The NBN and the phone service

Fascinating item in the AFR today (behind paywall) in which the new chief executive of Primus rants about the need for the NBN to do more for phone service.

According to this CEO the NBN only provides for one telephone and to get the existing telephones to work requires "extensive rewiring". That to me is complete and utter nonsense. From the ATA part of the NTU the customer gets exactly the same kind of socket as they get on their existing phones. Connect that up to another socket on the existing wiring - and the phone equivalent of double adaptors are readily available - and all the existing phones will - or at least should - work.

I'd be pleased if some enterprising telecommunications technical bod would tell me if I'm wrong - but I'm pretty sure I'm not.

His second complaint is the $24 access price to get the first service which provides the voice capability and 12/1 of data. He moans that the price needs to be like the "$5" he can get from another provider. Well no - as a non-access network owning provider he can provide voice in one of two ways - buying a ULL and adding voice or buying the Telstra wholesale line rental. The prices for these can be found in the ACCC's final Access Determination. These are $16 per month for the ULL and $22.10 for wholesale line rental. The NBN service includes the ATA which is not included in the ULL price. The NBN price does not result in any additional charges for local calls as occurs for WLR, in addition the provider will receive the PSTN TA charges that currently go to Telstra.

It is a pity that CEOs go out and say these types of things. There is nothing to be gained for the industry by projecting an industry hostility to the NBN - particularly when the statements just don't seem to be accurate.

PS For once I just can't be bothered sending a letter to the AFR. It is about time NBN Co felt mature enough to respond itself.





Novae Meridianae Demetae Dexter delenda est

Strangest headline

Gerard Henderson's SMH column today was headed Unions choose masters over members in carbon tax debate

It is strange in two ways. Firstly, despite commenting on the uniqueness of Australia's unions in supporting action on climate change, at no point did the article assett that their position was determined by the ALP.

But the stranger idea is the implied reversal of roles. After all we are forever being told that it is the unions that are the "faceless" bosses of the ALP. I, of course, blame the non-existent Fairfax sub-editors not Henderson.

Novae Meridianae Demetae Dexter delenda est

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

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 <http://www.aph.gov.au/house/committee/report_register/bycomlist.asp?id=190>last print inquiry twenty years ago the http://trove.nla.gov.au/work/15729267?">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

A letter to LEK and Fairfax

According to a report in the Oz Fairfax has called in LEK to review the Australian Financial Review and its paywall.

I've talked about Fairfax before as well as the plan to share the presses with News.

I'm firmly of the belief that the best solution for Fairfax is a single national daily with city specific editions. The AFR print version should cease to exist and be re-badged as the business section of this paper. The online AFR should include the stories from the print version free, some additional free content under the NYT model (you need to register, you can only see a certain number of stories for free, but everything is accessible).

I'm of course not privy to all the data available to LEK - there may be a better option. But at the very least if the review doesn't evaluate this option it is an ineffective review.

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Sharing the presses ... part 2

New reports in the Oz that News and Fairfax are close to a JV for printing newspapers, this time in the . Last time I commented on the story it also came from there - are they trying to put external pressure on Fairfax to do the deal?

As I said before it does raise competition concerns and would be an acquisition under s50. If the ACCC can have concerns about a merger between FOXTEL and AUSTAR one can expect them to be more worried about a print sharing deal.

The challenge is that both transactions clearly do increase "efficiency".


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Faulkner on the ALP

The SMH has reported on John Faulkner's Neville Wran Lecture at the NSW Parliament.

The story is reported under the heading "ALP must reform or die".

The perhaps unsurprising fact is that all elements of the ALP probably understand that; where they disagree is in what form this reform should take.

As Faulkner notes;

These days, as Party membership dwindles, ALP strategists talk about ‘reaching out’ to organisations active on particular progressive issues, ‘gaining endorsement’ of our policies.

That idea, with its implications of ‘us’ in Labor and ‘them’ in community organisations, is wrong. The frequency with which it’s raised by hand-wringing apparatchiks makes many wonder if Labor has lost its way.

Progressive, socially aware activists passionate about social and economic reform must never be outsiders to the Labor movement.

Against this he contrasts;

Activism, community engagement, commitment to ideas, policy debate, are not second-rate substitutes for getting into Parliament. Nor are they routine ritual posturing on the way to pre-selection. Committed members with ideals may complicate the lives of careerist Party managers but they are the life-blood of Labor. And the systematic efforts to marginalise and silence them in recent decades has brought us to where we are today.

adding;

Ladies and gentlemen, the principles of caucus unity and consistency with the party platform have historically meant that the decisions of the party, once debated and resolved, are abided by. They have not meant, and ought not to mean, an absence of debate or the appearance of an absence of debate. Labor needs to get better at explaining what solidarity and unity really mean – both to the general public and to those within the Party who have come to interpret it as acquiescence.

