Unsurprisingly The Australian did not publish my letter to the editor below defending Malcolm Turnbull.
Your editorial ‘Malcolm’s excellent adventure’ (The
Australian 6 June) contained the most extraordinary claims about the
Minister for Communications, namely that he has been something other than a
team player as Minister.
A fact used as evidence for the claim is the disloyalty to
conservatives displayed in launching Morry Schwartz’s The Saturday Paper. This
is the Minister who is proposing to weaken cross media ownership laws in a move
widely perceived to favour the interests of News Corp.
The Minister on launching the paper sought to make the case
that the current laws are not required to ensure diversity. This is the case he
needs to make if reform is to occur.
The Australian has long made the case that it
is entitled to be a conservative newspaper. So too are Schwartz’s stable of
publications entitled to be ‘left-wing’. The Australian has feasted on a
series of NBN stories largely provided by Mr Turnbull’s office
Mr Turnbull might add to his list. Why with friends like The
Australian do the Liberals need enemies.
The simple fact is that Mr Turnbull at least recognises the importance of diversity in news coverage, a diversity that is important to the operation of democracy. This piece in On Line Opinion captures the essential elements of that argument. However its conclusion is wrong - the media doesn't need to be "impartial" (which is not the same as accurate or even objective) so long as it is sufficiently diverse in the range of partiality represented.
I have also previously commented that the actual influence of the Murdoch press is probably over-rated. The difficulty is that it is Mr Murdoch himself that wants us all to believe how influential he is.
So on this day as Mr Abbott has dined with the person I think the PM has called Australia's greatest businessman (who has chosen to live in what Mr Abbott calls the world's greatest country) let us hop that the conversation might have been two way. Let us hope that Mr Abbott explained that any change to cross media ownership laws has to be based on preservation of diversity rather than Mr Abbott just turned up to take orders.
Showing posts with label Turnbull. Show all posts
Showing posts with label Turnbull. Show all posts
Wednesday, June 11, 2014
Monday, October 31, 2011
NBN Confusion
The coalition doesn't like the NBN - we know that. Malcolm Turnbull, Paul Fletcher and Barnaby Joyce go on about it.
But coalition backbenchers don't like the NBN - because residents don't know when they are getting it. Government backbenchers have also been known to complain about the inadequate roll-out schedule.
The public in general really wonders if the coalition can "stop the NBN." There is no evidence Telstra would have an appetite for negotiating a different deal. There is no evidence a structurally separated copper business could raise any capital in private markets for an FTTN upgrade.
But more significantly, like climate change, everyone wonders whether the coalition could get any enabling legislation through.
The biggest difference between Paul Keating winning the 1993 election against Fightback and Beazley losing the 98 election against the GST was that Keating promised to support ANY Fightback legislation if he lost. Beazley promised to oppose the GST. The people voted strategically in 98 to keep Howard and against the GST - which worked until Meg Lees ratted.
The ALP should go to the next election saying it will oppose legislation to change the carbon tax, because the coalition doesn't believe in any action. They should however say they will support any change the coalition wants to make on broadband policy because Mr Abbott and Mr Turnbull claim to be supportive of the intent.
That would make the issue of cancelling the NBN very very real for many people....maybe enough to make a difference.
Novae Meridianae Demetae Dexter delenda est
But coalition backbenchers don't like the NBN - because residents don't know when they are getting it. Government backbenchers have also been known to complain about the inadequate roll-out schedule.
The public in general really wonders if the coalition can "stop the NBN." There is no evidence Telstra would have an appetite for negotiating a different deal. There is no evidence a structurally separated copper business could raise any capital in private markets for an FTTN upgrade.
But more significantly, like climate change, everyone wonders whether the coalition could get any enabling legislation through.
The biggest difference between Paul Keating winning the 1993 election against Fightback and Beazley losing the 98 election against the GST was that Keating promised to support ANY Fightback legislation if he lost. Beazley promised to oppose the GST. The people voted strategically in 98 to keep Howard and against the GST - which worked until Meg Lees ratted.
The ALP should go to the next election saying it will oppose legislation to change the carbon tax, because the coalition doesn't believe in any action. They should however say they will support any change the coalition wants to make on broadband policy because Mr Abbott and Mr Turnbull claim to be supportive of the intent.
That would make the issue of cancelling the NBN very very real for many people....maybe enough to make a difference.
Novae Meridianae Demetae Dexter delenda est
Friday, October 14, 2011
Thinking out loud
We've been told that the joint NBN Committee is going to hear from New Zealand so that;
The conversations are hoped to settle an ongoing argument from shadow communications minister Malcolm Turnbull that a fibre-to-the-node rollout would cost a quarter or a third of the $27 billion headline currently set for government contributions to the NBN.
I am a little bemused by the claim, and indeed how it relates to Turnbull's other claim that FTTN is a good interim technology, again because New Zealand has done it.
The New Zealand government has committed $1.5B to be a co-investor in delivering FTTH to 75% of premises. They are funding half and as the Government investor intend to accept a lower return than the private investors. I haven't seen the rest of the detail.
The population of New Zealand is roughly one fifth of Australia's, and the coverage of 75% is roughly 80% of our target. The $NZ3B investment for the coverage equates to about $NZ18.5B for the Australian FTTH coverage. Allowing for a 1.2 exchange rate we can tweak that back to $15.4B.
But we aren't doing apples for apples. The $26B of Government funding in Australia funds $43B investment in the NBN (P.365 of the implementation study). Not all the $43B funds the fibre build - in fact the breakdown from the implementation study is shown below.
At the simplest we can say one eighth of the total cost funds the satellite and fibre solution, so that means the Govt funding for the fibre part is seven-eighths of $26B, or $22.3.
But so far we've assumed that servicing 75% of premises would cost the same per premise as 93%. The implementation study conveniently provided a chart relating cost to penetration, below.
A generous interpretation is $2000 per premise for the first 75% and $5000 per premise for the additional 18%. That comes to the cost of the first 75% being 62.5% of the total fibre cost.
Or stated another way, if all the premises were covered at $2000 the project would cost 77.5%. If we simply use three-quarters the investment required to do 93% if it cost the same as 75% would be three quarters of 22.3 or $16.725B
So my numbers to compare are NZ $15.4B, Australia $16.7B. That variation could be potentially explained by the fact Chorus has built fibre to the node, but nothing in it deals with their lost sunk investment in nodes.
No wonder after Turnbull used the EIU report the EIU analyst pointed out that their report favoured the Australian solution over New Zealand (behind AFR paywall).
The difference is that Turnbull consistently ignores 25% of the people. I continue to ask where Fiona Nash and Barnaby Joyce are on this?
Novae Meridianae Demetae Dexter delenda est
The conversations are hoped to settle an ongoing argument from shadow communications minister Malcolm Turnbull that a fibre-to-the-node rollout would cost a quarter or a third of the $27 billion headline currently set for government contributions to the NBN.
I am a little bemused by the claim, and indeed how it relates to Turnbull's other claim that FTTN is a good interim technology, again because New Zealand has done it.
The New Zealand government has committed $1.5B to be a co-investor in delivering FTTH to 75% of premises. They are funding half and as the Government investor intend to accept a lower return than the private investors. I haven't seen the rest of the detail.
The population of New Zealand is roughly one fifth of Australia's, and the coverage of 75% is roughly 80% of our target. The $NZ3B investment for the coverage equates to about $NZ18.5B for the Australian FTTH coverage. Allowing for a 1.2 exchange rate we can tweak that back to $15.4B.
But we aren't doing apples for apples. The $26B of Government funding in Australia funds $43B investment in the NBN (P.365 of the implementation study). Not all the $43B funds the fibre build - in fact the breakdown from the implementation study is shown below.
At the simplest we can say one eighth of the total cost funds the satellite and fibre solution, so that means the Govt funding for the fibre part is seven-eighths of $26B, or $22.3.
But so far we've assumed that servicing 75% of premises would cost the same per premise as 93%. The implementation study conveniently provided a chart relating cost to penetration, below.
A generous interpretation is $2000 per premise for the first 75% and $5000 per premise for the additional 18%. That comes to the cost of the first 75% being 62.5% of the total fibre cost.
