Renai le May writing for itWire has reported on Posum’s excellent expose of the cant inherent in calls for a cost benefit analysis of the NBN.
However, his suggestion that the solution to the problem could have been simply found in the separation of Telstra ignores the complexity of that issue. The single biggest difficulty with an externally imposed separation of Telstra was always that the there is no really simple dividing line in the existing business – systems are vertically integrated, the voice switches at the edge of the network are inherently part of the trunk switching, and even the way DSL is offered as a line sharing service differs technically in the way Telstra supplies to itself and others.
At a seminar organized by the Competitive Carriers Coalition and AAPT in 2005 on the need to improve broadband access in Australia it was identified that the time to achieve separation was when a new access network was built, not separating the old network. The staff of Shadow Minister Stephen Conroy were eager listeners.
We also need to remember that the national conversation about the need for a new access network was started by the owner of the copper network, Telstra. They did this in their FTTN proposal to the Howard Government in mid 2005. In their initial proposal the wholesale service was going to be of a lower standard than the one they supplied to themselves. Over the ensuing year it was not regulatory “certainty” they sought so much as simply a higher access price.
The ALP’s NBN Mark 1 plan was always as much about securing the restructuring of the industry as it was about Government funding of the network. It was the ALP’s expectation that an offer of a Government injection of $4.5B to build a new access network that needed to be structurally separate would create sufficient incentive for Telstra to voluntarily do so. The difficulty with this strategy was that it didn’t count on the brinkmanship that the then Telstra Board and Management were prepared to play. As the deadline for bids grew closer Telstra demanded that the separation requirement be removed. How they erred into believing this was at all possible is one of the imponderables of life – I have my own theories but they are only that.
When they put in their short form bid as part of this stand-off Telstra made a fatal error of not meeting technical bidding requirements (despite employing at least three legal firms on the bid, none of them reviewed the final letter), the Government had no alternative but to exclude them.
In the intervening four years since FTTN had been proposed by Telstra the FTTN technology had moved on apace. No one disputes that eventually we will want to take fibre all the way to the home, the question has only been when. (As an aside a major fault with the Henry Ergas CBA is that he never allows for the fact that using alternative technologies only results in the need to defer the FTTN build not can it completely). The expert panel concluded that over an eight year build cycle it was more cost effective to start building FTTN now and not do a two stage build.
This decision then completely changed the relationship between an NBN build and Telstra. No longer was Telstra critical as the copper loop was not part of the build. The deal that NBN Co has done with Telstra does however reduce NBN Co’s biuild cost and de-risks the revenue line, but it did not need the deal more than Telstra did.
Finally can we all remember that in Australia’s metropolitan areas there are many people not able to receive any fixed broadband, either because the copper runs are too long, or because there is fibre or an active line sharing device on the path.
Tuesday, September 21, 2010
Monday, September 20, 2010
And now to broadband - briefly
Ah, so while I was away the Government became the Government again, largely because the coalition which trumpets itself as the party of the bush because it contains some Nationals couldn't get a broadband policy together.
As I wrote before the election, the coalition were captives of their past in framing their communications policy. It is therefore reassuring to see Chris Pyne referring to the idea that the coalition will refresh their policy approach. Similar comments were made by the actual shadow Malcolm Turnbull as "In a wide-ranging interview with The Age, Mr Turnbull signalled the Coalition would develop a new broadband policy for the next election rather than stick with the approach taken to this year's poll."
hat has not stopped Turnbull already blathering on about the need for a "cost benefit analysis". A very good piece on why a CBA may not be what the commentariat think it is was re-run today. It might obviate my need to do a similar piece.
Possum Comitatus at his Pollytics blog picks up the main points that a CBA is different from a financial analysis or business case, that the timescales used are longer and that the CBA would be meaningless because of the degree of uncertainty. Put it simply we pay politicians to make decisions - if everything could be decided by simple analysis you'd leave it the bureaucrats alone.
There are some bits he leaves out. The first is that if you are using CBA for comparing projects because of a limited capital pool, then you a) need to do the CBA on all projects not just one, and (b) rather than just an NPV on the benefits over costs you should use a benefit-cost ratio. I have never seen either actually done for any public policy of any magnitude. They are usually restricted to relatively small scale projects.
The second is that a CBA is based on a thing called the "compensation principle" - a benefit to me offsets a cost to you if my benefit is bigger than your cost bcause I could notionally "compensate" you for your loss. This is made worse because a dollar gain to a millionaire is regarded as the same "value" as a dollar loss to a pensioner - even though we know the two "value" that dollar differently. In brief CBA is inherently anti-egalitarian - hence the reason why Australia's private CEOs club (mis-labelled the Business Council of Australia) so favours them.
Let me save or later the conversation on whether advancing the regional deployment changes the priority on wireless.
As I wrote before the election, the coalition were captives of their past in framing their communications policy. It is therefore reassuring to see Chris Pyne referring to the idea that the coalition will refresh their policy approach. Similar comments were made by the actual shadow Malcolm Turnbull as "In a wide-ranging interview with The Age, Mr Turnbull signalled the Coalition would develop a new broadband policy for the next election rather than stick with the approach taken to this year's poll."
hat has not stopped Turnbull already blathering on about the need for a "cost benefit analysis". A very good piece on why a CBA may not be what the commentariat think it is was re-run today. It might obviate my need to do a similar piece.
Possum Comitatus at his Pollytics blog picks up the main points that a CBA is different from a financial analysis or business case, that the timescales used are longer and that the CBA would be meaningless because of the degree of uncertainty. Put it simply we pay politicians to make decisions - if everything could be decided by simple analysis you'd leave it the bureaucrats alone.
There are some bits he leaves out. The first is that if you are using CBA for comparing projects because of a limited capital pool, then you a) need to do the CBA on all projects not just one, and (b) rather than just an NPV on the benefits over costs you should use a benefit-cost ratio. I have never seen either actually done for any public policy of any magnitude. They are usually restricted to relatively small scale projects.