These comments made me think of the annual conferences I attended this century and the approach to them. I was extremely disappointed that the Left - as then represented by John Watkins and Luke Foley - was as pleased as the Right was to avoid any meaningful debate on a position of policy. The eagerness for a deal saw one conference adopt completely opposite resolutions about nuclear power under different parts of the program - both moved as amendments from the floor and neither being debated (instead being incorporated by the mover of the motion).

Faulkner's prescription, building on the national review, is;

In my opinion, and I believe in the opinion of many other members and supporters of our Labor Party, whatever specific changes are adopted, they must be guided by five key principles:
* Labor must be a Party of values and ideas;
* We must have a growing, not a declining Party;
* Labor must return real power to its members;
* We must engage and involve our supporters in the community; and
* Labor must have a culture of inclusion and innovation, not exclusion and unbridled factionalism.

I agree for the most part. However, all this introspection made me look wider and I found a document from the UK Fabian Society called Facing Out. It contains many of the ideas of wider engagement, online policy forums, differential grades of membership, that would seem to accord with a re-activated party.

But when you visit the ALP national website you will find under the tab "Get Involved" a whole slew of these activities.

The distinction is that these activities look like the "us" and "them" model that Faulkner talks about. These programs need to be at the heart of the party, not add ons to it.

But ultimately there are two big simple reforms necessary.

The first is the one Rod Cavalier has championed for about forty years...the complete end to any block union vote. The party needs to be a democratic party of individuals.

The second is to return to what I think the NSW Left under the rubric of the "Steering Committee" originally held dear - the prosecution of the objective;

The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields.

What needs to be defined is what "democratic socialisation" means in the context of an embrace of a market economy.

I have two distinct views on this. The first is to recognise that the goal of economic efficiency as taught in market theory is anti-egalitarian. Markets work for some things, but they don't advance equity.

The second is to understand that "socialisation" means to work to social not private goals, not necessarily social rather than private ownership. A consequence of that is that the objective is the restraint of power.

Great speech by Faulkner - but will it have an effect.

By the way a reminder - the Latin text at the bottom says "The NSW Right must be destroyed". By that I mean the version of the right that believes the purpose is to gain power, that through power you can exercise patronage, and through patronage you can gain future power.

There is a strong argument that the ALP as a party of ideas was as effective in opposition as it was in Government .... until 1996.

Novae Meridianae Demetae Dexter delenda est

Social Exclusion

This column by Ross Gittins is a maust read.

He gets stuck into those complaining about "tough times" in the middle of a boom and talks about the real issues of social exclusion and contrasts it with measuring outcomes by money income.

...the concept of 'social exclusion' focuses on how relationships, institutions, patterns of behaviour and other factors (including lack of resources) prevent people from participating fully in the life of their community.

Australian research has divided social exclusion into three domains: disengagement, service exclusion and economic exclusion.

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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.

Novae Meridianae Demetae Dexter delenda est

Fairfax

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).

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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

Confusing consequences with goals

The world's "great" religions need to be understood in the context in which they developed. It is useful to understand why they developed and survived - basically because they "worked". That is for another post.

But it is important to understand them to be able to engage in a useful discussion with them. All religions suffer from a problem that, while they all have evolved in many ways, at any point in time they are perceived to be wholly true. Even the Koran shows a progression in the sayings of the prophet as he progressed from little known seer to ruler. It is just harder to see because of the ordering of the sura by length.

Such an appreciation is not evident in the heading given to Paul Sheehan's column in the SMH today; Repressing women is sharia's raison d'etre. In fairness to Sheehan this heading is probably an editor's work - but it confuses the outcome "repression of women", as the cause.

But Sheehan himself comes close to that heading writing;

Because when you scrape away the layers of rhetoric of such jihadists, or those who rationalise their actions, it is evident their primary concern in seeking to impose strict sharia is to control and constrain women's freedom. This is the core cultural impact of sharia.

In this context, the whole concept of Islamic holy war has been in part an expression of sexual repression and sexual oppression.

Let's briefly consider polygamy and its one-sided nature. The Arab tribes that Mohammed coalesced were constantly engaged in war. The consequence of war is that there are lots of deaths. Men can breed many warriors, women only one at a time. It makes sense to send men to war and not women because men are expendable. Once you do so you will have a population imbalance and the process of breeding more warriors will more readily occur by having asymmetric polygamy.