Or stated another way, if all the premises were covered at $2000 the project would cost 77.5%. If we simply use three-quarters the investment required to do 93% if it cost the same as 75% would be three quarters of 22.3 or $16.725B
So my numbers to compare are NZ $15.4B, Australia $16.7B. That variation could be potentially explained by the fact Chorus has built fibre to the node, but nothing in it deals with their lost sunk investment in nodes.
No wonder after Turnbull used the EIU report the EIU analyst pointed out that their report favoured the Australian solution over New Zealand (behind AFR paywall).
The difference is that Turnbull consistently ignores 25% of the people. I continue to ask where Fiona Nash and Barnaby Joyce are on this?
Novae Meridianae Demetae Dexter delenda est
Wednesday, October 12, 2011
The Member for Wentworth
There it is in Hansard.
Interjector - Would the honorable member be prepared to sell the Post Office?
Member for Wentworth - No.
The Member for Wentworth though is not the current one, but indeed the Member for Wentworth in 1946, Eric Harrison. By then he was a former Post-Master General, and was then the Deputy Leader of the Liberal Party. The occasion was the debate on the Overseas Telecommunications Bill 1946.
The record of the debate in both chambers is well worth a read in the light of my comments earlier today. There were a couple of opposition members concerned about socialisation, but their bigger concerns were over whether overseas telecommunications should be in a Commission rather than in the Post Office with the rest of communications, and over the payment to be made to the private owners of the wireless connections.
It seems mighty strange in hindsight that it was Liberal members urging the combination into one Department and opposing a Commission structure.
The identity of the company from whom the assets were bought also provides an interesting tale on the concept of life being better under a private sector firm - because that company was Amalgamated Wireless (Australasia), better known as AWA. In its later life AWA was famous for going broke on the back of unwise foreign exchange transactions reflecting some of the weaknesses in the governance model of corporations. It then crafted a living repairing gaming terminals, a business they have grown and are now selling their brand for Big W stores "home brand" TVs and other electronics.
I've also finally got around to putting together some of the information from the 1910 Royal Commission. As also noted earlier the UK only finally moved to full public ownership of telecommunications in 1912, and the US debate on the matter started in 1913. Yet there was very little reference to it all in the Royal Commission.
The report at paragraph 16 merely noted;
During his examination the Permanent Head showed that he had no personal knowledge of post and telegraph systems in other countries, other than that acquired by reading the British Post Office Reports. He also referred to a modern economic writer on the British telegraphs and telephones. The conclusions of this writer have, in the opinion of your Commissioners, no relevance to the Commonwealth Post and Telegraph Department, as his object was to establish a case against Government ownership.
The comment appears to be to Robert Townley Scott's reference in his opening statement referring to the Hugo Meter's The British state telegraphs : a study of the problem of a large body of civil servants in a democracy. Meyer also wrote Public ownership and the telephone in Great Britain : restriction of the industry by the state and the municipalities. These are in their own right interesting an interesting read, but had little impact.
The committee seems to have only asked two others about the question of ownership, one of who was Alexander Graham Bell. Bell gave his evidence in August 1910 after the Committee report had basically been written. His only observation on Government ownership was that it might impede innovation, and recommended the establishment of a Laboratory. The history of the Labs at the PMG and Telecom is an interesting one in its own right. Suffice to note here that after privatisation TRL was closed.
More interestingly Bell talked about the importance of twisted copper pair over single wire (with earth return). Equally interesting is the discussion on efficiency of exchanges, and the desire to get more than one service over a pair of wires.
I kind of reckon based on his evidence in 1910 that Bell today would be backing the NBN.
Novae Meridianae Demetae Dexter delenda est
Interjector - Would the honorable member be prepared to sell the Post Office?
Member for Wentworth - No.
The Member for Wentworth though is not the current one, but indeed the Member for Wentworth in 1946, Eric Harrison. By then he was a former Post-Master General, and was then the Deputy Leader of the Liberal Party. The occasion was the debate on the Overseas Telecommunications Bill 1946.
The record of the debate in both chambers is well worth a read in the light of my comments earlier today. There were a couple of opposition members concerned about socialisation, but their bigger concerns were over whether overseas telecommunications should be in a Commission rather than in the Post Office with the rest of communications, and over the payment to be made to the private owners of the wireless connections.
It seems mighty strange in hindsight that it was Liberal members urging the combination into one Department and opposing a Commission structure.
The identity of the company from whom the assets were bought also provides an interesting tale on the concept of life being better under a private sector firm - because that company was Amalgamated Wireless (Australasia), better known as AWA. In its later life AWA was famous for going broke on the back of unwise foreign exchange transactions reflecting some of the weaknesses in the governance model of corporations. It then crafted a living repairing gaming terminals, a business they have grown and are now selling their brand for Big W stores "home brand" TVs and other electronics.
I've also finally got around to putting together some of the information from the 1910 Royal Commission. As also noted earlier the UK only finally moved to full public ownership of telecommunications in 1912, and the US debate on the matter started in 1913. Yet there was very little reference to it all in the Royal Commission.
The report at paragraph 16 merely noted;
During his examination the Permanent Head showed that he had no personal knowledge of post and telegraph systems in other countries, other than that acquired by reading the British Post Office Reports. He also referred to a modern economic writer on the British telegraphs and telephones. The conclusions of this writer have, in the opinion of your Commissioners, no relevance to the Commonwealth Post and Telegraph Department, as his object was to establish a case against Government ownership.
The comment appears to be to Robert Townley Scott's reference in his opening statement referring to the Hugo Meter's The British state telegraphs : a study of the problem of a large body of civil servants in a democracy. Meyer also wrote Public ownership and the telephone in Great Britain : restriction of the industry by the state and the municipalities. These are in their own right interesting an interesting read, but had little impact.
The committee seems to have only asked two others about the question of ownership, one of who was Alexander Graham Bell. Bell gave his evidence in August 1910 after the Committee report had basically been written. His only observation on Government ownership was that it might impede innovation, and recommended the establishment of a Laboratory. The history of the Labs at the PMG and Telecom is an interesting one in its own right. Suffice to note here that after privatisation TRL was closed.
More interestingly Bell talked about the importance of twisted copper pair over single wire (with earth return). Equally interesting is the discussion on efficiency of exchanges, and the desire to get more than one service over a pair of wires.
I kind of reckon based on his evidence in 1910 that Bell today would be backing the NBN.
Novae Meridianae Demetae Dexter delenda est
What is the opposite of Godwin's Law?
I don't know what the opposite of Godwin's Law is, but in a strange piece of irony it appears that Malcolm Turnbull is trying to define it.
The irony is, of course, that it was another Godwin (Grech) who caused Turnbull so much trouble when leader, resulting in a classic case of over-reaching and rhetorical flourish. To remind you Godwin's Law states "As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1."
As the Wikipedia entry notes "Godwin's law is often cited in online discussions as a deterrent against the use of arguments in the widespread Reductio ad Hitlerum form." Turnbull has resorted to Reductio ad Communism (see note below). Turnbull started by simply relying on the Economist Intelligence Unit report on broadband investments (for purchase here). (That report and Turnbull's reliance on them show a complete lack of understanding of the principles of both economics and accounting...but more on that later.) But Turnbull's rhetorical flourish got the better of him, to the press he reportedly said;
This is the telecommunications version of Cuba. Cuba is the last communist state … I stand corrected, there's North Korea too. [Communications Minister] Stephen Conroy doesn't even have a North Korea to his Cuba, he's a one-and-only.
(Intriguingly what looks like the official Cuba promotion site Cuba.com picked up the story and ran it without comment.)
Let's start with some simple facts. There has been a national telecommunications monopoly for fixed line access in Australia since before Federation. The introduction of competition reforms and encouraging competitive investment did not fundamentally change that.
As I outlined in a recent submission to the ACCC the fixed line access network is even more a natural monopoly now than it was before. The decision being made is not whether to have a monopoly or not - that is determined by the cost structure. It is how to regulate that monopoly. As Senator Conroy said at the press conference announcing the FTTH version of the NBN;
This solves once and for all the core problem created when the previous Prime Minister privatised Telstra a decade ago without ever resolving the conflict of a private monopoly, owning the network infrastructure and dominating the retail market.