The second is that a CBA is based on a thing called the "compensation principle" - a benefit to me offsets a cost to you if my benefit is bigger than your cost bcause I could notionally "compensate" you for your loss. This is made worse because a dollar gain to a millionaire is regarded as the same "value" as a dollar loss to a pensioner - even though we know the two "value" that dollar differently. In brief CBA is inherently anti-egalitarian - hence the reason why Australia's private CEOs club (mis-labelled the Business Council of Australia) so favours them.
Let me save or later the conversation on whether advancing the regional deployment changes the priority on wireless.
A grab-bag of telco stuff
Ahhh what a great day to return to work. Reports emerged today about both the industry and consumer submissions to the ACMA's Reconnecting the Customer inquiry.
The industry submission (which I couldn't find at the Comms Alliance or the AMTA website. UPDATED - available here) is reported to blame "technology-challenged customers for the surge in complaints about phone and internet services." As I argued in my CPRF paper (subsequently printed in the TJA) this predicament is of the telcos making.
There remains a possibility that the current predicament occurs because the marketing departments of telcos are over-estimating the ability of both customers and call centre staff to understand the details of increasingly complex products. This would then compound the difficulties created by language in the conversation between customers and their service providers.
An extension of that hypothesis would be that the industry collectively needs to take action to manage its use of language to better enable customers and providers to converse. The ACCC
has seen fit to take the industry to task over language that might be misleading within the definition of the law. However, well before that threshold the industry’s way of using language (e.g. ‘uncapped’, ‘unlimited’, ‘cap’ and ‘coverage’) can be sufficiently confusing customers so that providers cannot be seen as offering quality.
Meanwhile Jessica Irvine writing in the SMH of her own personal telco experience argues that all would be well if we just got the competition structure right. I agree with her that there is an important issue of market design here, but I don't think it is as simple as structural separation and all competition is good. There are reasons of information asymmetry that mean competition alone does not improve customer service - as customers are limited in their ability to asses service standards. Equally simple price comparison is not sufficient.
Finally we come to the campaign launched today by ACCAN over the price of calls to 1800 and 13/1300 numbers from mobiles. The issue over the higher than fixed calls pricing of these has emerged now because they are not included in the so-called "caps" on mobile plans. With the increased prevalance of 13/1300 and 1800 numbers this is only now becoming an issue.
The matter could have been resolved by the operators providing 13/1300 and 1800 services years ago by invoking the declaration on mobile originated calls - a declaration that applied only to these B party pays type services. The fixed line operators had no incentive to do so because the price of the access would have looked like the price of terminating access. In those days this was about 23c per minute.
As the declaration was not used it has now been revoked so the ACCC has lost its ability to fix the problem. The possible solution might be for the ACMA to provide claritry through the numbering plan about the charging principle - but even then the ACMA is out of step as everyone charges the old local call fee (25c) for fixed 13 calls - not the current price cap figure (22c) nor the more logical rule that they actually be charged the same as an actual local call.
The mobile network price structures are becoming more perverse, with proliferation of free "on-net" calls and strange caps being subsidised by these outrageous 1300 and 1800 charges.
Meanwhile I note that the ACCC has initiated action against Optus for its think bigger and supersonic campaigns. I don't think the action is based on my own criticism of these plans. I do note that my friend Bob Kuhn (the voice of the Queen My Lord is Much Much Better) noted that the supersonic claim was simply dumb - you'd actually like your internet connection to run at the speed of light not the speed of sound! (Let's not confuse "speed" as in metres per second with "speed" as in bits per second again!).
In the same conversation I relayed the story of Stephen Conroy comparing fibre to wireless and saying something to the effect that fibre was faster because it is light. For the record they are both forms of "light" - that is electro-magnetic energy (waves or particles). The "c" of reltivity is the speed of light in a vacuum - it is slower in the air (radio) and even slower in glass (fibre) - the slowing depends on frequency, hence why a prism splits the frequencies of the rainbow.
Now there is heaps more of stuff to read on the NBN and stuff.
Oh - back to the topic of this post. It looks to me like ACCAn's campaign and their "super-complaint" has been timed to accompany their submission on Reconnecting the Customer. They have made their "super complaint" to back the case for "super complaints". I haven't read the detail - but I'm not sure the addition of a specific complaint provision is required to achieve the outcome.
Meanwhile everyone continues to talk at cross purposes. ACCAN specifically wants the Act to de-prioritise "self-regulation" while they really are criticising "co-regulation". As I've argued elsewhere, self-regulation hasn't really been tried. The difficulty I have with the position of the pro-regulation crowd is that it does stiffle the innovative benefits of competition, but I also don't buy the idea that competition alone provides better customer service or that "more information" solves the information problem.
What everyone should be able to agree on is that there is a great deal of customer confusion and there is a great deal of customer dis-satisfaction. If we could spend a few days discussing what we agree on then we might be able to move forward on what the solution is.
The industry submission (which I couldn't find at the Comms Alliance or the AMTA website. UPDATED - available here) is reported to blame "technology-challenged customers for the surge in complaints about phone and internet services." As I argued in my CPRF paper (subsequently printed in the TJA) this predicament is of the telcos making.
There remains a possibility that the current predicament occurs because the marketing departments of telcos are over-estimating the ability of both customers and call centre staff to understand the details of increasingly complex products. This would then compound the difficulties created by language in the conversation between customers and their service providers.
An extension of that hypothesis would be that the industry collectively needs to take action to manage its use of language to better enable customers and providers to converse. The ACCC
has seen fit to take the industry to task over language that might be misleading within the definition of the law. However, well before that threshold the industry’s way of using language (e.g. ‘uncapped’, ‘unlimited’, ‘cap’ and ‘coverage’) can be sufficiently confusing customers so that providers cannot be seen as offering quality.
