brand. There are a few more challenges in getting a consistent flavour - you need to brew locally and can't just ship a concentrated syrup.

The Fosterisation had two strands - enter markets with the brand and acquire local breweries. The acquisition strategy was based on having an ongoing valuation of every brewer and being ready to move anytime the proposition was valuable.

The strategy however hit a wall. The wall was the debt mountain built up by Elliott. But that debt mountain wasn't fuelled by the acquisition strategy alone, but by hubris.

Elliott decided he wasn't getting enough reward for his effort in growing shareholder value. The value was coming from his entrepreneurship, not shareholders. So he embarked on a bold MBO to become the owner rather than the manager.

That was the debt mountain that brought the game to an end.

Without that single error - that act of over-reaching by Elliott - we would probably be seeing SAB Miller being acquired by Fosters rather than the other way around.

Mind you as News Corp, TNT,James Hardie and others have shown before once the domestic company becomes truly global they are unlikely to stay headquartered in what Paul Keating once referred to as "the arse end of the world".

PS A really useful policy question to ask is why that should be so. The use of modern ICTs should mean that you can be accessible to global capital markets from anywhere. Indeed there is an argument that by being in somewhere like Australia you could be more readily accessible to them all - by having no home city bias - than making the decision to be based in New York or London.

That would mean changing the focus of strategies around Sydney as a financial centre from housing large numbers of traders in buildings in Barrangaroo to what the ICT infrastructure is - with particular emphasis on videoconferencing.

Novae Meridianae Demetae Dexter delenda est

Wednesday, September 21, 2011


I'm a bit slow but just got sent the link to this video of an ad by T-Mobile.

Angry Birds in the flesh is hilarious. But it raises for me two questions. Why is Angry Birds so popular? Is this the right way for a network operator to promote smartphones?

The popularity of all cultural objects - songs, movies, TV shows and computer games - is a perplexing field. No "expert" can accurately predict the popularity of specific items, and the distribution of popularity is extremely uneven, with "blockbuster" effects (like Angry Birds) and "superstar" effects (especially big names in movies).

A good empirical study of this was by Salganik Dodds and Watts in Science in 2006. They studied the ratings given to a randomly selected sample of new songs when individuals were given no idea how much other people rated them versus the case where they did have an indication of other people's ratings.

The study showed that "social influence contributes to inequality of outcomes in cultural markets" and that "as individuals are subject to stronger forms of social influence the collective outcomes will become increasingly unequal." (an extension of the study by Salganik and Watts appeared in 2009).

In other words there isn't necessarily anything particular special about Angry Birds - it just is.

But more interestingly is the relationship of Angry Birds to smartphones. The only use made of the phone functionality is to download the software. The game itself doesn't require connectivity, the use it makes of smartphone functionality is simply the touchscreen.

Contrast this to other simple apps like weather or maps that make the most of both parts of the functionality. Much harder to demonstrate I guess but more logical than a network operator saying "come subscribe with me to get a subsidised smartphone that you can just use as an independent game console."

Novae Meridianae Demetae Dexter delenda est

When will parliament catch-up

So the NBN joint house committee met last night. I didn't tune in - Tuesday night is bridge night and that is very important for my mental well-being.

Ry Crozier did an excellent job of commentary on the proceedings which has made me wish I could review it myself. But Hansard takes time to type up (for committees, never for the Parliament itself ... why is that?). But in this day and age you wonder why the Parliamentary website can't actually store a file of the proceedings that was broadcast. It would certainly be consistent with the ambitions inherent in the Digital Economy strategy.

Meanwhile I'll have to hold off on providing further comments - though from Ry's tweets the coalition members again made a complete hash of the proceedings.

The biggest news though was the committee winding up early because an NBN co progress report was unavailable. The delay appears to be caused by the Departmental officers not being prepared to release the report till they could verify the information following receipt of audited financials.

This reflects a general public service misunderstanding of the role of audits. Audits don't guarantee the accuracy of financial reports. They do two things. They use statistical sampling to check whether there are systemic errors, and they audit processes to ensure that data is captured. It is extremely rare for financial results to be amended as a consequence of an audit.

Furthermore there is no risk in releasing data based upon the company's own results data even if that needed to be qualified as being unaudited. The focus of the progress report was certainly more appropriately focussed on the non-financial milestones anyway. The financial results are just going to show a huge capital spend with little revenue - just like any large infrastructure project.

It is a pity. There are some good people in that part of DBCDE. They can and should do better than that.

Novae Meridianae Demetae Dexter delenda est

Tuesday, September 20, 2011

Google and anti-trust

My paper for this year's Communications Policy and Research Forum is titled Competition Policy for the Digital Economy. One factor that motivated the topic is how so much of new economy business consists of very distorted market structures with single very large firms and certainly nothing like the many small firms of competition theory.

Google is now having its turn in the spotlight, as the New York Times reported today (repeated in the AFR) on a forthcoming Senate hearing.

The Senate hearing is political. The real action is occurring in an FTC anti-trust investigation launched in June.

The issues Google faces are multitudinous. Of course, each and every acquisition has raised competition issues. More recently the concern is whether their Search product favours Google's own products over others (I guess without showing them as ads like happens to others) and the suggestion that content on other sites gets "scraped" into Google sites.