Australia's telecommunications network was Government owned until 1996. Indeed Government ownership was the global norm. The British government assumed full ownership and control of the British telephone system on 1 January 1912. Even the US Bell System (AT&T) was placed under Government control for one year to 1 August 1919.
In the discussion leading up to this the head of AT&T Theodore Vail said "all monopolies should be regulated." (See John Brooks Telephone).
Despite Robert Menzies determined efforts to ban the Communist Party, there is no evidence that he ever saw the ownership of the telecommunications network as socialist in any way. The entry on Menzies on the National Museum of Australia website notes;
Following increasing public dissatisfaction with Joseph Benedict Chifley's Labor government, the Liberal and Country parties swept to power at the general election on 10 December 1949. The fall of JB Chifley's Labor government followed a series of Communist-inspired strikes, controversies over Labor's wish to nationalise private banks, medical practitioners, transport and communications, and mounting public impatience with continuing wartime austerity measures.
The nationalisation of communications proposed referred to was only of overseas links. Ann Moyal in Clear Across Australia (at P.181) details how the Cable and Wireless Ltd monopoly on international cables was regarded as an impediment to war efforts. The initiative to replace Cable and Wireless' monopoly with "autonomous but interlocked government-owned telecommunications entities" was proposed by Australia and New Zealand at meetings of the (British) Commonwealth Communications Council in 1944 and 45.
It was enacted in Australia in 1946 and only one parliamentarian, a Liberal Senator from WA, took exception to a separate overseas telecommunications body 'when officers of the Post-Master's General Department are capable of undertaking their work.' (To be fair I should go read the debate on the OTC Bill to see if any Liberal voices were raised against this nationalisation or proposing privatisation of the PMG, and also read Alexander Grahame Bell's evidence to the 1910 Royal Commission .... but that will have to wait).
Ultimately the question is not whether government ownership of natural monopolies is communism; it is whether it is good policy (noting Vail's comment that "all monopolies should be regulated.") Sanford Berg and John Tschirhart in their Natural monopoly regulation: Principles and practices note;
If regulation of private natural monopolies results in inefficient production techniques and output prices, then one solution might be to socialize these monopolies: change the ownership from private to public. However, this proposal raises the hackles of many consumers, producers and regulators for reasons that extend beyond the domain of economic analysis.
Within the realm of economics though they list three main studies comparing cost of private monopolies versus public ones, Two conclude that public monopolies operate at lower cost, while the third finds no difference. The major basis for the assertion of the inefficiency of public enterprise is an article by Alchian (in a 1965 paper in Il Politico which only seems to be held in 4 libraries in Australia). Berg and Tschirhart state;
Alchian and subsequent authors have argued that public ownership will be less efficient because managers of public firms have more latitude in pursuing non-profit-maximizing objectives. Yet their hypothesis was not supported by the data.
The neo-liberal faith in privatisation is like so much of the neoclassical economic framework - a triumph of theory over observation, of analysis over empiricism.
Finally a note on the EIU study. The Australian Government financing of the NBN is totally by way of an equity investment in an enterprise that will return the cost of capital. The other programs it is compared to appear to be all grants - just like all the Howard Government programs. That Government can fund telecommunications this way is demonstrated by the PMG/Telecom story. The telecommunications function was financed by loans from the Commonwealth from 1959 on. All those loans were repaid with interest owing prior to privatisation in 1996.
If Malcolm Turnbull really wants to invoke a "communist" stance he might target a policy of "direct action" on climate change instead of the use of a price - but that is happening on his side of the chamber.
I propose Turnbull's Corollary to Godwin's Law "As a politician with no policy keeps talking, the probability of an illogical comparison approaches 1."
Note: Reductio ad Communism has been proposed previously for a Wikipedia entry but immediately deleted due to lack of references. Any readers who feel inclined to remedy that with references to Turnbull feel free (unless I get there first myself).
Novae Meridianae Demetae Dexter delenda est
The irony is, of course, that it was another Godwin (Grech) who caused Turnbull so much trouble when leader, resulting in a classic case of over-reaching and rhetorical flourish. To remind you Godwin's Law states "As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1."
As the Wikipedia entry notes "Godwin's law is often cited in online discussions as a deterrent against the use of arguments in the widespread Reductio ad Hitlerum form." Turnbull has resorted to Reductio ad Communism (see note below). Turnbull started by simply relying on the Economist Intelligence Unit report on broadband investments (for purchase here). (That report and Turnbull's reliance on them show a complete lack of understanding of the principles of both economics and accounting...but more on that later.) But Turnbull's rhetorical flourish got the better of him, to the press he reportedly said;
This is the telecommunications version of Cuba. Cuba is the last communist state … I stand corrected, there's North Korea too. [Communications Minister] Stephen Conroy doesn't even have a North Korea to his Cuba, he's a one-and-only.
(Intriguingly what looks like the official Cuba promotion site Cuba.com picked up the story and ran it without comment.)
Let's start with some simple facts. There has been a national telecommunications monopoly for fixed line access in Australia since before Federation. The introduction of competition reforms and encouraging competitive investment did not fundamentally change that.
As I outlined in a recent submission to the ACCC the fixed line access network is even more a natural monopoly now than it was before. The decision being made is not whether to have a monopoly or not - that is determined by the cost structure. It is how to regulate that monopoly. As Senator Conroy said at the press conference announcing the FTTH version of the NBN;
This solves once and for all the core problem created when the previous Prime Minister privatised Telstra a decade ago without ever resolving the conflict of a private monopoly, owning the network infrastructure and dominating the retail market.
Australia's telecommunications network was Government owned until 1996. Indeed Government ownership was the global norm. The British government assumed full ownership and control of the British telephone system on 1 January 1912. Even the US Bell System (AT&T) was placed under Government control for one year to 1 August 1919.
In the discussion leading up to this the head of AT&T Theodore Vail said "all monopolies should be regulated." (See John Brooks Telephone).
Despite Robert Menzies determined efforts to ban the Communist Party, there is no evidence that he ever saw the ownership of the telecommunications network as socialist in any way. The entry on Menzies on the National Museum of Australia website notes;
Following increasing public dissatisfaction with Joseph Benedict Chifley's Labor government, the Liberal and Country parties swept to power at the general election on 10 December 1949. The fall of JB Chifley's Labor government followed a series of Communist-inspired strikes, controversies over Labor's wish to nationalise private banks, medical practitioners, transport and communications, and mounting public impatience with continuing wartime austerity measures.
The nationalisation of communications proposed referred to was only of overseas links. Ann Moyal in Clear Across Australia (at P.181) details how the Cable and Wireless Ltd monopoly on international cables was regarded as an impediment to war efforts. The initiative to replace Cable and Wireless' monopoly with "autonomous but interlocked government-owned telecommunications entities" was proposed by Australia and New Zealand at meetings of the (British) Commonwealth Communications Council in 1944 and 45.
It was enacted in Australia in 1946 and only one parliamentarian, a Liberal Senator from WA, took exception to a separate overseas telecommunications body 'when officers of the Post-Master's General Department are capable of undertaking their work.' (To be fair I should go read the debate on the OTC Bill to see if any Liberal voices were raised against this nationalisation or proposing privatisation of the PMG, and also read Alexander Grahame Bell's evidence to the 1910 Royal Commission .... but that will have to wait).
Ultimately the question is not whether government ownership of natural monopolies is communism; it is whether it is good policy (noting Vail's comment that "all monopolies should be regulated.") Sanford Berg and John Tschirhart in their Natural monopoly regulation: Principles and practices note;
If regulation of private natural monopolies results in inefficient production techniques and output prices, then one solution might be to socialize these monopolies: change the ownership from private to public. However, this proposal raises the hackles of many consumers, producers and regulators for reasons that extend beyond the domain of economic analysis.
