No comment

We all know the US plays rough to defend its industries, but is it playing rough when they attack a firm in an industry that they "invented and developed ... but is largely out of the business now"?

How to stop extremists

The Daily Terror has today calculated the increase in Australian overseas aid since 2008 and claimed the increase was all about getting a seat on the UN Security Council. It could of course simply be increased overseas aid. Meanwhile The Economist has reported on the case of Nigeria. This is yet another case where poverty and a dysfunctional state leads to extremists. So just maybe the Terror could have said the increased aid was part of trying to rid the world of extremism.

For the Tin Foil Hat Brigade

Great scholarly article on The Effectiveness of Aluminium Foil Helmets. A must read.

Inconsistency

When is trawling through the deepest recesses of the internet to resurface claims about events 17 years ago that have already been answered "holding to account"? How can Chris Pyne yesterday look at a camera with a straight face and suggest that any of that had anything to do with actions that have been in court? When is assault - throwing a punch to make someone be afraid - anything other than assault, and not just the "rough and tumble" of student politics? How can a person whose approach to politics was "robust" using intimidation and hateful language (mostly directed at gays) come out and attack people who use similar tactics for their own cause?

Quiggin on Posner

Folks, a good simple read from Joghn Quiggin on how Richard Posner, leader of the Law and Economics cheer squad for the Republicans has changed his mind. Quiggin writes, "Posner is one of a small minority on the intellectual right who have responded to the economic crisis by changing their view of the world, rather than by finding more and more absurd defenses of the indefensible." Reminiscent of the line attributed to Keynes "When the facts change, I change my mind. What do you do, sir?"

Abbott and language

This has been an amazing week. At least the SMH got it right in yesterday's editorial when they noted the absence of anything amounting to policy. Senator Conroy's media releases covered the NBN bit. The SMH however saw fit to say nice things about the Abbott commitment to teaching foreign languages. I won't here go into the fact that such teaching would be advanced by the NBN. The question is the need, the observation is the hypocrisy. Australia is actually a linguistically diverse nation due to its high levels of immigration. But the single most important language to speak is English. That's what the Europeans an Asians all most want to learn. Better resource use would be to boost English language training to others in the region. But the policy stands in stark contrast to opposition to multiculturalism. That opposition takes the form of objecting to the useof community languages and encourages migrants to integrate. So Abbott's view is that if you already speak a language other than English you shouldn't, but if you don't speak a language other than English you should learn one. And this man is taken seriously? Wake up Australia.

Reporting the "news"

If Chicken Little runs around and says "The sky is falling" it could be reported in three ways. The first way would be "The sky is falling". This would be inaccurate. The second would be "Today Chicken Little claimed that the sky is falling." This would be a completely accurate report but of little value. The third would be "Today Chicken Little lied. Little claimed that the sky is falling. Investigations reveal it is not." This would be a completely accurate and highly valuable report. We call the third one "journalism". I wonder which one of the three ways of reporting will be used to cover politics tonight. Experience is rapidly telling me that it is most often the second, sometimes the first. Very very seldom is it the third, even amongst those outlets who talk about the need to fund "investigative journalism."

The Liberals and Indigenous Australians

So that's twice in recent times the Labor PM has saved the Opposition Leader from the consequence of a gaffe over indigenous affairs.

The first was Kevin Rudd helping Brendon Nelson over the disaster that was his address in the Apology by going across the chamber to get Nelson to accompany the elders into the Parliament.

Then yesterday we had Julia Gillard ensuring her security detail escorted Tony Abbott as well as her out fro the Lobby restaurant.

It transpires today that the activities that the PM regretted for disrupting the ceremony were in part caused by one of her staff being in a communication chain that passed on Mr Abbott's planned location for the day to the protesters. It doesn't seem to be he wo informed them of Mr Abbott's view that the Tent Embassy had passed its useful time. It wasn't he or anyone else that inspired Mr Abbott to assert that really we'd taken care of aborigines now with the apology and possible constitutional recognition so they didn't need their Embassy.

The Liberals in Government are notable for the demolition of ATSIC (for goodish reasons) and the NT intervention. No matter how honestly motivated the latter was it was as poorly executed a piece of paternalism as was taking half-caste children from their parents.