I believe there are big anti-trust issues here but that, just as with the Microsoft case, the investigation and resolution will be long and intractable. The bad news as ZDnet reported is the impediment the overhang could create for other IT development.

I happen to believe we need a new approach to competition policy that has a different array of analytic tools and remedies than currently applies.

Novae Meridianae Demetae Dexter delenda est

Time for clarity on irregular arrivals and refugees

Australia has a tiny problem in relation to "irregular arrivals" in its territory. The combination of having no land borders, the vast sea distances and very effective border processing at official points means we do not have the same kind of issue as many other countries.

The few boat arrivals we have tend to be on our far flung territories like Christmas Island which are closer to other countries than they are to our mainland. In fact the countries from which they come to get here have a bigger problem than us (especially Indonesia), and hence a general reluctance to stop the boats at source.

People "migrate" (to describe the whole act generically) for four primary reasons. The first are to voluntarily seek better economic prospects, and the second to achieve a better culture (which can include family reunion). Otherwise people emigrate in response to two factors beyond their control, cultural factors or terror.

"Cultural factors" encompasses all the issues of religious persecution and ethnic/language group rivalries. Terror can accompany these, or it can simply be political terror or it can be environmental terror (drought and famine).

People in the last two categories don't wait where they are till someone offers to settle them, they flee. The primary issue then is usually large collections of people in neighbouring the million plus Afghans in Pakistan, or the people rolling out of Somalia to Kenya.

These people are all refugees without necessarily being "asylum seekers". It can be the migratory equivalent of "respite care". The UN Convention relating to the status of refugees primarily addresses the treatment of these people.

Many of these refugees will continue their migration trying to find a new home. Relocating anywhere from a large refugee camp can be an improvement.

Only a subset of these refugees become asylum seekers, which is a person who is seeking to be permanently housed in a new country - to obtain a new nationality.

Australia's irregular arrivals by boat are not necessarily all refugees, they can be people seeking a "back door entry" to obtain the economic advantage of living here. These are the only ones of the irregular arrivals who can truly be said to be queue jumpers.

Not all the refugees are even necessarily asylum seekers. Indeed there can possibly be a case made for a "voluntary temporary protection visa" category, which would be a person who is a refugee but expects to be able to return and simply seeks somewhere to live in the meantime. (The coalition version I understand is a compulsory version that we apply in cases where we decide the reason for flight is temporary).

The Department of Immigration annual report explains;

Australia's Humanitarian Program comprises two components: offshore resettlement for people overseas, who have been determined to be refugees, and onshore protection for those people already in Australia who claim Australia's protection, and are found to be refugees. ...

In 2009–10, the department met the increase in the number of places in the Humanitarian Program from 13 500 to 13 750, with 13 770 visas granted during the program year (inclusive of onshore places). This comprised 9236 (67.1 per cent) under the offshore component and 4534 (32.9 per cent) under the onshore component.

It is often forgotten that part of the regional focus of the "Malaysian solution" involved increasing by 5000 the targeted offshore places.

The coalition has three policies;
1. Turn back the boats - no matter how risky that is and no matter where the boat subsequently lands.
2. Offshore processing in Nauru.
3. Temporary protection visas rather than permanent resettlement for irregular arrivals.

The first is not a real deterrent - if the boat sinks the people turning them back have to save them. Sound familiar?
The second is claimed to have been effective at stopping more boat arrivals, but now that 84% have been settled in Australia or New Zealand it looks as good to a boat arrival as onshore processing.
Temporary protection visas as a standard create an unnecessary state of uncertainty.

The fact that many of the irregular arrivals come from predominantly muslim countries has allowed a fear of terrorism and social disharmony to be added to the debate. But it is really little more than Australians on going fear of the "hordes" to our North wanting to descend here.

The Greens advocate onshore processing. But they have taken over the mantle once owned by the ALP as the party most opposed to higher immigration levels overall. The Grrens case though is made on environmental grounds, the ALP case used to be protecting workers terms and conditions from "cheap" labour.

The long term solution to the global issue of refugees is the twin goal of achieving economic advancement for all and achieving secular democratic governance. That is easy to say, but hard to do. But the Government is guilty of not even saying it, and the coalition is unlikely to.

The discussion of the global refugee issue and Australia's role in dealing with it needs to be conducted at a higher level than a narrow focus on boats. To do so requires real leadership - not the kind handed out by factional chiefs.

There are members of the FPLP capable of providing that. It is not just a question of onshore versus offshore. It is not a Left versus Right question.

It is, however, also one we have a global responsibility for having added to the global pool of refugees through our involvement in the wars in Afghanistan and Iraq.

PS I'm also really confused about the coalition and its sudden focus on the need for offshore processing to be in countries that are signatories to the UN convention. The list of signatories at April 2011 did not list Nauru - and I recall it has only recently signed. They clearly weren't a signatory when used by the Howard Government.

Novae Meridianae Demetae Dexter delenda est

Monday, September 19, 2011

The Media Inquiry - 3

It is truly remarkable the extent to which the history of media policy or the economics of media can be misconstrued.

Today Bruce Guthrie asserts that the Keating/Hawke media ownership law changes were what permitted the Murdoch acquisition of the Herald and Weekly Times. This is sheer nonsense because Federal law doesn't control how much print media anyone can own - only how much electronic media they can own if they own print media.