Meanwhile Jessica Irvine writing in the SMH of her own personal telco experience argues that all would be well if we just got the competition structure right. I agree with her that there is an important issue of market design here, but I don't think it is as simple as structural separation and all competition is good. There are reasons of information asymmetry that mean competition alone does not improve customer service - as customers are limited in their ability to asses service standards. Equally simple price comparison is not sufficient.
Finally we come to the campaign launched today by ACCAN over the price of calls to 1800 and 13/1300 numbers from mobiles. The issue over the higher than fixed calls pricing of these has emerged now because they are not included in the so-called "caps" on mobile plans. With the increased prevalance of 13/1300 and 1800 numbers this is only now becoming an issue.
The matter could have been resolved by the operators providing 13/1300 and 1800 services years ago by invoking the declaration on mobile originated calls - a declaration that applied only to these B party pays type services. The fixed line operators had no incentive to do so because the price of the access would have looked like the price of terminating access. In those days this was about 23c per minute.
As the declaration was not used it has now been revoked so the ACCC has lost its ability to fix the problem. The possible solution might be for the ACMA to provide claritry through the numbering plan about the charging principle - but even then the ACMA is out of step as everyone charges the old local call fee (25c) for fixed 13 calls - not the current price cap figure (22c) nor the more logical rule that they actually be charged the same as an actual local call.
The mobile network price structures are becoming more perverse, with proliferation of free "on-net" calls and strange caps being subsidised by these outrageous 1300 and 1800 charges.
Meanwhile I note that the ACCC has initiated action against Optus for its think bigger and supersonic campaigns. I don't think the action is based on my own criticism of these plans. I do note that my friend Bob Kuhn (the voice of the Queen My Lord is Much Much Better) noted that the supersonic claim was simply dumb - you'd actually like your internet connection to run at the speed of light not the speed of sound! (Let's not confuse "speed" as in metres per second with "speed" as in bits per second again!).
In the same conversation I relayed the story of Stephen Conroy comparing fibre to wireless and saying something to the effect that fibre was faster because it is light. For the record they are both forms of "light" - that is electro-magnetic energy (waves or particles). The "c" of reltivity is the speed of light in a vacuum - it is slower in the air (radio) and even slower in glass (fibre) - the slowing depends on frequency, hence why a prism splits the frequencies of the rainbow.
Now there is heaps more of stuff to read on the NBN and stuff.
Oh - back to the topic of this post. It looks to me like ACCAn's campaign and their "super-complaint" has been timed to accompany their submission on Reconnecting the Customer. They have made their "super complaint" to back the case for "super complaints". I haven't read the detail - but I'm not sure the addition of a specific complaint provision is required to achieve the outcome.
Meanwhile everyone continues to talk at cross purposes. ACCAN specifically wants the Act to de-prioritise "self-regulation" while they really are criticising "co-regulation". As I've argued elsewhere, self-regulation hasn't really been tried. The difficulty I have with the position of the pro-regulation crowd is that it does stiffle the innovative benefits of competition, but I also don't buy the idea that competition alone provides better customer service or that "more information" solves the information problem.
What everyone should be able to agree on is that there is a great deal of customer confusion and there is a great deal of customer dis-satisfaction. If we could spend a few days discussing what we agree on then we might be able to move forward on what the solution is.
States rights
One thing that gets consistently high support in opinion polls is the idea of abolishing State Governments. In fact, faced with the choice of the ALP and the coalition in NSW it looks like an "Abolish State Government" party might be our best hope. I'm seriously considering forming it, so contact me if you are interested. (There is an e-mail link here somewhere - or just post a comment).
However, we do have wildly inconsistent views on the issue of State rights - as best exemplified by the Greens. It has been reported today that the Greens plan to introduce legislation to repeal the Howard legislation that overturned the NT euthanasia laws. In doing so he said "This won't bring in euthanasia, but it will restore the rights of the territorians to be able to legislate for euthanasia the same as everyone in the states."
Conveniently for Brown he'll be able to use the same argument in the case of the Queensland Wild Rivers legislation which we are also told will see a private members bill from Tony Abbott seeking to overturn the protection of these rivers on aboriginal land so that the traditional owners can exploit their economic potential.
But where, I ask, does that leave Bob Brown on the cause in which he made his fame? He led the campaign against the Franklin Dam - a dam that was stopped by the Federal Government using its external affairs powers to over-rule state laws.
States rights is a convenient slogan for anytime a political party favours the action of a state - and are totally forgotten when the politics runs the other way.
However, we do have wildly inconsistent views on the issue of State rights - as best exemplified by the Greens. It has been reported today that the Greens plan to introduce legislation to repeal the Howard legislation that overturned the NT euthanasia laws. In doing so he said "This won't bring in euthanasia, but it will restore the rights of the territorians to be able to legislate for euthanasia the same as everyone in the states."
Conveniently for Brown he'll be able to use the same argument in the case of the Queensland Wild Rivers legislation which we are also told will see a private members bill from Tony Abbott seeking to overturn the protection of these rivers on aboriginal land so that the traditional owners can exploit their economic potential.
But where, I ask, does that leave Bob Brown on the cause in which he made his fame? He led the campaign against the Franklin Dam - a dam that was stopped by the Federal Government using its external affairs powers to over-rule state laws.
States rights is a convenient slogan for anytime a political party favours the action of a state - and are totally forgotten when the politics runs the other way.
Sunday, September 19, 2010
Component Pricing
I do tend to rant here a bit about aspects of competition policy and regulation. One good move in Oz has been the rules on component pricing - this requires the advertised price to be the total price.
Its most notable purpose was in relation to "cheap flights" which quoted airline prices without the taxes which were then charged separately. Unfortunately its not all that isn't included (think expensive cab fare to out of the way airport).
This comical look could equally be written about telcos.
Many thanks to A.W. (Red) Steel for the original link.
Its most notable purpose was in relation to "cheap flights" which quoted airline prices without the taxes which were then charged separately. Unfortunately its not all that isn't included (think expensive cab fare to out of the way airport).
This comical look could equally be written about telcos.
Many thanks to A.W. (Red) Steel for the original link.