Perhaps, rather than saying it is tme the Tent Embassy moved on, we should consider the value of a permanent "embassy" - a place of representation of the indigenous Australians - within the Parliamentary triangle. And perhaps National Australia Day/Invasion Day/Survival Day ceremonies could start with a smoking ceremony there like NSW ones do with a smoking ceremony at Farm Cove.

It would be more useful than the former ATSIC building stuck over by the Museum of Australia.

I note that Google Maps identifies an area between Old Parliament House and the lake as "Reconciliation Place" - but it just seems to be a circle. If that is indeed what it is - more needs to be made of it.


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Kodak

Anyone observing the latest chapter in the Kodak story would do well to read Clayton Christiansen's The Innovator's Dilemma.

Kodak, you see, invented digital photography but didn't invest for fear of cannibalising the film business. This the only technology choice where this occurred.

There ought to be a saying somewhere, if you don't cannibalise your own business you will just end up road kill.

That said, this is the US, and "bankruptcy" doesn't mean what we think it means.


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Not Blogging Really

Anyone in Australia thinking of the idea of primaries should take a bit of a look at what happens in the US.

This ad is run by Newt Ginrich to destroy the credibility of Mitt Romney.



But Ron Paul goes one better and just attacks Newt and Mitt.



But when you follow these links you find a really monumental pro-Ron Paul piece which argues that a non-interventionist Foreign Policy as proposed by Paul ticks the Libertarian boxes.



It is frightening that Julie Borowski - who describes herself as TokenLibertarianGirl on YouTube - can hold such views so young. But then again anyone in their early to mid twenties who wears pearls like those is a bit doubtful to begin with. I guess Tanya Costello (nee Coleman) was just like her at that age.

Anyhow, she has conveniently told us the libertarian books she recommends. Some of the more serious of these I have read - and they are as dangerous nonsense as Marx's Capital or Hitler's Mein Kampf. Simple prescriptions unbounded by empirical evidence. More fascinating still is that she holds up Bastiat's The Law telling us how politicians use the Law to take away our freedom.

The fascinating part is that this volume is getting close to two hundred years old and describes a slightly different world. However, Bastiat was at his best using a method of rhetoric that outlined the stupidity of some policy proposals - as for example his item on a Negative Railroad.

Should we start a charity to rescue young people from the libertarian fold - like a variety of a cult busting group?


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The Iron Lady - Verdict

The Iron Lady is a disappointing film, but not for all the reasons outlined in John Huxley's column today.

It wasn't merely "revisionism", and the long-term effect of Thatcher on Britain is something on which rational intelligent informed people could disagree. Far from being toned down "Thatcherism" it demonstrated how her downfall within her own party was determined by th excesses to which she took that with the poll tax.

But the film itself spends too long on an interpolated latter life Thatcher, and nowhere near enough on her formative years. For that read Wikipedia.

Interestingly at the time we observed similarities between Malcolm Fraser and Margaret Thatcher, and what they had most in common was a political philosophy derived from a rejection of totalitarianism and all forms of state control. To understand either read Hayek's The Road to Surfdom. The difference is that Fraser never lost his classic "liberalism" whereas thatcher seems to have lost hers - and the difference could be in the difference between the patrician and the grocer's girl fighting class and sexism.

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To my loyal reader(s)

As reported in CommsDay today I will be commencing a gig as Temporary Special Adviser to Senator Conroy starting Monday.

Writing a blog is inconsistent with the role. While some of my esoteric pieces on the nature of religion, the global sweep of history and heterodox economics might be legitimate independent comment, those who know me well know I would find it hard not to stray.

It does leave some current unfinished business - not least was a post I was going to write about broadband pricing built on some recent analysis by Benoit Felten on the ways to manage bandwidth hogs.

So, we now adopt radio silence.


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The Corporation - Part 2

Nice little piece today from Ross Gittins on suggestions for a "relational business charter".

In part it goes to the same territory as my comments on the corporation. But only in part.

The question is more how would you get firm's to pursue the objectives given the myth of "maximising returns". The answer is more that the public policy debate needs a better understanding of the role of the firm and feel comfortable regulating them to achieve the wider objective.