The Hawke/Keating laws forced Murdoch to choose between newspapers and television in Australia, and he chose print. And despite the assertions that electronic media is more influential - it is through print that Murdoch wields influence. That's in part because a lot of electronic news is still news about what was in print.

Richard Alston shows he is all lawyer and nothing else when he writes;

There are no barriers to entry into the Australian print media, so there is no reason why Graeme Wood, with his fortune of $380 million, who gave the Greens $1.6 million at the last election, couldn't round up a few mates and offer a Brown/Green view of the world.

There are no legislative barriers to entry, but there certainly are commercial/economic ones, like the cost to establish a printing facility. As I've suggested creating a single shared printing (and distribution) facility could significantly reduce those barriers.

More interestingly Graeme Wood could approach News Limited to print a national paper and see what reaction he gets. Would there be a case like Queensland Wire in it?

But I think the prize has to go to Chris Kenny in the Oz who opines that it is not News Limited who are biased against the Government, only everyone else who is biased in favour of it.

I think the piece goes to far by saying of the ABC's Insiders;

A new arrival in Australia would have been left with the impression that Tony Abbott is an objectionable opportunist blocking a government's mandate to impose a carbon tax and send asylum-seekers to Malaysia.

The bad news is that much of his own party sees Mr Abbott as an objectionable opportunist. Mandate is a messy word - but trashing the traditions of the Parliament over "pairs" is an attempt to deny the Government its votes.

But the crushing point is that the Government failing to win a vote when pairs have been denied, or even losing a vote of confidence when pairs have been denied, would be insufficient for the Governor-General to withdraw the PM's mandate.

The media inquiry is doing two things. Firstly it is questioning whether there is adequate mechanism for redress about reporting in the print media. Secondly it is questioning whether there is anything Government can do to assist in ensuring an ongoing strong investigative media.

The first ToR would be unnecessary if Richard Alston had acted on his own side's recommendation to form a Media Complaints Commission. The second ToR is the complete opposite of threatening the media.

Novae Meridianae Demetae Dexter delenda est

NBN price plans

It is extraordinary how much focus individual NBN price plans are receiving in the market. The only thing more extraordinary is the diverse commentary.

The release of iiNet's plans had itWire writing "Anyone who thought that NBN would bring ubiquitous cheap broadband to Australia may have had their hopes dashed with the announcement of the new offerings from iiNet." They went on to say though "Although cheaper than its DSL offerings, iiNet's NBN starting price is still a hefty $50 for just 12Mbps download and 1 Mbps upload, with a 20GB peak and 20GB off-peak quota."

iTnews saw it more as "iiNet undercuts rivals with retail NBN prices", whereas ZDnet focussed on the comparison with Internode.

Meanwhile Delimiter took the differential even further asserting "Internode must slash its horrible NBN pricing."

The level of focus is frightening when these providers are all competing for a few tens of thousand customers today in a market that is renowned for the dynamism within which prices and plans are constructed and changed.

The only certainty really is that entry level prices are at or below the comparable ADSL services, with better speed reliability and likely better service support. And that's without mentioning some of the lower price offerings from telcos that an MP saw fit to disparage in a parliamentary speech.

If I'm not much mistaken Malcolm Turnbull has already ditched the "the NBN will be dearer" story.

What happens next?

Novae Meridianae Demetae Dexter delenda est

Telstra and branding

Well, Telstra is going multi-coloured.

I want to discuss the three themes in the clip in reverse order, being mission, promise and brand.

Telstra's advertising strap line "It's how we connect" is explained with the video saying "Connection is important to every single one of us. After all we can't be human on our own." This is going to be very powerful for Telstra if they can simply get across the line on actually making this corporate value number 1 - rather than the creation of shareholder value.

I was part of an exercise at AAPT/TCNZ that crafted a really powerful vision that was based on exactly the ame theme - the purpose of Telecom NZ was to satisfy human beings need to communicate. It is remarkable how motivational that can be. That doesn't mean return to shareholders doesn't count - you have to manage all stakeholder interests to achieve the goal. But as John Kay points out in 'Obliquity' often the best way to achieve a goal is to not work on it directly.

Telstra also seems prepared to step up its own communications saying "We sound different to how we used to as well. It's all about taking complicated subjects and talking about them in uncomplicated ways. And concentrating on talking like human beings not like machine."

It is nice to see the acknowledgement that they need to do better. But saying they need to talk about complicated subjects in simple ways is a cop-out. They need to say simpler things! It is not enough to try to explain complicated plans better - the goal should be to simplify the plans.

And if they want to talk like people not machines will they turn off the voice recognition on their queues - or at least give customers the choice between using "grunt" or their keypad. Go one better and put the menu tree for the IVRs up online so a customer can skip right through and just key in the answers at once!

But the real issue is this is dangerous customer service territory. A customer evaluates service as the gap between their expectation and the delivery. Saying you will get better makes the expectation go up, increasing the amount of experience improvement you need to actually shift the satisfaction score.

Finally swe get to the brand itself. No change in the shape of the logo that I can see just the move to six different two colour representations.

The video says of this;

We now live in full colour, because we know you do. It helps make us more relevant to you and your life.

The way we now look is all about representing the way we connect with you, the way you connect with our products and of course how you connect to the people in your life.

This just opens up so many questions. Firstly, did Telstra really live in two colours before just because their logo was? What does it mean to live in full colour? Exactly how does the colours of a logo make anyone more or less relevant?