Within the realm of economics though they list three main studies comparing cost of private monopolies versus public ones, Two conclude that public monopolies operate at lower cost, while the third finds no difference. The major basis for the assertion of the inefficiency of public enterprise is an article by Alchian (in a 1965 paper in Il Politico which only seems to be held in 4 libraries in Australia). Berg and Tschirhart state;
Alchian and subsequent authors have argued that public ownership will be less efficient because managers of public firms have more latitude in pursuing non-profit-maximizing objectives. Yet their hypothesis was not supported by the data.
The neo-liberal faith in privatisation is like so much of the neoclassical economic framework - a triumph of theory over observation, of analysis over empiricism.
Finally a note on the EIU study. The Australian Government financing of the NBN is totally by way of an equity investment in an enterprise that will return the cost of capital. The other programs it is compared to appear to be all grants - just like all the Howard Government programs. That Government can fund telecommunications this way is demonstrated by the PMG/Telecom story. The telecommunications function was financed by loans from the Commonwealth from 1959 on. All those loans were repaid with interest owing prior to privatisation in 1996.
If Malcolm Turnbull really wants to invoke a "communist" stance he might target a policy of "direct action" on climate change instead of the use of a price - but that is happening on his side of the chamber.
I propose Turnbull's Corollary to Godwin's Law "As a politician with no policy keeps talking, the probability of an illogical comparison approaches 1."
Note: Reductio ad Communism has been proposed previously for a Wikipedia entry but immediately deleted due to lack of references. Any readers who feel inclined to remedy that with references to Turnbull feel free (unless I get there first myself).
Novae Meridianae Demetae Dexter delenda est
Thursday, September 15, 2011
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
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
Friday, August 05, 2011
Kiama and the NBN
I had the great pleasure of driving down to Kiama last week for the NBN launch there (the thing about the NBN for politicians is its like school building programs - an endless series of openings).
It gave me a good hook for my iTnews column, in which I demonstrate that Turnbull is using the same strategy against the NBN that his leader uses against putting a price on carbon.
Meanwhile I had a letter published in the AFR this week - in response to an editorial trumpeting the idea that structural separation really solved everything without reflecting on the fact that it was only the NBN policy that achieved that (submitted text below).
I couldn't work into either article the other famous thing about Kiama - which was Alastair Mackerass' beach house. As Master of the Lower School (and Maths and Latin teacher to Form 1A - aka Year 7) at Sydney Grammar School he would invite groups of the Form 1 boys to spend a week of the summer holidays with him there. I certainly enjoyed my week.
I can only presume that Malcolm Turnbull had this opportunity. I don't know if the other big NBN protagonist - Paul Fletcher - did, only because I don't know if Mackerras kept it up after becoming headmaster.
I tried hard to work it in. To have had the opportunity you had to be bright - but they now act so dumb. Perhaps it is the fact that they both went on to be participants in the school debating team - a skill where you learn to argue any proposition convincingly, no matter how much you disbelieve what you are saying.
Meanwhile the other memorable part of the launch was the "big red button". When depressed all that technically happened is a video started that showed a map being "lit up".
Anyone got any better ideas on what should happen? To go back to the road and bridges analogies from the column - how would de Groot upstage the button pushing?
**************
AFR Letter
Your editorial today (NBN already looking costly for consumers AFR 1 Aug) asserts that the marketplace benefits being achieved through the NBN could have been achieved through the structural separation of Telstra.
You fail to mention that no Minister prior to Senator Conroy was interested in doing so. The Member for Bradfield in his book Wired Brown Land makes it clear that the coalition recognised that they had an option to separate Telstra before starting privatisation, but that his then boss, Senator Alston, elected not to do so.
Senator Alston subsequently commenced an inquiry into structural separation, which was subsequently abandoned when then Shadow Communications Minister Lindsay Tanner published a report indicating it could not be done.
Senator Conroy and Lindsay Tanner together then developed the plan for the NBN, one benefit of which was to be structural separation. NBN Mark 1 did not reach a satisfactory outcome in part because Telstra refused to make a full submission unless the requirement for separation was taken out of the policy.
To assert there is an alternative to something requires the alternative to be achievable. No one has ever devised an alternative strategy to secure the structural separation of Telstra.
Finally, so far all retail prices announced for the NBN have been the same as current copper based prices. What is also announced though are new services not previously available to the consumer market, and at prices ten times less than comparable business services.
Novae Meridianae Demetae Dexter delenda est
It gave me a good hook for my iTnews column, in which I demonstrate that Turnbull is using the same strategy against the NBN that his leader uses against putting a price on carbon.
Meanwhile I had a letter published in the AFR this week - in response to an editorial trumpeting the idea that structural separation really solved everything without reflecting on the fact that it was only the NBN policy that achieved that (submitted text below).
I couldn't work into either article the other famous thing about Kiama - which was Alastair Mackerass' beach house. As Master of the Lower School (and Maths and Latin teacher to Form 1A - aka Year 7) at Sydney Grammar School he would invite groups of the Form 1 boys to spend a week of the summer holidays with him there. I certainly enjoyed my week.
I can only presume that Malcolm Turnbull had this opportunity. I don't know if the other big NBN protagonist - Paul Fletcher - did, only because I don't know if Mackerras kept it up after becoming headmaster.
I tried hard to work it in. To have had the opportunity you had to be bright - but they now act so dumb. Perhaps it is the fact that they both went on to be participants in the school debating team - a skill where you learn to argue any proposition convincingly, no matter how much you disbelieve what you are saying.
Meanwhile the other memorable part of the launch was the "big red button". When depressed all that technically happened is a video started that showed a map being "lit up".
Anyone got any better ideas on what should happen? To go back to the road and bridges analogies from the column - how would de Groot upstage the button pushing?
**************
AFR Letter
Your editorial today (NBN already looking costly for consumers AFR 1 Aug) asserts that the marketplace benefits being achieved through the NBN could have been achieved through the structural separation of Telstra.
You fail to mention that no Minister prior to Senator Conroy was interested in doing so. The Member for Bradfield in his book Wired Brown Land makes it clear that the coalition recognised that they had an option to separate Telstra before starting privatisation, but that his then boss, Senator Alston, elected not to do so.
Senator Alston subsequently commenced an inquiry into structural separation, which was subsequently abandoned when then Shadow Communications Minister Lindsay Tanner published a report indicating it could not be done.
Senator Conroy and Lindsay Tanner together then developed the plan for the NBN, one benefit of which was to be structural separation. NBN Mark 1 did not reach a satisfactory outcome in part because Telstra refused to make a full submission unless the requirement for separation was taken out of the policy.
To assert there is an alternative to something requires the alternative to be achievable. No one has ever devised an alternative strategy to secure the structural separation of Telstra.
Finally, so far all retail prices announced for the NBN have been the same as current copper based prices. What is also announced though are new services not previously available to the consumer market, and at prices ten times less than comparable business services.
Novae Meridianae Demetae Dexter delenda est
Tuesday, July 26, 2011
Where is the BTCE when you need it?
I was grabbing a couple of volumes off my bookcase this morning. Both were reports by the former Bureau of Transport and Communications Economics. (One was report 64 - the cost of Telecom's Community Services Obligations, the other was report 89 - the communications futures report). What was originally just the bureau of Transport Economics morphed into BTCE with the Hawke Government mega-ministries.
Three things decimated research capability in communications. First was the split between comms and transport. (Transport still has the bureau in BITRE). Secondly the Howard Government centalised research into the Productivity Commission. Thirdly a few other research activities got outsourced (e.g ACMA and ACCC reports on the economic value of competition reforms).