Wednesday, September 15, 2010
Sunday, September 12, 2010
The Top End
All quiet on the blog front as I rest up on the classic round trip Darwin-Kakadu-Katherine-Litchfield-Darwin.
Feeling refreshed from a day cruising and swimmining the Nitmiluk Gorge (aka Katherine Gorge). Two comms issues come to mind.
You can't miss the microwave towers in regional Australia - you can understand why they want fibre. I gather down South there is a suggestion the Gillard deal with Windsor/Oakshot brings forward NBN wireless. That would be the wrong move. What needs to happen is acceleration of satellite and deal with the changed economics of an outside-in fibre build by stretching the project to ten years from eight.
Meanwhile Kakadu park entry is $25 for 14 days. A telco would package that as $12.50 per day, minimum purchase 2 days with twelve extra days - value of $175!
Feeling refreshed from a day cruising and swimmining the Nitmiluk Gorge (aka Katherine Gorge). Two comms issues come to mind.
You can't miss the microwave towers in regional Australia - you can understand why they want fibre. I gather down South there is a suggestion the Gillard deal with Windsor/Oakshot brings forward NBN wireless. That would be the wrong move. What needs to happen is acceleration of satellite and deal with the changed economics of an outside-in fibre build by stretching the project to ten years from eight.
Meanwhile Kakadu park entry is $25 for 14 days. A telco would package that as $12.50 per day, minimum purchase 2 days with twelve extra days - value of $175!
Thursday, September 02, 2010
Betrayal
Simon Benson's Betrayal is a tale that is meant to tell of the betrayal of Morris Iemma by Kevin Rudd, but is ultimately an insight into the betrayal of Karl Bitar and Mark Arbib that subsequently Kevin Rudd himself experienced.
A part of that story was the relationship that developed between these two players as Secretary and Assistant Secretary of the ALP, and the other Assistant Secretary - the position bequeathed to the Left under the "power sharing model" in NSW, Luke Foley. In reporting on Foley's maiden speech in the Legislative Council the Australian refers to the fact that "Mr Foley was notable during his tenure at the party's Sussex Street headquarters for the close working relationships he formed with his right-wing counterparts."
It is therefore deemed newsworthy by the Oz that Foley has "In his inaugural speech in state parliament yesterday, Luke Foley slammed the "empty pursuit of power" that has characterised NSW Labor machine politics in recent years." In reality he didn't - in his speech the comment was in reference to his support of party politics, and the important role parties played in making sure democracy wasn't just a parliament of the rich.
Yes he did say;
Above all, I am Labor, committed to equality, solidarity and social justice. I believe in the principles of the party and in a party of principle. I have been a member of the Australian Labor Party for 22 years. I served the party in a full-time capacity as Assistant General Secretary of its New South Wales branch from 2003 until June this year. I have some experience of Labor's remorseless internal politics. I have always felt that our members and supporters deserve a party machine worthy of Labor's message. Political power is a means to an end; it should never be the end in itself. I reject the empty pursuit of power. There is no honourable political future for a Labor Party that will not uphold courageously the principles from which it draws life. My political involvement has a purpose and a direction. My idealism imagines a better kind of world.
In this he was doing the very standard new member speech as the prelude to talking about "the principles" he wanted to "uphold courageously". What were they? "My values are social democratic values." To paraphrase Foley
Providing these things (that are so often the preserve of State Government: modern schools, state-of-the-art hospitals and community health services, accessible public transport, safe streets, a flourishing artistic and cultural sector, social housing, and our natural environment protected for all to enjoy) which only the community, not individuals acting alone, can provide—should always be the essential purpose of any State government.
It is that essential purpose that led this State's very first Labor Government, Jim McGowen's, to build the garden suburb of Daceyville to provide housing for working-class families. It is that essential purpose that led the Cahill Labor Government to build the Sydney Opera House, and it is that essential purpose that has led this Labor Government to rebuild or upgrade nearly every major hospital in this State since 1995.
Hardly a ringing endorsement of a grand social democratic vision. Of more interest was his rejection of the "totalitarian right" where he said;
I do not believe that, in today's world, human rights are the exclusive preserve of Westerners. Anti-totalitarianism is at the heart of my politics. Today a totalitarian movement of the far Right is threatening pluralist democracies and the lives and freedoms of people in many societies, including our own. This global Islamist movement is misogynist, racist and homophobic. This movement's extremist ideology is, of course, based on an utter perversion of the Islamic faith. Too many progressives are silent about this or deny this. Governments everywhere have a profound duty to protect their citizens from the threat of extremist Islamist terrorism. I intend to maintain an active interest in this over my time in this place.
Meanwhile writing about the last minority Government in the Oz was the great Rodney Cavalier. Worth a read, but the detail on Rod said "His book, Power Crisis, on the crisis of organisation and belief facing the ALP, will be published in October." Now that should be worth a read.
Historical footnote: Rodney Cavalier was also a member of the Senate of the University of Sydney with the two males in this photo.
Novae Meridianae Demetae Dexter delenda est
A part of that story was the relationship that developed between these two players as Secretary and Assistant Secretary of the ALP, and the other Assistant Secretary - the position bequeathed to the Left under the "power sharing model" in NSW, Luke Foley. In reporting on Foley's maiden speech in the Legislative Council the Australian refers to the fact that "Mr Foley was notable during his tenure at the party's Sussex Street headquarters for the close working relationships he formed with his right-wing counterparts."
It is therefore deemed newsworthy by the Oz that Foley has "In his inaugural speech in state parliament yesterday, Luke Foley slammed the "empty pursuit of power" that has characterised NSW Labor machine politics in recent years." In reality he didn't - in his speech the comment was in reference to his support of party politics, and the important role parties played in making sure democracy wasn't just a parliament of the rich.