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Heterodoxy Unbound

I have spent the last two days at the conference of the Australian Society of Heterodox Economists.

The conference re-established a core point - the heterodox are united by what they stand against rather than what they stand for.

What they stand against is the dominant paradigm of the neo-classical core of economics. But even how much they stand against this varies.

Universally they would argue that neo-classicism fails because it is a system that assumes that the economic system is inherently stable and that analysis begins with an economy in equilibrium. You would probably get general agreement on the proposition that the neo-classical core ignores money and hence largely ignores the finance system, yet the latter accounts for 20% of US economic activity.

Going further you might actually get them to agree that the weaknesses of neo-classicism begin with the three core assumptions of Methodological individualism, methodological instrumentalism and methodological equilibriation.

I approach the heterodox economists from a telco policy stance where I am astounded how the terms "efficiency" and "competition" get chanted with no understanding of the limitations the theory of neo-classicism itself would impose on them, let alone all the other potential fallacies.

An interesting part of the conference was a session proposing a mathematically modelled macro system including finance that was attacked for not having "micro-foundations". This ignores the good conversation that the Hicks co-option of Keynes to give it "micro-foundations" was the point at which Keynes became misunderstood. It also assumes that microeconomics itself is well founded and that the issues are merely to do with macro.

Steve Keen eloquently describes the failures of micro - indeed its internal inconsistency - in his Debunking Economics.

There was so much good in the conference - but the paper by Lynne Chester that distinguished Australia from being characterised as a Liberal Market-Based Economy was a stand-out. Working backward, Australia's relatively better performance than the true LMEs (US, UK even Canada) can be attributed to its different institutional structure - the Australian approach to wage fixation, highest bank capital adequacy requirements.

To put it another way, as economies rushed to implement market mechanisms to facilitate the structural adjustments necessary to respond to the oil supply shock - seen as stagflation - Australia did so in an effective way that created just enough flexibility without overshooting.

There were interesting discussions on central bank policy - with different views of whether central banks in setting official interest rates can or cannot effect employment. The latter view was accompanied by a call for more explicit specification of a "full employment" goal.

In the end the conference had a discussion about the future of heterodox economics - and ultimately the question is whether the goal is the overthrow of the orthodoxy or not. Some, like Keen, think the orthodoxy is so dangerous it needs to be overthrown. Others regard the orthodoxy as being too ingrained to be rebelled against (and one could argue their approach to Keynes is evidence of that - on which the best paper on Keynes was given by UTS's Rod O'Donnell but the paper doesn't appear to be available anywhere).

Yet others see the real benefit in the heterodox as being its pluralism - the fact that it permits economics to be looked at from different dimensions.

My own view is that we do need a true "paradigm shift" but that the shift needs to be to a pluralism - to the kind of world like mechanics in which Newton, quantum and relativistic mechanics can co-exist because the boundary conditions are well understood. The overall title of the new paradigm will be "complexity economics" because that is the consequence of putting institutions directly into models - they create feedback loops.

Finally there is the question of the relation between heterodox and political economy. The latter was the original term for the field when the focus was on how to make wealth. It was inherently prescriptive not merely descriptive. The term is now also used to explain how the neo-classical position operates to support the entrenched power positions (the definition of efficiency says that the preference of the person with the most endowments counts more).

For me this is the piece that simply blows up the cant that economics is a "positive science". If it were only such there would be no preference for economists in policy roles.

Anyhow - short summary - great conference and we all need to pay more hede to the heterodox and spurn the orthodox.

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Weird comments

I just moderated a weird comment on a post about the University of Sydney rebranding.

The comment made reference to a supposed "secret society" called the "Integralia." Further research has thrown up a short item in Honi Soit that provides good evidence that the existence of the society is an organised hoax.

The hoax is centred on its own wikispace and seems to be actively centred on a campaign to dis-empower the (already powereless) SRC.

I guess it is just Tony Abbott in the age of the Internet.


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Update on Canada

Thanks to Catherine Middleton for alerting me that the story on easing foreign ownership restrictions in Canada is premature.

The relevant Minister did indicate that change is underway but will not be unveiled till 2012.