For the record here is a list of BTCE reports on communications I found in the NLA catalogue;
Interconnection Pricing Principles
International telecommunications: an Australian perspective"
Communications Research Forum Papers
Communications Research Forum Papers 1994
Communications Research Forum Papers 1993
Australian commercial television 1986-95: structure and performance
Elements of broadcasting economics
Transport and Communications Indicators: Quarterly review of activity
Measuring community benefits of Australian TV programs
Management of radiocommunications frequency: an economic analysis
Demand projections for Australian telecommunications services and equipment to Asia by 2010
Short term forecasting of transport and communications activity
Telecommunications in Australia
Broadcasters and market behaviour
Economic effects of commercial TV aggregation on commercial radio in regional areas
The Australian telecommunications market; ewhen does dominance cease
Communications services in Australia
Cultural regulation of Australian TV programs
Research in Communications Economics in Australia
Elasticities of demand for telephone services
Valuation of commercial broadcasting licences
Australian content on Pay TV
Evaluation of the transitional period in Australian telecommunications
Interconnection pricing principles: a review of the economic literature
Residential demand for broadband services
Film and television co-production in Australia
Economic aspects of broadcasting regulation
Quality of service: conceptual issues and telecommunications case study
Demand projections for Australian telecommunications services and equipment to Asia by 2010: an update
Telecommunications Reform in Australia
That is an impressive array, more recent versions of which would help the convergence review.
Meanwhile one has to laugh that the Liberals who gutted the BTCE now want the PC to do a cost benefit analysis on the NBN. The old BTCE did one on the Costs and benefits of a single Australasian aviation market. But I can find no evidence that the PC has ever done one.
A CBA on Country of Origin Labelling was done for them by the CIE, other reports on medical technology, on pharmaceuticals, copyright, and the National Reform Agenda talk of costs and benefits but do not do a CBA.
The closest the PC ever comes is to lecture others on the need for CBAs.
If someone wants an economic advisory office on communications they need to build it first.
PS The PC did do reviews of each of Broadcasting, Radiocommunications and Telecommunications. Each review was more notable for the inaction by the coalition than anything else.
Three things decimated research capability in communications. First was the split between comms and transport. (Transport still has the bureau in BITRE). Secondly the Howard Government centalised research into the Productivity Commission. Thirdly a few other research activities got outsourced (e.g ACMA and ACCC reports on the economic value of competition reforms).
For the record here is a list of BTCE reports on communications I found in the NLA catalogue;
Interconnection Pricing Principles
International telecommunications: an Australian perspective"
Communications Research Forum Papers
Communications Research Forum Papers 1994
Communications Research Forum Papers 1993
Australian commercial television 1986-95: structure and performance
Elements of broadcasting economics
Transport and Communications Indicators: Quarterly review of activity
Measuring community benefits of Australian TV programs
Management of radiocommunications frequency: an economic analysis
Demand projections for Australian telecommunications services and equipment to Asia by 2010
Short term forecasting of transport and communications activity
Telecommunications in Australia
Broadcasters and market behaviour
Economic effects of commercial TV aggregation on commercial radio in regional areas
The Australian telecommunications market; ewhen does dominance cease
Communications services in Australia
Cultural regulation of Australian TV programs
Research in Communications Economics in Australia
Elasticities of demand for telephone services
Valuation of commercial broadcasting licences
Australian content on Pay TV
Evaluation of the transitional period in Australian telecommunications
Interconnection pricing principles: a review of the economic literature
Residential demand for broadband services
Film and television co-production in Australia
Economic aspects of broadcasting regulation
Quality of service: conceptual issues and telecommunications case study
Demand projections for Australian telecommunications services and equipment to Asia by 2010: an update
Telecommunications Reform in Australia
That is an impressive array, more recent versions of which would help the convergence review.
Meanwhile one has to laugh that the Liberals who gutted the BTCE now want the PC to do a cost benefit analysis on the NBN. The old BTCE did one on the Costs and benefits of a single Australasian aviation market. But I can find no evidence that the PC has ever done one.
A CBA on Country of Origin Labelling was done for them by the CIE, other reports on medical technology, on pharmaceuticals, copyright, and the National Reform Agenda talk of costs and benefits but do not do a CBA.
The closest the PC ever comes is to lecture others on the need for CBAs.
If someone wants an economic advisory office on communications they need to build it first.
PS The PC did do reviews of each of Broadcasting, Radiocommunications and Telecommunications. Each review was more notable for the inaction by the coalition than anything else.
Monday, July 25, 2011
Turnbull and the ALP
It is an interesting observation that both of the last two leaders of the Liberal Party have been considered possible ALP recruits in the past.
Tony Abbott was certainly wooed in his student days by great NSW right winger Johnno Johnson. The fit would have appeared natural because Abbott's primary opponents in student politics of the 70s were real communists of various varieties. As such he was a natural ally of the former groupers who retained control of the ALP. (See note below).
The fact that he ended up in the Liberal party can be partly credited to the influence of the future Tanya Costello, though not by the mechanism that Bob Ellis claimed in Goodbye Jerusalem
- the "seduction" was entirely of an intellectual kind.
Malcolm Turnbull was also touted as a potential waverer, especially through his closeness to Paul Keating and his support of the Republic. In his case the presence of his father-in-law would have been a steady influence on his choice of the Liberal clan. But the facts remain that at every turn Malcolm has had to impose himself on the party, they have neber embraced him. This perhaps reflects the deeply anti-intellectual traditions of Australia's conservatives.
It is not unusual for individuals to be intent on politics but unsure of which path to pursue. It was always an accusation made by my parents (who knew the Whitlams at University) that Gough only went to the ALP after being unable to gain traction on the conservative side. While history records the progression otherwise, it is notable that Whitlam's commitment to the ALP was about modernising the constitution not any philosophical cause.
By the same token ALP history is replete with "rats" who broke with the ALP to side with their opponents - the most notable being Billy Hughes and Joseph Lyons.
None of this should be surprising given the way "public choice theory" argues that democratic politicians are really competing for the same median voters.
Today we see the suggestion that Turnbull is a threat to both Abbott and Gillard - posing the question of what support Turnbull would have as Labor leader. Given the fact the ALP has been attacked from the left by the Greens the party is increasingly a party of the social democratic middle. The Liberals are still highly fragmented, but Abbott is certainly a poster child for "do nothing" conservatism - a position which the more rabid right can accept.
The Gillard coalition looks fragile given the ongoing demands from Andrew Wilkie that Gillard has to use all her political capital to ensure the pokies legislation gets through.
It does raise the interesting question - what would Turnbull do if a deputation from the ALP factions - possibly including the PM herself - were to say "Malcolm, the most important policy challenge before us is getting to progress on climate change. You know and we know that if the Government stumbles, then Mr Abbott will become Prime Minister and climate change and all other good works are at an end. We invite you to change sides and to be Prime Minister ...."
Note: The SRC of which Tony Abbott was President (directly elected) had 21 members (by recollection) that were made up of seven members of the broad left, seven members from Abbott's conservative ranks and seven members of a much less co-ordinated middle. Members of that middle identified variously with the ALP, but included a zionist group that was motivated by opposition to the pro-Palastinian stance of the left.
I was elected Vice-President, Paul Brereton (now a Justice of the Supreme Court of NSW) was elected Honorary Secretary/Treasurer, Tanya Costello (nee Coleman) was elected as Education Officer. I would need to do more research to do justice to the full list.
Novae Meridianae Demetae Dexter delenda est
Tony Abbott was certainly wooed in his student days by great NSW right winger Johnno Johnson. The fit would have appeared natural because Abbott's primary opponents in student politics of the 70s were real communists of various varieties. As such he was a natural ally of the former groupers who retained control of the ALP. (See note below).
The fact that he ended up in the Liberal party can be partly credited to the influence of the future Tanya Costello, though not by the mechanism that Bob Ellis claimed in Goodbye Jerusalem
- the "seduction" was entirely of an intellectual kind.Malcolm Turnbull was also touted as a potential waverer, especially through his closeness to Paul Keating and his support of the Republic. In his case the presence of his father-in-law would have been a steady influence on his choice of the Liberal clan. But the facts remain that at every turn Malcolm has had to impose himself on the party, they have neber embraced him. This perhaps reflects the deeply anti-intellectual traditions of Australia's conservatives.
It is not unusual for individuals to be intent on politics but unsure of which path to pursue. It was always an accusation made by my parents (who knew the Whitlams at University) that Gough only went to the ALP after being unable to gain traction on the conservative side. While history records the progression otherwise, it is notable that Whitlam's commitment to the ALP was about modernising the constitution not any philosophical cause.
By the same token ALP history is replete with "rats" who broke with the ALP to side with their opponents - the most notable being Billy Hughes and Joseph Lyons.