Yes he did say;
Above all, I am Labor, committed to equality, solidarity and social justice. I believe in the principles of the party and in a party of principle. I have been a member of the Australian Labor Party for 22 years. I served the party in a full-time capacity as Assistant General Secretary of its New South Wales branch from 2003 until June this year. I have some experience of Labor's remorseless internal politics. I have always felt that our members and supporters deserve a party machine worthy of Labor's message. Political power is a means to an end; it should never be the end in itself. I reject the empty pursuit of power. There is no honourable political future for a Labor Party that will not uphold courageously the principles from which it draws life. My political involvement has a purpose and a direction. My idealism imagines a better kind of world.
In this he was doing the very standard new member speech as the prelude to talking about "the principles" he wanted to "uphold courageously". What were they? "My values are social democratic values." To paraphrase Foley
Providing these things (that are so often the preserve of State Government: modern schools, state-of-the-art hospitals and community health services, accessible public transport, safe streets, a flourishing artistic and cultural sector, social housing, and our natural environment protected for all to enjoy) which only the community, not individuals acting alone, can provide—should always be the essential purpose of any State government.
It is that essential purpose that led this State's very first Labor Government, Jim McGowen's, to build the garden suburb of Daceyville to provide housing for working-class families. It is that essential purpose that led the Cahill Labor Government to build the Sydney Opera House, and it is that essential purpose that has led this Labor Government to rebuild or upgrade nearly every major hospital in this State since 1995.
Hardly a ringing endorsement of a grand social democratic vision. Of more interest was his rejection of the "totalitarian right" where he said;
I do not believe that, in today's world, human rights are the exclusive preserve of Westerners. Anti-totalitarianism is at the heart of my politics. Today a totalitarian movement of the far Right is threatening pluralist democracies and the lives and freedoms of people in many societies, including our own. This global Islamist movement is misogynist, racist and homophobic. This movement's extremist ideology is, of course, based on an utter perversion of the Islamic faith. Too many progressives are silent about this or deny this. Governments everywhere have a profound duty to protect their citizens from the threat of extremist Islamist terrorism. I intend to maintain an active interest in this over my time in this place.
Meanwhile writing about the last minority Government in the Oz was the great Rodney Cavalier. Worth a read, but the detail on Rod said "His book, Power Crisis, on the crisis of organisation and belief facing the ALP, will be published in October." Now that should be worth a read.
Historical footnote: Rodney Cavalier was also a member of the Senate of the University of Sydney with the two males in this photo.
Novae Meridianae Demetae Dexter delenda est
Another question for AAB
In posing some (excellent) questions to the Alliance for Affordable Broadband Computerworld states;
I think we can all agree right now that everyone wants “a competitive National Fibre Backhaul Network (NFBN) platform”, and it is something all parties have put forward plans on.
I'd like to put up my hand as one person who doesn't agree. The basis for my disagreement is the meaning of the word "competitive". The simplest economic justification for competition policy is economic efficiency - this is defined using a standard known as Pareto optimality and refers to a case where "no one can be made better off without making anyone worse off". For the purpose of policy analysis this is usually accompanied by a "compensation principle" which adds the rider "or those who are made better off could compensate anyone made worse off".
But at its simplest the justification is based on a theory that in a competitive market prices are set to equal marginal cost - that is the technical meaning of a "competitive price". One of the core assumptions is that the supply curve "behaves" - most specifically that it is upward sloping. The whole theory struggles once you have production technologies with increasing returns to scale - the marginal cost is always below average cost so marginal cost pricing is loss making. Its more practical limitation is that the high fixed (and sunk) costs means there is a dramatic divergence between short-run marginal cost and long-run marginal cost. In an actually competitive market once the upfront investment is made each competitors short run profit is maximised by pricing closer to short-run marginal cost - which is even more loss making than long-run marginal cost.
The second feature of the production function is that costs are "sub-additive" - in other words all the output can be produced more efficiently by one provider rather than two. This means it is counter-intuitive to duplicate infrastructure on the belief that "competition" will drive down prices.
he example cited by Senator Conroy earlier in the year was to compare pricing per Mbps of capacity on the (monopoly) Perth to Port Headland route to the (competitive) Perth to Sydney route. The analysis completely ignored the fact that the cost to build is flat rate per kilometre, whereas the revenue available depends upon the number of "communicators" at each end of the link.
And ultimately this is the problem for regional Australia. We don't make backhaul cheaper to a country town by duplicating the existing fibre. Worse any investment in duplication ultimately denies other towns access to fibre. Just ask those towns still connected by radio backhaul what their priority is?
Now people familiar with policy debates will think this sounds similar to the arguments from the 1980s about how competition would drive up the prices of long distance calls on thin routes but down on thick routes. The actual outcome has been the elimination of all price discrimination on "national calls" including the erosion of the peak/off-peak distinction. The reason for this distinction is the way calls are sold - telephone calls are sold as a "bundle" - you buy the right to ring everyone not the ability to call different places. The nature of the competition for the bundle has seen the ability to maintain price discrimination break-down - the providers need to average their costs. This does mean that providers make losses on some actual phone calls - a position the accountants always find troubling, the economists fully understand and the marketers simply don't understand.
The difficulty with rural towns is that not very provider has to go there to offer a service. Most importantly the "competitive providers" can choose where they offer service. They do get involved in the "cherry-picking" we were always threatened would be a consequence of competition.
Now my analysis of the backhaul market is open to critique - especially by one of the Cynical Seven who built a business selling backhaul, and another for whom it is one of his few remaining assets. These competing investments have found customers and have in cases been profitable (but don't tell NextGen and IP1 that). The reasons for that vary - not least the fact that the primary provider does undertake a degree of cross-subsidy and doesn't always have all the capacity required - but primarily bcause it is a reluctant wholesaler that is not trusted by its customers. The second reason is that purchasers have also used the competing providers as a way to provide diversity.
However, even diversity is better provided by including all the traffic in a single well designed network.
All this means that the country is not better served by a "competitive backhaul network" if "competitive" means actual cost based prices. The country is probably better served by a structurally separated monopoly backhaul provider that charges the same "price per bit" at every point of interconnection. This is the proposal that was put forward by Axia and that no one seems to really understand.