He interestingly is reported to have said "the government expects cellphone companies to offer rural Canadians the same services as those living in cities." Canada faces the same kind of geographic issues as Australia - though less urbanised. Vast thinly populated areas are extremely hard to provide metro like mobile coverage to. The only way such an expectation can be fulfilled is to put "must build" criteria on licences (as indeed the original Australian GSM licences had).


Middleton has provided a neat summary of telecommunications in Canada in the TJA. In it she notes a wireless market structure much like Australia's and that "99% of the population has access to 2G or 3G service
(which covers only 20% of the country's geographic area)" The Australian comparison is something like 98% of the population and 25% of the land mass (when a car kit is included)though real data is hard to obtain. (The landmass figure was provided in the Glasson report at P.125 and may well have increased since.)

The comparison between Australia and Canada is otherwise interesting. We have a well developed infrastructure strategy, and at least an attempt at a Digital Economy strategy.

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Kevin Rudd and the Right on the ALP

Launching yet another book on the current malaise of the ALP Kevin Rudd has provided his own analysis. Much of this is confused, and what he calls for is indistinct.

He starts by asserting a distinction between Labor good and the other side evil as;

A Party that has painted most of the nation’s history on a wide and expansive canvas; its economic reforms, its social innovation, the centrality of the environment, the place of indigenous Australians, as well as Australia’s independent place in the affairs of the world.

And just as we have painted this great canvas for the nation, the conservatives’ historical mission has been, wherever possible, to erase it.

Ours, a positive agenda of building the nation. Theirs, invariably a negative agenda to tear down what we have built up.

Because in the end, our creed is about the rights of the many – theirs being about the privileges of the few.

This is blatantly not true at the level of history - a good many of the reforms were introduced by conservative governments, and very few reforms have ever been torn down. Even the great reform of arbitration is only occassionally demolished by conservatives.

But secondly, the conservatives (Rudd's term - as previously discussed the non-Labor side are not always conservative) often just place a different emphasis on the order of redistributing wealth and growing it (to use Button's description that Rudd does). They regard this as a positive agenda of growth, and are especially wary of central planners.

Rudd is right to say that open debate lets the sunshine in. But the enemy is not the factions as such, there will always be groupings, but that the factions align around the way to exercise power not philosophy.

Rudd notes that there are three areas for reform;

It is time therefore for an open debate on the Party’s future. Its values. Its policies. And critically, its structure.

He places great store in "direct election." He doesn't go as far as the call Sam Dastyari is now making for membership election of the State Parliamentary Leader, though in a later interview he says he has an open mind on it.

People who favour this option should look to not only the recent disaster in the UK where they got the wrong brother, but read Alison Rogers The Natasha Factor and see the consequences of trying to impose on the Parliamentary Party a person other than the person they would choose to lead themselves.

Unfortunately on values Rudd is full of the same weak waffle as Gillard. He quotes his own Chifley Research speech.

The speeches are rendolent with talk of opportunity and fairness. At least Gillard's speech talked of the collective orientation of Labor, while Rudd saved this for his spray on neo-liberalism.

The backdrop of the current ALP malaise is a declining membership. However, this is not really a novel issue for the Labour Movement. In 1890 in Queensland there were 54 unions with 21,379 members, which by 1894 had declined to 9 unions and 780 members (McMullin The Light on the Hill P.26). Ten years after that the movement celebrated the (brief) first ever national Labor government in the world.

The history of the ALP is always fascinating reading, filled as it is with larger than life characters like Watson, Hughes, O'Malley, Scullin, Theodore, Lyons, Lang, McKell, Curtin, Chifley, Evatt, eddie Ward, Clyde Cameron, Whitlam, Cairns, Keating , Hawke, both John Cain's, both TJ Ryan's.

An enduring theme in that history has been the tension in the party between electoral politics designed to achieve power and a wider policy aim that variously goes under the name "socialism" but isn't recognisable as socialism in most other parts of the world. It is a very individualistic kind of socialism - a socialism founded more on the assumption of egalitarian values than of attacking the powerful "class".

These debates raged in the early years of the party, especially Federally. But the same debate can be identified as what - until the 1990s - divided Left and Right in NSW. The Left wanted purity of philosophical position, the Right any position that achieved power.