None of this should be surprising given the way "public choice theory" argues that democratic politicians are really competing for the same median voters.
Today we see the suggestion that Turnbull is a threat to both Abbott and Gillard - posing the question of what support Turnbull would have as Labor leader. Given the fact the ALP has been attacked from the left by the Greens the party is increasingly a party of the social democratic middle. The Liberals are still highly fragmented, but Abbott is certainly a poster child for "do nothing" conservatism - a position which the more rabid right can accept.
The Gillard coalition looks fragile given the ongoing demands from Andrew Wilkie that Gillard has to use all her political capital to ensure the pokies legislation gets through.
It does raise the interesting question - what would Turnbull do if a deputation from the ALP factions - possibly including the PM herself - were to say "Malcolm, the most important policy challenge before us is getting to progress on climate change. You know and we know that if the Government stumbles, then Mr Abbott will become Prime Minister and climate change and all other good works are at an end. We invite you to change sides and to be Prime Minister ...."
Note: The SRC of which Tony Abbott was President (directly elected) had 21 members (by recollection) that were made up of seven members of the broad left, seven members from Abbott's conservative ranks and seven members of a much less co-ordinated middle. Members of that middle identified variously with the ALP, but included a zionist group that was motivated by opposition to the pro-Palastinian stance of the left.
I was elected Vice-President, Paul Brereton (now a Justice of the Supreme Court of NSW) was elected Honorary Secretary/Treasurer, Tanya Costello (nee Coleman) was elected as Education Officer. I would need to do more research to do justice to the full list.
Novae Meridianae Demetae Dexter delenda est
Thursday, July 21, 2011
Where is Malcolm's Policy?
I'd dearly love to comment on Malcolm Turnbull's new broadband policy as announced to CEDA yesterday. Unfortunately I wasn't there. But more surprisingly the very media astute Turnbull doesn't seem to have published the speech yet.
Various parts of the tech media have covered it. ZDnet reported it as a faster scaled back NBN. Rob Burgess of Business Spectator reckons that Turnbull pulled two of the three planks supporting the NBN away.
From what I can figure out Turnbull is now saying that it is important to have a plan to improve broadband services in Australia. That's a big change since through most of the Senate NBN Committee hearings the coalition stance was we don't need a faster network and all its for is entertainment.
Turnbull's plan is also supposedly based on the idea that Telstra should continue to face structural separation. He doesn't tell us, however, how that will be achieved - or would have been achieved without the NBN. It is also a big change from coalition opposition to the structural separation bill that they labelled "a gun to Telstra's head".
His next big step is apparently to ask the Productivity Commission to do a "cost-benefit analysis" to choose the best technology mix and include FTTN. I'm still prepared to stake my hat on that analysis coming to the same conclusion - if done properly - as the Government's Expert Panel. That is, that FTTN is at best an intermediate step, and the extra upfront investment isn't worth it in the long run. But the plan may have more credibility if he were to hire people who do CBA for a living - like business people - not people who spend their lives telling other people to do CBAs - that is the PC.
By the way, I wonder if Patricia Scott, former Secretary of the department and Chair of the Expert Panel but now Commissioner at the PC would get to run the inquiry.
There is no evidence that Telstra would have any interest in renegotiating its agreement to pursue a structurally separated FTTN build. If the Government under the coalition were to say no FTTH NBN then Telstra would revert to their NBN Mark 1 position - no access to our copper in a structurally separated model.
The bit I want to see more of is the notion of a "voucher" system for regional services. It sounds like crazy classic neo-liberal orthodoxy - like vouchers for schools etc. There are scale economies in this stuff. the vouchers are useless unless everybody spends their voucher on the same supplier...that is why we have Government as a way to co-ordinate action.
Turnbull's plan is not "credible" because, as far as i Can figure out, it really is exactly the same as the coalition non-plan from 2005 to 2007. It just looks credible because Malcolm comes across better than Tony Smith or Bruce Bilson ever did.
Novae Meridianae Demetae Dexter delenda est
Various parts of the tech media have covered it. ZDnet reported it as a faster scaled back NBN. Rob Burgess of Business Spectator reckons that Turnbull pulled two of the three planks supporting the NBN away.
From what I can figure out Turnbull is now saying that it is important to have a plan to improve broadband services in Australia. That's a big change since through most of the Senate NBN Committee hearings the coalition stance was we don't need a faster network and all its for is entertainment.
Turnbull's plan is also supposedly based on the idea that Telstra should continue to face structural separation. He doesn't tell us, however, how that will be achieved - or would have been achieved without the NBN. It is also a big change from coalition opposition to the structural separation bill that they labelled "a gun to Telstra's head".
His next big step is apparently to ask the Productivity Commission to do a "cost-benefit analysis" to choose the best technology mix and include FTTN. I'm still prepared to stake my hat on that analysis coming to the same conclusion - if done properly - as the Government's Expert Panel. That is, that FTTN is at best an intermediate step, and the extra upfront investment isn't worth it in the long run. But the plan may have more credibility if he were to hire people who do CBA for a living - like business people - not people who spend their lives telling other people to do CBAs - that is the PC.
By the way, I wonder if Patricia Scott, former Secretary of the department and Chair of the Expert Panel but now Commissioner at the PC would get to run the inquiry.
There is no evidence that Telstra would have any interest in renegotiating its agreement to pursue a structurally separated FTTN build. If the Government under the coalition were to say no FTTH NBN then Telstra would revert to their NBN Mark 1 position - no access to our copper in a structurally separated model.
The bit I want to see more of is the notion of a "voucher" system for regional services. It sounds like crazy classic neo-liberal orthodoxy - like vouchers for schools etc. There are scale economies in this stuff. the vouchers are useless unless everybody spends their voucher on the same supplier...that is why we have Government as a way to co-ordinate action.
Turnbull's plan is not "credible" because, as far as i Can figure out, it really is exactly the same as the coalition non-plan from 2005 to 2007. It just looks credible because Malcolm comes across better than Tony Smith or Bruce Bilson ever did.
Novae Meridianae Demetae Dexter delenda est
Tuesday, July 05, 2011
Clutching at straws
Interesting tweet from Malcolm Turnbull, shadow spokesperson for destroying the NBN. It reads;
very thoughtful article rob gallagher of informaTM about costs and questionable benefits of FTTH http://t.co/xMFF9yH #NBN
The article is indeed thoughtful, even though it tries to deal with Fibre to the Node as if it is the Lord Voldemort of technology - that which cannot be named.
Gallagher tries to make two points. The first is that there is more speed (bandwidth) to be rung out of copper yet, the second is that average user requirements don't rise as fast as peak user requirements. The conclusion he reaches is that an operator is unlikely to have a business case for an Fibre to the Home deployment.
The bad news for MT is that Senator Conroy, Mike Quigley and everyone who supports the NBN would agree with the last part of the proposition. But that is different to the proposition that in the long run progressing straight to FttH is a better investment.
Let's go through the issues.
Firstly the sorts of things Gallagher sees as being able to breath more life into DSL have limited practical application. Line bonding is a part of the ADSL 2+ standard and does allow for the ability to get double the 24 Mbps theoretical maximum - but at the price of using two copper pairs. There is nowhere in Telstra's network where spare pairs are the main feature - in fact urban consolidation has been making the issue worse not better.
The concept of vectoring is about doing more to co-ordinate the encoding across multiple paths to reduce crosstalk. The requirement is that all pairs in the bundle are served by the one DSLAM. So it certainly isn't a strategy that works for the current environment, and certainly wouldn't be embraced without structural separation.
Meanwhile he tells us that Omega DSL from Alcatel-Lucent promises DSL speeds of up to 1 Gbps by 2020. The proviso is that the distance is limited to 200 metres.
What is forgotten in these discussions of FTTN is that such a network is an active network, every one of those nodes needs to be powered leading to dual vulnerability, and excessive cost. the shorter the bit of copper being used the more nodes to be powered. It works fine to reticulate through a building if the DSLAM is in the basement, but you'd be far better off putting fibre through the building anyway.