More interestingly is Telstra going to register all twelve shades and maybe go one better than Cadbury and argue that it now owns the rights to the rainbow? It certainly makes it very hard for others choosing colours.

The overall shift to so many colours reflects the shift to online rather than print for so much copy. Colour is cheap online - it is more expensive (and tiresome) in print. (but see this advice)

The unanswered question is whether the six separate colour pairings will be used to represent different aspects of the way we connect with Telstra, their products or each other, or whether there will be a free-for-all or whether everything comes in different colours.

Finally for the history buffs. The original Telstra yellow and blue logo was created to accommodate the merger between OTC and Telecom Australia.

The merged entity was initially known by its official name - the Australian and Overseas Telecommunications Corporation (AOTC). A logo existed for letterheads and business cards for a few execs in corporate roles but little else (and I couldn't find a copy on Google Images - I'll have to find an old AOTC business card of mine to scan).

The rebranding came up with a new name "Telstra" - to get away from the generic "Telecom". The logo combined the OTC and Telecom Australia colours. It was introduced in two stages. For the first two years the new logo was used with the words "Telecom Australia" for the domestic business, for the overseas business the new logo and name wre used, but "OTC AUSTRALIA" appeared beneath it.

No one, of course, was happy. A lot of OTC guys complained that Asian customers would struggle to pronounce the name. Others were concerned about the confusion between Telstra and Telstar.

But the best of the lot was a story Frank Blount told me. He'd just announced the brand change and received an e-mail from a person who'd come in from the Telecom Australia part. The e-mail told Frank that he thought the decision was bad, because the people of Australia loved Telecom and had a real connection to it, and we would risk alienating them as we faced competition.

Frank rang the person and asked what he did. He worked in the IT Department, his team was part of the billing design group. Frank asked the guy if he understood how important that was given the trouble you have with customers if bills are wrong etc. The guy liked what he heard. After a bit more building up Frank finished the call "So you understand how important what you do on billing is to the company?" The guy says "Yes Frank." Frank replied "So how about you get on and do that and leave it to me to run the company/worry about brand."

Novae Meridianae Demetae Dexter delenda est

Friday, September 16, 2011

The Media Inquiry - Part 2

In the SMH this morning Richard Ackland writes

Of course, this is not the first time the print media has been disturbed by officials taking a peek under its skirts. The inquiries of recent human memory both concerned Fairfax, the publisher of this organ.

In March 1992 a House of Representatives select committee produced a report called ''News & Fair Facts - the Australian Print Media Industry''. .... The committee went on to produce a report that lies unstudied and forgotten in the parliamentary library. It even produced a chapter on how to beef up the Press Council and the impact of ''technology''. ...

The other major print media inquiry took place in the 1980s in Melbourne under former judge Sir John Norris. It concluded there was too much concentration of control and ownership, what with Fairfax at that time having large shareholdings in Herald & Weekly Times Ltd and The Age.

It is worthwile in the context of the current inquiry noting the existence of earlier inquiries, but Ackland gets their number wrong.

The Print Media Inquiry report is available online (though at the time of writing the online version is not complete - a matter being rectified by APH staff now).

Ackland also notes that the committee's hearings coincided with the Tourang bid for Fairfax, but this was not its motivation. Its motivation was the acquisition of the Herald and Weekly Times by News Ltd and Fairfax going into receivership.

Mr Packer did go on to give some compelling evidence given the significance of the Tourang bid to the question of concentration of ownership.

But a later committee was actually established in the Senate to fully inquire into the Fairfax issues of 1991 and 1993 producing the report Percentage Players

Intriguingly that committee formed the view that the PM suggesting that the foreign acquisition of Fairfax would be allowed on the condition that reporting be"balanced" was inappropriate. Yet the backdrop to the current inquiry is unbalanced coverage by newspapers owned by a foreign proprietor.

The committee in particular called for the Foreign Acquisitions and Takeover Act and other instruments to be replaced with a single instrument covering all foreign ownership issues. It also called for the Foreign Investment Review Board to be replaced by a new Statutory Authority. This was a report written in 1994 by the then opposition. Interestingly in 12 years in Government neither of these things occurfred.

But on the core issue of standards rather than ownership and concentration the parliament again visited the issue in 2000 with a report by the Senate Information Technologies committee In the Public Interest.

That committee actually recommended

establishment of an independent statutory body, the Media Complaints Commission (MCC), which will be a one-stop-shop for all complaints and will assist to enforce standards established by self-regulation.

This appears to be highly relevant to the current inquiry.

Meanwhile the Member for Bradfield has another Op Ed published claiming Stephen Conroy's media circus is an exercise in revenge.

Fletcher asks;

If an inquiry is needed, why is it confined to the print media as opposed to many other forms of media including free-to-air television, pay-TV, radio and the booming online sector?

In doing so he conveniently ignores the fact the Minister already has a Convergence Review looking at these sectors.

He concludes;

This inquiry is an exercise in retaliation, designed to lead to the imposition of new regulatory burdens on News Limited papers, with those operated by other companies to suffer collateral damage.

It is a political exercise pure and simple. For anyone who cares about the role of newspapers in our democracy, this new inquiry is the last thing we need. It should be cancelled immediately.