Now that monopoly needs to be constrained to a "cost based" price - and that's where the loss of the dynamics of competition cuts in. Structural separation alone does not guarantee this, and a regulator suffers from the fact that the quantity actually purchased has a huge impact on what the price needs to be. There are indeed market mimicking mechanisms around this....but now is not the time for this.
Is it too much to ask that we actually check all the assumptions?
Novae Meridianae Demetae Dexter delenda est
I think we can all agree right now that everyone wants “a competitive National Fibre Backhaul Network (NFBN) platform”, and it is something all parties have put forward plans on.
I'd like to put up my hand as one person who doesn't agree. The basis for my disagreement is the meaning of the word "competitive". The simplest economic justification for competition policy is economic efficiency - this is defined using a standard known as Pareto optimality and refers to a case where "no one can be made better off without making anyone worse off". For the purpose of policy analysis this is usually accompanied by a "compensation principle" which adds the rider "or those who are made better off could compensate anyone made worse off".
But at its simplest the justification is based on a theory that in a competitive market prices are set to equal marginal cost - that is the technical meaning of a "competitive price". One of the core assumptions is that the supply curve "behaves" - most specifically that it is upward sloping. The whole theory struggles once you have production technologies with increasing returns to scale - the marginal cost is always below average cost so marginal cost pricing is loss making. Its more practical limitation is that the high fixed (and sunk) costs means there is a dramatic divergence between short-run marginal cost and long-run marginal cost. In an actually competitive market once the upfront investment is made each competitors short run profit is maximised by pricing closer to short-run marginal cost - which is even more loss making than long-run marginal cost.
The second feature of the production function is that costs are "sub-additive" - in other words all the output can be produced more efficiently by one provider rather than two. This means it is counter-intuitive to duplicate infrastructure on the belief that "competition" will drive down prices.
he example cited by Senator Conroy earlier in the year was to compare pricing per Mbps of capacity on the (monopoly) Perth to Port Headland route to the (competitive) Perth to Sydney route. The analysis completely ignored the fact that the cost to build is flat rate per kilometre, whereas the revenue available depends upon the number of "communicators" at each end of the link.
And ultimately this is the problem for regional Australia. We don't make backhaul cheaper to a country town by duplicating the existing fibre. Worse any investment in duplication ultimately denies other towns access to fibre. Just ask those towns still connected by radio backhaul what their priority is?
Now people familiar with policy debates will think this sounds similar to the arguments from the 1980s about how competition would drive up the prices of long distance calls on thin routes but down on thick routes. The actual outcome has been the elimination of all price discrimination on "national calls" including the erosion of the peak/off-peak distinction. The reason for this distinction is the way calls are sold - telephone calls are sold as a "bundle" - you buy the right to ring everyone not the ability to call different places. The nature of the competition for the bundle has seen the ability to maintain price discrimination break-down - the providers need to average their costs. This does mean that providers make losses on some actual phone calls - a position the accountants always find troubling, the economists fully understand and the marketers simply don't understand.
The difficulty with rural towns is that not very provider has to go there to offer a service. Most importantly the "competitive providers" can choose where they offer service. They do get involved in the "cherry-picking" we were always threatened would be a consequence of competition.
Now my analysis of the backhaul market is open to critique - especially by one of the Cynical Seven who built a business selling backhaul, and another for whom it is one of his few remaining assets. These competing investments have found customers and have in cases been profitable (but don't tell NextGen and IP1 that). The reasons for that vary - not least the fact that the primary provider does undertake a degree of cross-subsidy and doesn't always have all the capacity required - but primarily bcause it is a reluctant wholesaler that is not trusted by its customers. The second reason is that purchasers have also used the competing providers as a way to provide diversity.
However, even diversity is better provided by including all the traffic in a single well designed network.
All this means that the country is not better served by a "competitive backhaul network" if "competitive" means actual cost based prices. The country is probably better served by a structurally separated monopoly backhaul provider that charges the same "price per bit" at every point of interconnection. This is the proposal that was put forward by Axia and that no one seems to really understand.
Now that monopoly needs to be constrained to a "cost based" price - and that's where the loss of the dynamics of competition cuts in. Structural separation alone does not guarantee this, and a regulator suffers from the fact that the quantity actually purchased has a huge impact on what the price needs to be. There are indeed market mimicking mechanisms around this....but now is not the time for this.
Is it too much to ask that we actually check all the assumptions?
Novae Meridianae Demetae Dexter delenda est
Wednesday, September 01, 2010
We believe in fairies at the bottom of the garden
A group of industry luminaries trading under the name of the "Alliance for Affordable Broadband" has released what Stuart Corner called a manifest proposing an NBN 3.0 to be largely left to the market.
I would probably call it a manifesto, rather than a manifest because it has lots of points that start "we believe".
My comments here are not designed to advocate for or against any of the existing broadband policies doing the rounds. They aren't offered as the views of my employer. They are however observations on the claims of this group, just as I'm prepared to make observations about other claims.
Their beliefs include that infrastructure based competition has worked - despite the fact that the bulk of broadband competition takes place over Telstra's copper network asset. ADSL is not, and has never been, infrastructure based competition.
Where there has been infrastructure based competition has been in HFC - a failed model as both builds stopped after 3 million households were passed by 2 networks and the rest were passed by none. Mobiles is the only space where there can be any claim to sustained infrastructure competition - though one of the signatories is the CEO of a company that failed to build such a network (before his time). Meanwhile the mobile industry is as stubbornly concentrated now as it was in 1992 despite the fact that there has been a policy bias towards new entry.
But the alliance is seriously mistaken if it believes a wireless network capable of delivering 100Mbps could be delivered now if only the additional 4G spectrum were available. It is further mistaken in believing that the 700 MHz or 2.5 GHz could be made available any time sooner than currently planned.