But the law goes much further than this. Indeed one of the bases for the success of Islam was that it treated women better than the other social orders around it at the time. Families have responsibilities to the wives of their brothers and sons. No woman is left uncared for.

Sheehan is right, however, to note that in a modern society with greater life expectancy and not dominated by tribal war-fare that these practices are wrong. To do so requires an engagement with Islam that says "we respect your beliefs and your right to those beliefs, as we ask you to accept our beliefs. We have modified our cultural values as the world has developed around us and we encourage you to do the same."

We have plenty of evidence for how we have changed - the God of a twenty-first century Christian is not the God of Joshua who told him to exterminate all other people.

But equally we have parts of the twentieth century church that are equally repressive of women, as evidenced by the Papal view of contraception and the place of women in the Church.

Sheehan needs to be a little less shrill about Islam and more reflective about belief and culture.





Novae Meridianae Demetae Dexter delenda est

Fairfax

In today's Crikey Margaret Simons writes about the decision made at Fairfax to outsource some sub-editing.

In describing the task facing Fairfax's senior execs she writes;

The whole thing is bloody and awful, and while it is part of my job to criticise what Hywood and Matthews do, I also recognise that, despite their fat salaries, their jobs are far from enviable. God knows why people scrap so hard to be in these positions. One assumes it is because they believe they can pull gold out of the shit. I wish I shared their belief.

There are no easy answers to trying to save dying media business models, and they are right to do what their predecessors have failed to do -- admit the depth of the problem and try to do something about it.

She goes on to note that the new CEO has fronted-up to the idea that the classifieds business - the old "Rivers of Gold" - is basically dead.

There are a few observations to make. The first is that Fairfax had plenty of opportunity to act about on-line much earlier. In about 1994 when I was the Account Director for the media portfolio at Telstra the Fairfax CIO Frank McMahon asked us to talk to him about online services. (For the record Frank was responsible for the initial computerisation of the production process at Fairfax - no slouch).

He was particulary interested in what was called "On Australia" which was a Microsoft/Telstra JV. At that stage it was about Microsoft's non-internet based MSN - in the days when AOL and other dial-up subscription services were booming.

To the credit of the guys from telstra Multimedia who met Frank, they told him all about On Australia, but really recommended he have a look at a thing called Mosaic - which was the first web-browser.

In the end Fairfax took a decision to go with a "corporate" style on line service buying something that had a large base in libraries. This route was partly chosen because it could be achieved by acquisition.

The second is that the media are not alone in fronting what Clayton Chritensem dubbed The Innovator's Dilemma. This is the fact that to expolit the new business as it develops means sacrificing some of your revenues and profits from the old business. The example he used is the manufacture of hard disc drives.

Whenever in business you hear a CEO or exec team reject a strategy because it will "cannibalise our existing business" then you know you need to get out. Quite simply, if the existing business can be cannibalised then it will be cannibalised by someone else if not by you. It is closely related to a problem in business case development of what is the base case - the do nothing case - against which a strategy should be implemented. Too often it is a flat line or worse an extrapolation of historic growth when the reality is that the base case is declining revenue. As an example, AAPT was unable to develop a strategy for VoIP in conjunction with broadband because of how healthy the voice resale margins were.

The important thing to remember though is that CEOs are ultimately paid the big bucks to make the hard decisions. they should all sign-up to JFKs invocation "We choose to go to the moon, not because it is easy, but because it is hard".




Novae Meridianae Demetae Dexter delenda est

I missed it

The wonders of having a unique identifier like "David Havyatt" is that Google Alerts finds you stuff about you.

Like this blog post about two AFR letters included scanned pages (probably breaching copyright) - the first page included a letter of mine that I thought the AFR hadn't used.

The letter was published 28 Feb and reads;

Your editorial highlights Australia’s recent productivity decline and reaches for the old grab bag of reducing business costs and enhancing supply-side responsiveness. (‘Productivity lift needed now’ AFR 24 Feb).

You manage to completely miss the recommendation of the Siemens report that “productivity improvements through the adoption of technology and innovation will alleviate this pressure”. The Grattan Institute also noted “slippage in Australia’s take-up of productivity-enhancing technologies.”

The Australian Financial Review’s response to the innovation challenge has been opinion pieces over recent weeks criticising the key infrastructure project identified to facilitate technology adoption and promote innovation, the National Broadband Network.

Senator Stephen Conroy has perhaps been too busy responding to the idiocy of the idea that a wireless or hybrid-fibre coaxial (HFC) solution could be a viable alternative to prosecute his other role as the Minister Assisting the Prime Minister on Digital Productivity.

It is time the Financial Review dragged itself out of the 1980s and 90s agenda and confronted the twenty-first century.


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