It is interesting to note that the committee report from 2000, on which the Howard Government with Richard Alston as Minister (an office in which the Member for Bradfield once worked), was a report from the coalition members of the committee, the dissenting reports were from the ALP and the Democrats.

Finally let's note that the last trigger for this inquiry was the Bolt blog and the pulled Milne article. The error of their publication was revealed by the way that News responded. Clearly that News response wasn't based on a deal about the media inquiry (as suggested).

But Bolt himself raised the concern that an ordinary citizen would not have had the mechanism for redress the PM used - ringing the CEO. And that is exactly the point, there is no effective complaints mechanism, a fact that has been reported as part of two previous committees.

It is perhaps time the Member for Bradfield caught up and let the current Minister get on with doing things that the member's former boss ignored!

Novae Meridianae Demetae Dexter delenda est

Thursday, September 15, 2011

The origin of "Confusopoly"

The Surgeon of Crowthorne is an absolutely fabulous book about a mad doctor who was a major participant in putting together the original Oxford English Dictionary.

That dictionary was significant as the first that tried to cover previous as well as current uses and try to identify earliest uses of words. Unlike other dictionaries of the era it was a descriptive rather than proscriptive work.

The word "confusopoly" has its origins in Scott Adams' The Dilbert Future. The word has been successfully used to describe many pricing issues.

Neerav Bhatt provided an excellent summary in a blogpost last year.

He cites the 2005 paper by Joshus Gans given at the ACCC's 2005 Regulatory Conference. I was there and it was the first time I'd heard the term and I have in the past been prepared to credit Gans with the first use.

That was until the Deakin University/ACCAN report Seeking Straight Answers: Consumer Decision-Making in Telecommunications was released. The report cites a 2004 use by Larsen et al. They wrote;

In reality the mobile phone market is a perfect example of Dilbert’s confusopoly. That is, various price propositions are on offer with different combinations of free minutes, texts, and other services, whilst in reality the same level of usage would result in roughly the same cost, leaving the user so confused that they simply choose the product with the name they like the most – a fact most notably recognised by the operator Orange with their animal-themed tariffs, such as Dolphin and Raccoon, and by LG who give their phone’s names such as Chocolate and Shine.

I have also found this use from the USA in 2004.

Does anyone have an advance on 2004?

Novae Meridianae Demetae Dexter delenda est

The Media Inquiry

Senator Conroy's media inquiry will at least go at least part way to the issues that I blogged recently were relevant.

It clearly addresses the question of complaint mechanisms. Andrew Bolt was actually right to note that not everyone could ring John Hartigan, like the PM could, to complain about the Milne article. Someone did pose though the question of whether the ACMA is any less toothless than the Press Council. At least we can frame the question "what would a well functioning complaints system look like" (might take some heat off telcos for a while too!)

The second ToR addresses the question of market structure but in a roundabout way;

The impact of this technological change on the business model that has supported the investment by traditional media organisations in quality journalism and the production of news, and how such activities can be supported, and diversity enhanced, in the changed media environment

Michelle Grattan has criticised the ToR for the fact that they don't address "the high concentration of Australian newspaper ownership." But that concentration is in part driven by the "business model." In fact to the <>last print inquiry twenty years ago the">News Ltd submission made the compelling case that the future was for only one newspaper in each city - a forecast that still looks increasingly likely for Sydney and Melbourne and applies elsewhere already.

As Wendy Bacon has commented;

It’s an opportunity for those who allege there is systematic market failure to deliver comprehensive news and current affairs from diverse view points to come up with evidence for that, in the way that Robert Manne has done in his Quarterly Essay. (must go read that now)

Malcolm Turnbull scoffed at the idea the inquiry could do anything to help make the business model for newspapers more sustainable.

However it is abundantly clear that shared printing facilities will go a long way to help the cost structures. There is a real difficulty though with the private incentives (each thinks the other will be forced to close first), and there are potential competition issues (the ACCC might view it as collusion, agreement very hard to write).

Government could intervene by (a) creating an "access right" to printing presses for third parties if you control over a threshold of readership in a market and (b) creating some explicit rules for the management of shared print facilities.

Such a proposal would change the incentives on voluntary co-operation and remove the impediment.

The same is true of a whole host of other savings by sharing. Chris Anderson highlighted the cost of duplicated TV news feeds in his Andrew Olley lecture. He reported on a study conducted by Kevin McQuillan from RMIT that found;

After reviewing the content of the news programmers, (we excluded SBS - as that is often not a typical domestic rundown), the report concluded:
1. That competition, fierce as it is, is often failing to produce significantly different news programs;
2. 'exclusives' rarely lead the network bulletins, or were good enough to be placed in the top four stories.
3. There is questionable value in the current system of each network sending a reporter and crew to the same event for what will inevitably be the same story.

It is interesting to note that the vertical integration of news media recently saw the disbandment of the New Zealand equivalent of AAP. The history of AAP itself is interesting having been formed as a cooperative of a vast number of news organisations to provide common news - especially from overseas. Today it is owned by just the three remaining big print players.

It is interesting also to note (as detailed by Ken Inglis in his two volume history of the ABC) that the ABC began its radio news services by simply reading the daily newspapers and then subscribing to the AAP feed. The newspapers fearing the competition denied the ABC the access thus triggering the decision by the ABC to deploy its own network of international correspondents.