But the final delusion is that we don't want a national monopoly FTTH but they do seem to want a national monopoly on the 4G network as a mandated private sector wholesale only investment.
Can we just remember that the people who started all this were the private sector owners of the national monopoly network who said to the Howard Government in 2005 "we need a new customer access network but will not build it under current law". I'm also waiting for anyone to show me the "cost-benefit analysis" for any communications policy ever implemented in Australia (a CBA not being the same thing as a business case).
I would probably call it a manifesto, rather than a manifest because it has lots of points that start "we believe".
My comments here are not designed to advocate for or against any of the existing broadband policies doing the rounds. They aren't offered as the views of my employer. They are however observations on the claims of this group, just as I'm prepared to make observations about other claims.
Their beliefs include that infrastructure based competition has worked - despite the fact that the bulk of broadband competition takes place over Telstra's copper network asset. ADSL is not, and has never been, infrastructure based competition.
Where there has been infrastructure based competition has been in HFC - a failed model as both builds stopped after 3 million households were passed by 2 networks and the rest were passed by none. Mobiles is the only space where there can be any claim to sustained infrastructure competition - though one of the signatories is the CEO of a company that failed to build such a network (before his time). Meanwhile the mobile industry is as stubbornly concentrated now as it was in 1992 despite the fact that there has been a policy bias towards new entry.
But the alliance is seriously mistaken if it believes a wireless network capable of delivering 100Mbps could be delivered now if only the additional 4G spectrum were available. It is further mistaken in believing that the 700 MHz or 2.5 GHz could be made available any time sooner than currently planned.
But the final delusion is that we don't want a national monopoly FTTH but they do seem to want a national monopoly on the 4G network as a mandated private sector wholesale only investment.
Can we just remember that the people who started all this were the private sector owners of the national monopoly network who said to the Howard Government in 2005 "we need a new customer access network but will not build it under current law". I'm also waiting for anyone to show me the "cost-benefit analysis" for any communications policy ever implemented in Australia (a CBA not being the same thing as a business case).
Monday, August 30, 2010
Interesting Category
I was just browsing "Mystery and Thrillers" in the Amazon Kindle store - the first book on the screen shot is a bit intriguing.
There it is Adam Smith's The Wealth of Nations!
I'm sure there are many economists who would class it as a thriller, and many non-economists would class it as a mystery.
There it is Adam Smith's The Wealth of Nations!
I'm sure there are many economists who would class it as a thriller, and many non-economists would class it as a mystery.
The Web is dead?
That's the conclusion Mark Day claims is now made by Chris Anderson of Long Tail
and Wired fame.
Day uses the model to construct a "media centric" view of the future of the Internet as being a home for "apps" - and the idea that newspaper proprietors are moving from free-on-line to "app" models of news distribution. He summarises it nicely as;
Conceiving, making and marketing apps is a creative entrepreneur's dream with low barriers to entry and global distribution available in an instant. But in the great majority of cases the best applications will be snapped up by the major media companies as they strive to deliver their content by covering all bases and meeting all consumer demands, all at once and all the time.
Now my earlier post on co-operation policy should explain why I actually think we should actively resist the idea that major media players will monopolise the app space. In part the history of the Web versus proprietary on-line services (think AOL) is part of the reason - there is more value created from ay-to-any connectivity than from walled gardens.
The actual original story in Wired is accompanied by a highly misleading graphic that shows proportions of internet traffic and shows the Web as a declining proportion, but so too e-mail. Yet in his argument Anderson still classes e-mail managing apps as part of the change (the dumb example being that an iPad can receive e-mail - I don't know why the iPad doing it is an app when my PC using Outlook isn't it). The proportions are misleading because almost by definition IPTV and P2P downloads are bandwidth consumptive. They are also services that will ultimately demand localised caching.
Anderson quotes Metcalfe's Law - that the "value" of a network is proportional to the square of the connections (or people connected). For a man famous for the long tail argument - which morphs into power laws - this is a dramatic error. The error is that it assumes that all connections are of equal value to any person. But the value of my connection to the other n-1 people in the network is likely to be distributed like a Power Law - the conclusion of which is that the value of a network (see 1 or 2) is proportional to n*log(n) where n is the number of connections. This doesn't mean that networks don't tip but they don't tip as fast.
It also demonstrates why building a flat network with the same amount of connectivity between every point would be wrong. (This concept was promoted by George Gilder in Telecosm
which followed his Microcosm
, an application of Havyatt's Law.)
Meanwhile elsewhere in the news Ericsson has been pitching the idea that mobile network operators need to come up with new ways to bill to allow users more affordable capacity. If Anderson were right the mobile operators wouldn't face this problem because their "content" and "apps" would all sit inside a manageable space. But they don't - basically what users access is still TCP/IP traffic - most of it delivered as HTTP.
So if the Internet isn't dead, and the Web isn't dead, can we agree with Anderson that Netscape cofounder Marc Andreessen was wrong forecasting the rise of the Web browser when he forecast the Web replaced PC application software and operating systems were merely “poorly debugged set of device drivers,”?
Well, no, because these Apps of which he speaks are all "outgrowths" of the net-centric world that was the browser. The Web is not dead, it has just become multi-faceted.
and Wired fame. Day uses the model to construct a "media centric" view of the future of the Internet as being a home for "apps" - and the idea that newspaper proprietors are moving from free-on-line to "app" models of news distribution. He summarises it nicely as;
Conceiving, making and marketing apps is a creative entrepreneur's dream with low barriers to entry and global distribution available in an instant. But in the great majority of cases the best applications will be snapped up by the major media companies as they strive to deliver their content by covering all bases and meeting all consumer demands, all at once and all the time.
Now my earlier post on co-operation policy should explain why I actually think we should actively resist the idea that major media players will monopolise the app space. In part the history of the Web versus proprietary on-line services (think AOL) is part of the reason - there is more value created from ay-to-any connectivity than from walled gardens.