The real question comes down to the demand for more bandwidth and the price people will pay for it. The first thing to note is the scale economies of both supply and demand in a telecommunications network. That means a big bang investment approach will get you lower average prices over time than an incremental one.
The second is the value of ubiquity - not often enough mentioned but should be. Applications become practical to invest in as a developer if I know everyone can access them - subject to them being willing to pay the price.
So to counter the comment,
But such an analysis ignores some fundamental principles that Nielsen built into his law. First of all, the law applies to connection speeds only for high-end users, not all users. And as Nielsen notes, average connection speeds will diverge ever further from high-end one as the mass-market of customers get online, as they are more likely to be low-end users.
I simply note that you can't tell a priori which user wants the peak and which one doesn't, but that also the NBN business plan assumes a distribution of speed demands consistent with the observation.
Gallagher's point is that fttH isn't a good strategy for an operator. He is right. but it is a good strategy for a nation - which is why the Government has chosen to build it as a piece of national infrastructure - just like roads.
Yes Malcolm, a very thoughtful piece that explains why the right decision on improved broadband won't come from the market.
Novae Meridianae Demetae Dexter delenda est
very thoughtful article rob gallagher of informaTM about costs and questionable benefits of FTTH http://t.co/xMFF9yH #NBN
The article is indeed thoughtful, even though it tries to deal with Fibre to the Node as if it is the Lord Voldemort of technology - that which cannot be named.
Gallagher tries to make two points. The first is that there is more speed (bandwidth) to be rung out of copper yet, the second is that average user requirements don't rise as fast as peak user requirements. The conclusion he reaches is that an operator is unlikely to have a business case for an Fibre to the Home deployment.
The bad news for MT is that Senator Conroy, Mike Quigley and everyone who supports the NBN would agree with the last part of the proposition. But that is different to the proposition that in the long run progressing straight to FttH is a better investment.
Let's go through the issues.
Firstly the sorts of things Gallagher sees as being able to breath more life into DSL have limited practical application. Line bonding is a part of the ADSL 2+ standard and does allow for the ability to get double the 24 Mbps theoretical maximum - but at the price of using two copper pairs. There is nowhere in Telstra's network where spare pairs are the main feature - in fact urban consolidation has been making the issue worse not better.
The concept of vectoring is about doing more to co-ordinate the encoding across multiple paths to reduce crosstalk. The requirement is that all pairs in the bundle are served by the one DSLAM. So it certainly isn't a strategy that works for the current environment, and certainly wouldn't be embraced without structural separation.
Meanwhile he tells us that Omega DSL from Alcatel-Lucent promises DSL speeds of up to 1 Gbps by 2020. The proviso is that the distance is limited to 200 metres.
What is forgotten in these discussions of FTTN is that such a network is an active network, every one of those nodes needs to be powered leading to dual vulnerability, and excessive cost. the shorter the bit of copper being used the more nodes to be powered. It works fine to reticulate through a building if the DSLAM is in the basement, but you'd be far better off putting fibre through the building anyway.
The real question comes down to the demand for more bandwidth and the price people will pay for it. The first thing to note is the scale economies of both supply and demand in a telecommunications network. That means a big bang investment approach will get you lower average prices over time than an incremental one.
The second is the value of ubiquity - not often enough mentioned but should be. Applications become practical to invest in as a developer if I know everyone can access them - subject to them being willing to pay the price.
So to counter the comment,
But such an analysis ignores some fundamental principles that Nielsen built into his law. First of all, the law applies to connection speeds only for high-end users, not all users. And as Nielsen notes, average connection speeds will diverge ever further from high-end one as the mass-market of customers get online, as they are more likely to be low-end users.
I simply note that you can't tell a priori which user wants the peak and which one doesn't, but that also the NBN business plan assumes a distribution of speed demands consistent with the observation.
Gallagher's point is that fttH isn't a good strategy for an operator. He is right. but it is a good strategy for a nation - which is why the Government has chosen to build it as a piece of national infrastructure - just like roads.
Yes Malcolm, a very thoughtful piece that explains why the right decision on improved broadband won't come from the market.
Novae Meridianae Demetae Dexter delenda est
Friday, June 03, 2011
Malcolm on the Digital Economy Strategy
Malcolm Turnbull is without doubt a skilled debater. One of the great tricks of debating is to define the territory of the debate.
In the case of his critique he does just this. He asserts that "Senator Conroy’s National Digital Economy Strategy is simply a thinly-veiled spruiking of the NBN."
He makes this assertion after carefully detailing how none of the individual objectives specified in the plan actually depend on a 100 Mbps connection to 93% of households. What he doesn't do though is demonstrate that the goals can be achieved with existing infrastructure.
The case need not be made for 100 Mbps, just for more than most people have today. That includes more than they have in upload and in download. The upload is the killer - because that's why thinks like two-way videoconferencing don't work. And saying that an application only needs 1.5 Mbps or 10 Mbps ignores the fact we want to enable MULTIPLE applications.
The question is then whether alternatives work. The FTTN strategy sucks because you still eventually have to do FTTP to get to 1 Gbps. And I don't have to make the case for higher future speed requirements - it is others who need to make the case for the exponential growth in demanded speed to stop.
Turnbull ran much of this in what delimiter called a "major speech in Parliament" yesterday. But the reality as tagged by the Member for Ballarat is that the "Matter of Public Importance" was shuffled into the last five minutes before the adjournment. It is unclear whether that was more because Mr Abbott has no interest in the topic or fears Mr Turnbull being given too much space to promote himself.
Turnbull has still not explained how he, as Minister, would have achieved a structurally separated industry. He now needs to add to this an explanation of how an FTTN network could have been constructed without handing control of the industry back to Telstra.
And finally can we get over his monstrous assertions that we are abandoning infrastructure based competition. We never had it. All the ADSL services are on Telstra's copper, Optus never opened its HFC to service providers, Optus stopped building HFC about 8 years ago.
Novae Meridianae Demetae Dexter delenda est
In the case of his critique he does just this. He asserts that "Senator Conroy’s National Digital Economy Strategy is simply a thinly-veiled spruiking of the NBN."
He makes this assertion after carefully detailing how none of the individual objectives specified in the plan actually depend on a 100 Mbps connection to 93% of households. What he doesn't do though is demonstrate that the goals can be achieved with existing infrastructure.
The case need not be made for 100 Mbps, just for more than most people have today. That includes more than they have in upload and in download. The upload is the killer - because that's why thinks like two-way videoconferencing don't work. And saying that an application only needs 1.5 Mbps or 10 Mbps ignores the fact we want to enable MULTIPLE applications.
The question is then whether alternatives work. The FTTN strategy sucks because you still eventually have to do FTTP to get to 1 Gbps. And I don't have to make the case for higher future speed requirements - it is others who need to make the case for the exponential growth in demanded speed to stop.
Turnbull ran much of this in what delimiter called a "major speech in Parliament" yesterday. But the reality as tagged by the Member for Ballarat is that the "Matter of Public Importance" was shuffled into the last five minutes before the adjournment. It is unclear whether that was more because Mr Abbott has no interest in the topic or fears Mr Turnbull being given too much space to promote himself.
Turnbull has still not explained how he, as Minister, would have achieved a structurally separated industry. He now needs to add to this an explanation of how an FTTN network could have been constructed without handing control of the industry back to Telstra.
And finally can we get over his monstrous assertions that we are abandoning infrastructure based competition. We never had it. All the ADSL services are on Telstra's copper, Optus never opened its HFC to service providers, Optus stopped building HFC about 8 years ago.
Novae Meridianae Demetae Dexter delenda est
Wednesday, May 18, 2011
Quigley and "gobbers"
I've had my say on twitter and elsewhere online about the character assasination of Mike Quigley. Today the SMH has joined the fray with an editorial. In doing so they join everyone else in saying there is no allegation about Quigley, but that the issue should have been identified in the recruitment process, writing;
But Quigley's NBN candidature needed to be judged against a clear appreciation of his previous experience. That taxpayers are staking $36 billion in this project demands complete transparency. It should not have been for Quigley to decide what history was relevant. And if he was too forgetful, the federal government's own inquiries should have filled the gaps. That they did not is not surprising.