A lot would happen to the media business model if this process were reversed, that the ABC was to take on a role as not just public sector broadcaster but the "official" newsagency and that its raw footage of anything it covered was available to other "subscribing" news organisations. (The subscription model needs to be well designed - but that's an economics blog post).

So we are going to address in more detail the right questions. The ToR also neatly explain that the media inquiry works as a sort of mini-inquiry within the Convergence Review with the final report of the CR to include the outcomes from the media inquiry.

And a final note, UNSW's George Williams backed up in the AFR this morning something I tweeted yesterday. The print media isn't a formal federal power, but the judgement in the Work Choices case indicates the Feds could easily use the corporations power to implement media regulation.

Novae Meridianae Demetae Dexter delenda est

Wednesday, September 14, 2011

When smart people say dumb things

As if having Michael Porter blather on about HFC wasn't bad enough, Josh Gans and Jerry Hausmann have contributed to the ACCC consideration of the Telstra SSU.

They maintain it is anti-competitive because of the deal on HFC (not to be used for broadband) and the deal on 4G (not to be promoted by Telstra at time of copper shut down as an alternative).

They first draw conclusions based on completely different market structures about the role of HFC in driving broadband uptake. These mostly model HFC vs ADSL, not HFC vs FTTP. They also mostly come from markets that were clever enough to award HFC monopolies rather than our idiotic duopoly (see note - UPDATED).

But secondly they really don't want Telstra to keep its HFC at all, they think it should be divested.

Hang on guys - Telstra made an NPV negative decision to build the HFC to block the competitive threat from Telstra (see Frank Blount in book with Bob Joss "Managing in Australia"). Optus thought the overbuild was anti-competitive, mounted a legal challenge (for $900M) but settled for what Telstra told Senate estimates (24 May 2005 at P.74) was a "miniscule amount, a very small amount." Telstra isn't about to sell the HFC to Foxtel.

In fact I bet the Foxtel partners are still trying to figure how to unpick the Foxtel shareholders agreement to migrate Foxtel to the NBNs Multicast facility.

Never mind the fact that the footprint of HFC hasn't been expanded since about 1997. Never mind that Telstra and Optus have no interest in using the networks. I think they know more about the technical viability than a couple of Economics professors.

But Gans and Hausmann rail against the lack of competition, even writing, "The presumption and evidence thus far is that competition spurs investment in these industries – even when characterised by a natural monopoly." That may well be the case, but it certainly isn't efficient investment. A natural monopoly is defined as one that is sub-additive in costs - that for any level of output one firm can produce the output more cheaply than two. That's why you only have one water pipe to your home.

HFC and telephony originally did different things and competed in some areas - HFC never did telephony well, and copper never did Pay TV well - both could do broadband. FTTH does all three better than either HFC or copper.

The HFC case is just nonsensical, technically and economically.

The mobile issue is equally illogical. Telstra isn't the only wireless provider. Both Optus and Vodafone can be expected to launch 4G, and vividwireless already has. Spectrum auctions in 2012 could even introduce more operators (though experience suggests the market can't sustain more and that maybe less is better). So what if Telstra doesn't offer 4G as an alternative for the short period around decommissioning copper - V and O still can. Customers can still buy it from Telstra even, they aren't saying they won't sell it.

The clause is very much a very standard one between an upstream and downstream player where the upstream guy is making the big investment that the downstream guy will use best efforts to sell heaps of it. Its the contractual way of dealing with some of the known problems of not being vertically integrated that Henry Ergas normally jabbers about.

Meanwhile, just to show the planet is going completely crazy, Bob Brown has introduced legislation to restrict the construction of mobile base stations. Much as I would like to say I told you so the proposal is dumb on so many levels. Unfortunately AMTA's Chris Althaus didn't really nail it preferring to focus on the NBN issue.

Firstly the consultation called for already occurs under an effective and complied with industry code. Secondly mandatory spacing from schools simply increases likelihood the school falls into the middle of the beam of most intensity (Brown is a medical doctor, he should be able to understand simple physics). Let alone the idea that mobile operators can forecast their tower needs five years hence!

But the biggie - are you listening Bob Brown - is that the recent labelling of mobiles as a "possible" cancer risk relates only to handsets held to your head - not base stations. You know the best way to REDUCE the power that the handset operates at - be CLOSE to the base station which means have MORE of them.

In fact a really good solution is to have your very own femto-cell - just like Optus launched. Guess what - that gets connected using fixed broadband.

Can we please be allowed to get on with delivering the future now?

Note: The Keating Government was presented with a suggestion by a shareholder in Optus Vision that instead of OV and Telstra duplicating the country should be divided into a set of franchise areas for monopolies. In most circumstances this would have been the right thing. In the specific case he was right to say no given who was asking - Kerry Francis Bulmore Packer.

Novae Meridianae Demetae Dexter delenda est

Tuesday, September 13, 2011

Marketers destroy social marketing

Inside the mark comms teams of telcos there is great excitement about the firm being followed by a person with lots of followers - the implication being that such people are "incluencers".

What fun to see then that you can buy followers. Great to boost your "profile" to look influential. The way I found out about the site was by reading about a person who started following me today. The last of her posts had the link saying "This site just gave me many twitter fans using {link}".

So no longer does a followers list mean anything. Nice to see the marketing machine roll right over the top of the technology. They are like that you know.