Labor has been at its best when this debate has been allowed to flourish, because it creates the idea of both short term and long term goals otherwise missing from politics. Labor has been at its worst when - like the Victorian ALP post split - it was able to be painted as just a socialist idealist party. Labor has been at its worst when - like NSW Labor over the last decade - it has imagined that politics is all about focus groups and mirroring back to people what you think they want.

The other part of Labor history is the role that early unionists and party members played in education - they took to their fellow workers the concept of unionism, of collective action, of the ideals behind socialism and the need to constrain capital. The rot seems to have set in once the movement could afford paid organisers, rather than merely to start paying existing organisers. Today an "organiser" in a union or the party is an organiser of numbers for internal battles and disputes - rather than an organiser focussed on education and motivating support.

The relationship between the political and the industrial wing of the Labour movement has always been tense. From the very earliest elections where Labor candidates were successful those representatives have found themselves caught between representing the interests of their electors and the interests of the unions. Different states resolved this in different ways - but NSW at least decided at itts conference in 1893 that the Trades and Labor Council that had formed the party would not control it (McMullin P.18). It was not until a 1916 NSW conference that the industrial wing gained control (McMullin P.105). Five years later the socialist objective was written into the platform.

Adding to the melting pot the ALP Right has issued its plan for party reform. It talks long on increasing democratisation, but gives twenty delegates on a new National Policy Forum to representatives of affiliated unions chosen by National Executive. When added to the parliamentarians and other officers they dwarf the twenty directly elected rank and file members.

Nothing else in the document offers much hope. More vague discussion of policy ideas, campaigning and engagement without any re-commitment to philosophy. More shadow democracy, and online tools (these exist already - they just don't achieve anything).

The Labour Movement's origins are entirely embedded in advancing the cause of the workers against those of capital. The origin of democracy was in freeing individuals from the arbitrary power and control of others. In the 21st century we suffer from the fact that too many "workers" don't identify themselves as such. A person running a small plumbing business, an owner-operator truckie, an IT contractor, a salaried professional are all workers. They are not capitalists like the old pastoralists. But capital has also changed - the interests of capital are now advanced by a managerial class not by real business owners.

Labor's modern view of socialisation should not be state owned enterprises - we have seen how these enterprises degenerate into the perception that state ownership's purpose is to over reward the worker rather than to constrain market power. Labor's modern view of socialisation needs to be grounded in the idea that no one in society should be able to acquire and exert power over others - be that physical, coercive or economic.

True reform of the ALP can only begin by removing affiliated unions from having any formal role in the governance of the party. True reform of the ALP needs to start by developing a better narrative of what it stands for. True reform of the ALP needs to embrace a return to the struggle to balance electoral success and long term goals, and to embrace the role of the party to educate not just respond.

So far none of the formal proposals from right and left, or the thought bubbles of various people in leadership roles amounts to anything more than mere posturing.

Novae Meridianae Demetae Dexter delenda est

The Corporation

In my many and varied writings there is one issue that is central, and that I very seldom discuss directly. That issue is an understanding of the Corporation as an economic and political institution. My understanding of the Corporation informs my overall "socialist" bent - wherein I read the "socialisation of the means of production etc" to not mean social ownership but directed to social not private goals. (see note)

As such I was pleased to see a short item by Lynn Stout in today's SMH. The piece says that it is time to recognise shareholder value as an ideology, not as a legal requirement. She notes that focussing on shareholder value often translates into share price and how focussing on share price may not really be in the interests of "shareholders" once they as a class are properly understood.

All this will be anathema to a modern business executive, especially one who is trained by a leading business school or one who reports to a Board of Directors that responds more to the commentary of analysts than the advice of managers.

Stout's academic writing however addresses much of the history.

In her paper Why we should stop teaching Dodge vs Ford she outlines the US case in which the statement about the purposes of the firm came to prominence. It said;

There should be no confusion ….A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of the directors is to be exercised in the choice of means to attain that end, and does not extend to … other purposes.

She outlines three reasons why this statement should not be relied on. First it is an old case, second it was not a particularly expert court that ruled that way, and thirdly the statement in fact played no part in the actual judgement. It was what the lay would call commentary. Dodge vs Ford was not really a case of directors responsibility to shareholders, but about majority shareholders suppressing minority rights.