There is a perverted logic in arguing that a recruitment process should have identified a matter about someone for which they were NOT being investigated.
It would not, of course, be the first time such a thing has happened. There was an infamous case of Telstra appointing a Chief Technology Officer who had faked his CV to include a doctorate, disclosed only when his new staff wanted to write a story for an in house magazine about him.
The interesting governance question is that we know the Commonwealth paid a large sum of money to an executive recruitment mob (Egon Zehnder) for the staffing of the NBN Board. If there is a question of why the issue wasn't known is this one for the head hunter rather than the Government? After all what more can a Minister do than pay for the best professional advice available.
Meanwhile the SMH also carries a great story about people who comment on blogs. Rick Gekoski notes "the number of readers' comments that are splenetic, ranging from the snide dismissal to the full-on rant. I wonder why so many of these commenters are angry and self-righteous, so anxious to spit out their insults?"
Adding "Spitting is what it is, and one can feel spat at. I like to call this phenomenon Gobbing. There are a multitude of gobbers."
He identifies six characteristics of gobbers; They have a peculiar name, not a real one, and rarely a pictur, they are in a perma-rage with regard to almost everything; they apparently lack any other forum in which to express themselves; their response comes so quickly - Skim! Spit! Click! - that it can hardly be considered the result of thinking; they like sarcasm and eschew irony; and they are unable to distinguish an argument from an assertion...if answered back, they spit harder.
Of course, bloggers like me dream of having our share of "gobbers".
As an example of the form look at the comments (including mine) on this article on the Turnbull/Quigley exchange.
Novae Meridianae Demetae Dexter delenda est
But Quigley's NBN candidature needed to be judged against a clear appreciation of his previous experience. That taxpayers are staking $36 billion in this project demands complete transparency. It should not have been for Quigley to decide what history was relevant. And if he was too forgetful, the federal government's own inquiries should have filled the gaps. That they did not is not surprising.
There is a perverted logic in arguing that a recruitment process should have identified a matter about someone for which they were NOT being investigated.
It would not, of course, be the first time such a thing has happened. There was an infamous case of Telstra appointing a Chief Technology Officer who had faked his CV to include a doctorate, disclosed only when his new staff wanted to write a story for an in house magazine about him.
The interesting governance question is that we know the Commonwealth paid a large sum of money to an executive recruitment mob (Egon Zehnder) for the staffing of the NBN Board. If there is a question of why the issue wasn't known is this one for the head hunter rather than the Government? After all what more can a Minister do than pay for the best professional advice available.
Meanwhile the SMH also carries a great story about people who comment on blogs. Rick Gekoski notes "the number of readers' comments that are splenetic, ranging from the snide dismissal to the full-on rant. I wonder why so many of these commenters are angry and self-righteous, so anxious to spit out their insults?"
Adding "Spitting is what it is, and one can feel spat at. I like to call this phenomenon Gobbing. There are a multitude of gobbers."
He identifies six characteristics of gobbers; They have a peculiar name, not a real one, and rarely a pictur, they are in a perma-rage with regard to almost everything; they apparently lack any other forum in which to express themselves; their response comes so quickly - Skim! Spit! Click! - that it can hardly be considered the result of thinking; they like sarcasm and eschew irony; and they are unable to distinguish an argument from an assertion...if answered back, they spit harder.
Of course, bloggers like me dream of having our share of "gobbers".
As an example of the form look at the comments (including mine) on this article on the Turnbull/Quigley exchange.
Novae Meridianae Demetae Dexter delenda est
Monday, March 14, 2011
Incomprehensible rubbish from the Hon. Malcolm Turnbull
Someone claiming to be Malcolm Turnbull has offered a comment on a story about a radio interview he did. It may well be Malcolm.
If so it is very, very sad. He says:
I think you miss the point about HFC. My simple point is this. If the objective is to provide fast broadband to all Australians at an affordable price then we should try to do so in the most cost-effective fashion. If there is infrastructure which enables us to do that (HFC for example) then it makes sense to use that rather than overbuild it. You make a point about Telstra not being prepared to make it available as a wholesale service, well all of those structural issues can be addressed in the separation of carriage and service which we support. The mistake the Gillard Government has made is never to even ask the question: how do we do this for the least amount of taxpayers' dollars, and instead rushing to what must be the most expensive solution. For example, I was very interested to see in Incheon where there is a new broadband enabled city being built that the fibre runs to the basement of the brand new towers and the service then runs over the buildings LAN, on ethernet. So it is very much fibre to the basement. In Singapore on the other hand the Government is requiring that fibre is pulled through to every apartment. Nonetheless here there is no obligation for Singtel to decommission its copper and no restriction on the HFC network being used to compete with the new fibre. So there is both here and in Korea continuing facilities based competition. So in summary: there is no dispute between us and Labor on the need to have universal fast broadband. We differ on two main points. 1) The cost, we do not accept that this is the most cost effective way of delivering it and cannot understand why they did not follow their stated policy of having a cost benefit analysis, 2) the establishment of a new government owned telecoms monopoly is turning policy on its head and going back to the days of government owned Telstra, added to that preventing facilities based competition runs the real risk that this will result in a more expensive network than a different approach would have delivered.
So on the one hand the Government has erred by rushing hrad long into fibre because it might have been cheaper to use the HFC. But on the other hand the Government is erring by not leaving the HFC in place when it does deploy fibre.
His greatest line is "You make a point about Telstra not being prepared to make it available as a wholesale service, well all of those structural issues can be addressed in the separation of carriage and service which we support.", but he hasn't told us how he would pull off structural reform of the industry. He really should read Paul Fletcher's book.
By the way he says fibre "must be the most expensive solution". This is not necessarily true, because if you believe any other solution is at best temporary till we need to build fibre anyway, then A the expenditure on the temporary solution is wasted. That is what the NBN Expert Panel told the Government - it is there in the documents that were released when the announcement was made.
Novae Meridianae Demetae Dexter delenda est
If so it is very, very sad. He says:
I think you miss the point about HFC. My simple point is this. If the objective is to provide fast broadband to all Australians at an affordable price then we should try to do so in the most cost-effective fashion. If there is infrastructure which enables us to do that (HFC for example) then it makes sense to use that rather than overbuild it. You make a point about Telstra not being prepared to make it available as a wholesale service, well all of those structural issues can be addressed in the separation of carriage and service which we support. The mistake the Gillard Government has made is never to even ask the question: how do we do this for the least amount of taxpayers' dollars, and instead rushing to what must be the most expensive solution. For example, I was very interested to see in Incheon where there is a new broadband enabled city being built that the fibre runs to the basement of the brand new towers and the service then runs over the buildings LAN, on ethernet. So it is very much fibre to the basement. In Singapore on the other hand the Government is requiring that fibre is pulled through to every apartment. Nonetheless here there is no obligation for Singtel to decommission its copper and no restriction on the HFC network being used to compete with the new fibre. So there is both here and in Korea continuing facilities based competition. So in summary: there is no dispute between us and Labor on the need to have universal fast broadband. We differ on two main points. 1) The cost, we do not accept that this is the most cost effective way of delivering it and cannot understand why they did not follow their stated policy of having a cost benefit analysis, 2) the establishment of a new government owned telecoms monopoly is turning policy on its head and going back to the days of government owned Telstra, added to that preventing facilities based competition runs the real risk that this will result in a more expensive network than a different approach would have delivered.
So on the one hand the Government has erred by rushing hrad long into fibre because it might have been cheaper to use the HFC. But on the other hand the Government is erring by not leaving the HFC in place when it does deploy fibre.
His greatest line is "You make a point about Telstra not being prepared to make it available as a wholesale service, well all of those structural issues can be addressed in the separation of carriage and service which we support.", but he hasn't told us how he would pull off structural reform of the industry. He really should read Paul Fletcher's book.
By the way he says fibre "must be the most expensive solution". This is not necessarily true, because if you believe any other solution is at best temporary till we need to build fibre anyway, then A the expenditure on the temporary solution is wasted. That is what the NBN Expert Panel told the Government - it is there in the documents that were released when the announcement was made.
Novae Meridianae Demetae Dexter delenda est
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