Novae Meridianae Demetae Dexter delenda est

BOF's gift to the NSW ALP

The great Rodney Cavalier identified a long time ago that the major flaw in the ALP is the position of affiliated unions as a controlling influence at conferences, and hence elections to the Administrative Committee etc.

Rodney has for a long time advocated for the disconnection of the unions from party governance. I've noted recently other calls for this. I've also noted the damage that comes to the ALP from the very dodgy culture within some unions.

The ALP itself is caught in a trap - how do you get the union movement to vote itself out of power? And then along comes BOF.

He has introduced a bill that changes election funding laws to (a) make campaign spending by affiliated organisations count towards spending limits and (b) to outlaw affiliation fees.

As Andrew Norton rightly notes (pun intended) the first part may not be very effective. The penalty is not to invalidate the election, merely incur a fine. And it is a little unfair as the party can't control the spending of its affiliate.

The second one which makes the affiliation fees illegal gifts would mean I think that like unidentifiable donations the money needs to be surrendered to the Electoral Commission.

So the logical response from the unions and the ALP is to disaffiliate, whereby the unions can continue to spend just as much as they currently do.

The other change that bans donations from corporations and organisations will impact all parties, so we can just expect a lot more third party campaigning.

At the heart of this is one of the great conservative strategies to "defund the Left." In his book The Wrecking Crew Thomas Frank even gave this as a reason for deficit spending by conservatives - Government had to be left impoverished for the next cycle of "liberal" rule.

More extreme views argue the left can only succeed because of all the leftist programs funded by Government.

But will this be a case of wishing for too much - like Work Choices. Could BOF actually deliver for the ALP a reform it can't deliver for itself?

Novae Meridianae Demetae Dexter delenda est

Monday, September 12, 2011

Sept 11 Truthers

I can't countenance the habit of using the perverse US system of representing dates to refer to the events that took place in the Eastern USA ten years ago. 9/11 is the 9th of November!

Using 9/11 is as bad as the use of 911 in TV shows so that some Australians don't know to ring 000.

Anyhow, my issue here is with "truthers". The Punch has today run an item in which one truther makes his case.

His case is based on the fact that there have in the past been "false flag operations" defined as "covert operations designed to deceive the public in such a way that the operations appear as though they are being carried out by other entities." While I wouldn't accept all the examples given as false flags, the point is conceded. (One I'd dispute is the Reichstag fire - yes the Nazis blamed others but the primary objective was the destruction not the blame shift).

His entire evidence remains the issue of the three towers collapsing at "free fall" speeds, and this is entirely based on one finding of particles that would indicate explosives. That the self-same particles would exist as a consequence of welding the original frames never seems to be considered.

The planes wre indeed taken over by Muslim fundamentalists but they were supposedly duped into doing so, and the real destruction caused by explosives placed by other persons.

The other favourite is the non-release of security video from the Pentagon...but equally there is no counter evidence of anyone saying they didn't see a plane, and there clearly is a fourth plane "missing".

The objective of the operation was supposedly "to propel the US and its allies into war for the sake of profit, oil and empire." If so it has spectacularly failed as the twin wars seem to have done little more than bankrupt the country.

The author rightly notes that the anti-terror laws introduced afterwards are excessive, and certainly there is a case that they should be wound back. But they are a long way from an assault on democracy. A Government fully intent on using such an extreme false flag would have sought even stronger rules.

Finally, as with all conspiracy theories, the real problem lies in just how many people would need to be actively involved in the conspiracy. It is beyond belief that all these people would stay so solid for so long.

The events of Sept 11 were capitalised on by the US hawks - both those in Government and those in the private sector who thought they would benefit. I cannot believe that these people - as evil as I think most of them are - were able to pull off so monumental a false flag operation.

There are two kinds of people the state of consent needs to fear - fundamentalists of all kinds and conspiracy theorists.

Novae Meridianae Demetae Dexter delenda est

Tuesday, September 06, 2011

Publication milestone

I've had letters published in the AFR, the SMH and the South China Morning Post. I've had a mention in Column 8. I've been a commentator on Crikey and have my iTnews column.

I've asked a question in person on Q&A. But last night was the latest - one of my tweets in Q&A made it on air;

If Aust taxpayer money is being spent I want the best price not Australian support #qanda

Is this a big moment?

Novae Meridianae Demetae Dexter delenda est

"reflective of a lazy regulatory attitude" AAPT and NBN Co

I am generally an NBN fan. I am a fan of the concept of an FTTN network, I am a fan of the structural separation it delivers and I am a fan of the idea of a Government enterprise delivering it.

There is no real foundation for the perception that Government enterprises are less efficient and effective than private sector ones. A colleague has kindly recently made some observations on submissions to the Domestic Transmission Capacity service FAD.

The first by private sector firm AAPT. The colleague described it as "a whole new level of pathetic" and said that the submissions in general were "reflective of a lazy regulatory attitude."

The second is by NBN Co. This is neatly described as "a metaphor for the entire organisation...5 pages with nothing on it, then 2.5 pages with very little of any substance on it...8 pages that could be condensed into 1 page." and adds "Wasting paper, wasting money..."

I do note however the reassuring words from NBN Co on the second page of their submission,

NBN Co asks that you consider the environment before printing this submission.

Going to my earlier comments about corporations losing the plot on communications. If you want to save the environment come up with document templates that do so. The cover detail could be on the same page as the bit with the notice, it didn't need an intentionally blank page and it didn't need the superflous colourful back page.