Stout goes on with some other reasons why it is not good law, but from my point of view the issue is that it is simply not good reasoning.

The history of corporations certainly provides plenty of evidence that the policy intent of enabling incorporation is anything but maximising profit. From the observation of Adam Smith that;

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Governments did not permit individuals to work together in creating "firms."

However, certain activities were identified as entailing too much risk or too high a capital sum, or both, to be conducted other than through the combined capital of many people. So the trading companies were chartered, as were corporations to undertake municipal works. In this early era where a corporation had to be explicitly chartered the first requirement was to demonstrate a purpose that could not be fulfilled other than through a corporation.

And today no corporation is formed by someone going to investors saying "invest in this corporation so I can maximise shareholder value." They go to the market saying "I have identified this opportunity because there is a need we can fulfill, in doing so I need your money and I will provide this return to you."

By both history and formation a business organisation is carried on primarily for the purpose outlined in its "prospectus".

John Kay in his book Obliquity has emphasised that the best way to some goals is to not work on them directly. To make money for shareholders focus on meeting customer needs, not on making money. In meeting customer needs focus on doing it efficiently, not on making money.

In her Bad or Not-So-Bad Arguments for Shareholder Primacy Stout relays how long running the debate about shareholder value has been. In doing so she notes the protagonist for the view that firms exist to make money for shareholders was one of Berle & Means who had concluded in The Modern Corporation and Private Property that this was not how executives actually acted. Thus was born agency theory in corporate governance and the trend that has seen ever greater efforts to "align the interests of the executive with shareholders" which has seen its practical consequence of ever bigger remuneration to executives - remuneration that is at best only notionally related to shareholder return.

Stout in her writing generally raises the concern that belief in "shareholder value" extends to "shareholder primacy" and then the conclusions from that, like shareholder rights to call EGMs to vote for the remuneration report etc. Stout is generally concerned that these are policy proposals based on misconceived views of the firm.

Surprisingly, I find myself in agreement. (Note Stout also does some great work separately analysing the Efficient Capital Market Hypothesis and why in the premise of heterogeneous investment preferences you will get under-pricing of assets.)

Much else follows once you dismiss the inaccurate representation of the purpose of the firm. Another consequence is an increase in the transparency of the true purpose of the firm - that is active engagement with investors on an ongoing basis on strategy.

Finally, those on the socialist side need to reject the language adopted by Friedman (see the reference by Stout in the Ford & Dodge) piece. Firms are collusive acts of capital, a collusion authorised by the state because of the value that can be obtained by society. That authorisation entails obligations. That collusion creates the right and need for other economic agents to also be allowed to "collude" in their dealings.




Note: It is sometimes unfashionable to refer to "society." I make no apologies.

The film The Iron Lady about Maggie Thatcher will soon be released. She, with Ronald Reagan, epitomises the rise of the "cult of the individual" ... a cult among whose thought leaders was Ayn Rand. Thatcher expressed the view that there is no such thing as society. (full quote below)

Her views really went further and entailed the mutual obligation element, but overall suppresses the reality that humans are social animals. We are "designed" to live in groups, we act co-operatively by nature and we value fairness.

I think we have gone through a period when too many children and people have been given to understand "I have a problem, it is the Government's job to cope with it!" or "I have a problem, I will go and get a grant to cope with it!" "I am homeless, the Government must house me!" and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then also to help look after our neighbour and life is a reciprocal business and people have got the entitlements too much in mind without the obligations.



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Canada and mobiles/wireless

An interesting report today that the Canadian Government is considering reducing the restrictions on foreign ownership of telcos.

The article neatly points out how the current ownership limit would impede new entrants into the market. The discussion has some relevance to the yet to be undertaken (or revealed) analysis of competition limits to apply to the Australian Digital Dividend spectrum auction.

I don't know the Canadian market well enough to comment, but from the Australian market perspective "smaller providers" are no longer a reasonable goal. What works is national licences, and few of them.

It is also hard to believe any market still has a foreign ownership restriction on mobile licences. The trend is even towards reducing that requirement on fixed licences.

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The NBN and the phone service

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

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

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

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

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

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





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