There is a longer story to write about what creates this environment, but in brief, we have reached that stage in a regulated industry wherein the regulatory process is now no longer strategic.

The logical move is a massive restructure of regulatory institutions. The structural separation has been used to allow people to assume their problems are over. The reality is they have only just begun, but have very little to do with NBN prices and everything to do with bundling.

Novae Meridianae Demetae Dexter delenda est

Telstra ongoing embarrassment from its CEDA foray - Updated

One of the observations Dr Phil Burgess made to me about Australia was the lack of engagement by Australian business in political debate. He set about changing that.

Most particularly he made it clear to think tanks and research institutes that he was only interested in funding organisations that supported the views that Telstra espoused.

The Committee for the Economic Development of Australia (CEDA) was one body that heard the message. CEDA commissioned a report that was ultimately released as Growth 60: Australia's Broadband Future - Four doors to greater competition. It is not totally available on line but many libraries have copies.

I am not suggesting that CEDA was funded by Telstra to undertake the research, however the bulk of the contributors were at some stage paid by Telstra for writing similar pieces elsewhere.

Confusingly the CEDA link to the report dates it as "Wednesday, November 18, 2009", however, the one chapter available online dates the report as 2008. The introduction also refers to "current policy" as FTTN to 98% of the population.

Having been in the audience for the launch (and at one stage considered as one of the authors) I know the report was released at the time of the conclusion of tenders for NBN 1.0 in November 2008.

This date is supported by the excellent review by Stuart Corner. He noted;

Leading economic think tank CEDA (Committee for Economic Development of Australia) has criticised the Federal Government's obsession with building the National Broadband Network, saying a subsidised $4.7 billion FTTN rollout is unnecessary. CEDA's report, Australia’s Broadband Future: Four doors to greater competition, maintains that focussing on FTTN to the exclusion of competing access methods will decrease competition.

The CEDA report contains six chapters written by eminent economic researchers, all of whom argue among other things excessive regulation and structural separation of Telstra is unwise, while the promotion of competing access networks including cable, copper and wireless would provide the necessary competitive marketplace.

Yet CEDA as recently as April 2011 has been peddling this report as if it is informative about the current policy position.

This is compounded by the fact that the AFR continues to use the report's commissioner, Michael Porter, to write opinion editorial pieces on the NBN; the latest offering is Fibre rollout wastes billions. These pieces ignore the reality of what happened in the NBN 1.0 tender and make fanciful and inaccurate technical claims.

I will move to a systematic response to the column in a moment. My first point is though that CEDA and Porter's interest in this matter was spurred when Telstra wanted NBN 1.0 stopped. In particular Telstra did not want any solution that involved their structural separation - the key reason they declined to bid.

Now Telstra's position is totally different. They would like to get on with their business and deploying NBN 2.0 is what they want to achieve. David Thodey has made it clear that shareholders should not vote on the NBN and separation deals on the assumption that there is an alternative policy. It might be worthwhile for Telstra to have another quiet chat with CEDA.

Moving to Porter, he asserts that "by avoiding fibre overbuild in metropolitan and regional areas, HFC can indirectly finance up to $20 to $30 billion of NBN savings."

This assertion simply does not stand up to scrutiny. HFC exists mostly only in metropolitan areas, there is very little in regional areas. HFC passes somewhere around 70% of Australian households, but it is a well known fact that it has extremely low penetration into multi-dwelling units. That is a technological limitation due to the difficulty of feeding a whole coax cable into existing spaces.

The total NBN construction cost of $43B includes the cost of the satellite and wireless solutions. The implementation study provided detail (below) of the cost per premise connected by percentile.

Even if we assumed that HFC did cover 70% of households, these are the households it costs $2 to $3K to connect. It is noteworthy that it was this analysis that saw the FTTP footprint extended to 93% from 90%. That means that Porter's upper bound of saving $30B, being three-quarters of the capital cost, is totally beyond reach. $20B may be reasonable to estimate the amount of capital not spent.

But here's the other problem - the outcome is not comparable. The 100Mbps speeds being quoted for HFC are shared speeds - not what is available to each premise. To provide a comparable service over the life of the asset requires additional investment. Further, as mentioned above, HFC simply is not available at all the premises it passes.

Porter asserts

Most independent experts would prefer NBN Co to request tenders by location and speed, not technology. Regional markets, with support from the private and public sectors, could sort and blend bids and technologies, and deliver content competition.

and concludes

To be commercially viable, NBN Co should invite all parties to bid to build upgraded and expanded cable, wireless and fibre in metropolitan areas. It will then start to have a better balance sheet owing to savings on fibre rollout - estimated at well over $20B.

The difficulty is that neither Telstra nor Optus - the owners of the two big HFC networks - have any interest at all in this strategy. It doesn't deliver comparable service and does not defer forever the need for a fibre to the home investment.

It is interesting to note that Porter's latest contribution only credits his university post. It is unclear from the CEDA site whether he is still also CEDA National Director Research and Policy. (Update - I have been informed that Porter is no longer with CEDA. His replacement is Nathan Taylor, Chief Economist). CEDA could profitably leave its 2008 report - properly dated - on its website and delete the more recent blathering.

Novae Meridianae Demetae Dexter delenda est