The actual original story in Wired is accompanied by a highly misleading graphic that shows proportions of internet traffic and shows the Web as a declining proportion, but so too e-mail. Yet in his argument Anderson still classes e-mail managing apps as part of the change (the dumb example being that an iPad can receive e-mail - I don't know why the iPad doing it is an app when my PC using Outlook isn't it). The proportions are misleading because almost by definition IPTV and P2P downloads are bandwidth consumptive. They are also services that will ultimately demand localised caching.
Anderson quotes Metcalfe's Law - that the "value" of a network is proportional to the square of the connections (or people connected). For a man famous for the long tail argument - which morphs into power laws - this is a dramatic error. The error is that it assumes that all connections are of equal value to any person. But the value of my connection to the other n-1 people in the network is likely to be distributed like a Power Law - the conclusion of which is that the value of a network (see 1 or 2) is proportional to n*log(n) where n is the number of connections. This doesn't mean that networks don't tip but they don't tip as fast.
It also demonstrates why building a flat network with the same amount of connectivity between every point would be wrong. (This concept was promoted by George Gilder in Telecosm
which followed his Microcosm, an application of Havyatt's Law.)Meanwhile elsewhere in the news Ericsson has been pitching the idea that mobile network operators need to come up with new ways to bill to allow users more affordable capacity. If Anderson were right the mobile operators wouldn't face this problem because their "content" and "apps" would all sit inside a manageable space. But they don't - basically what users access is still TCP/IP traffic - most of it delivered as HTTP.
So if the Internet isn't dead, and the Web isn't dead, can we agree with Anderson that Netscape cofounder Marc Andreessen was wrong forecasting the rise of the Web browser when he forecast the Web replaced PC application software and operating systems were merely “poorly debugged set of device drivers,”?
Well, no, because these Apps of which he speaks are all "outgrowths" of the net-centric world that was the browser. The Web is not dead, it has just become multi-faceted.
Constitutional meandering
Nothing like a hung parliament and a slow vote to promote constitutional meandering.
I was fascinated to read the suggestion today that "Recruiting outside experts into federal cabinet would not be possible unless Australia's Constitution was changed." The supposed source of this is s64 of the constitution.
Terribly inconveniently the constitution itself never refers to "cabinet" as such. The collective decision making executive in the constitution is the Federal Executive Council which is chaired by the Governor-General. These days that body largely only meets for the purposes of the GG exercising the executive power as in "The GG in Council"...but in the history of the "loans affair" it was the convening of the Executive Council and what transpired there that was the politically relevant act.
Interestingly the Executive Council Handbook explains that the title "The Honourable" is applied to members of the Executive Council for the term of their appointment - usually for life. (Which is why some opposition members are still called The Hon - as an aside some Australian Ministers wre also in the past appointed to the Privy Council whereupon they were called The Right Honourable - an honorific now not used in Australia). Any time an Act gives a power to the Governor-General (e.g. to make an appointment) this is actually a reference to the GG in Council.
The position for which one must be a member of either house of parliament is that of Minister of State (under s64), though one can be a Minister for a period of up to three months without holding a seat. Ministers are the politicians to whom other legislative instruments delegate powers - one of the documents produced along with a Ministry list is the "Administrative Orders" which details which Acts a Minister is responsible for (that is, who is the individual to whom a reference in the Act to "the Minister" refers".
Section 64 specifies that Ministers will be members of the Executive Council, but does not limit the Executive Council to Ministers - and as noted above technically everybody previously a member of the Executive Council continues to be so.
Elsewhere Henry Ergas has extolled the virtues of proportional representation. His primary argument appears to be to avoid the policy distortion inherent in marginal seats campaigning - built on the twin assumptions that the marginal voter across the country is different to the marginal voter in a marginal seat, and that expenditure programs can be better targeted geographically than taxation programs hence marginal seat campaigning results in excessive expenditure promises.
The first assumption is probably invalid. In the increasingly a-philosophical electorate the marginal seats are possibly well defined as concentrations of marginal voters - and the attempt in line with public choice theory to appeal to the "median" voter probably results in the same outcome. Ergas claims that the marginal seat focus results in "infrastructure where we don't need it" - which doesn't explain why the area of Sydney's "marginal seats" - from Greenway to Macquarie - is the Western Sydney area devoid of transport infrastructure and under-served with quality schools and hospitals.
Ergas second reason seems to be more partisan - being an observation that PR in Europe combined with the rise of the Greens has sen a fracturing of the progressive vote that used to be housed in democratic socialist parties (or social democrats). Hence he believes PR would be good because it would advance the conservative cause.
In my recent post on this topic I did suggest a possibly different variant that accommodated both the idea of formalising our increasingly "presidential" campaign style, the need to be able to secure relatively easily places for the prospective ministry and a better representation of minorities. The proposal bridges between US style "executive presidency" and the Westminster system.
The lower house (where the executive Government is determined) could be elected by a full national PR vote. This vote would be a "list only" ballot - you choose the Party (or group - though you might limit it to a party) - you choose the parties in order of preference. Basically each party would lead their ticket with their leader - that is candidate PM. One would hope that the highest ticket positions would be allocated by parties on the basis of people they most want in a Ministry. This would never deliver an absolute majority - but would work as an electoral college for the selection of a PM - that is the PM is formally elected by the House at a meeting - by an exhaustive vote of members (that is anyone can nominate, everyone votes, person with least votes is eliminated, and so on till one person commands a majority).
The PM gets to appoint from the house the Cabinet which also equals the Ministry which also equals the Executive Council. (Whether it includes representatives from other parties then depends on any agreement reached for support). There needs to be a relatively simple process for votes to replace the PM - which needs to be more intricate than just the "no-confidence motion". A baseline suggestion would be "mini-impeachment" - that is the petitioning members make a written case of the basis on which they think the PM should be dismissed, and the PM gets the chance to provide a written response. Only after these are considered is the vote actually brought on.
Parties in Government don't get to just change their leader and hence the PM, though a PM can still resign mid-term.
The upper house is a house selected from geographically distinct electorates. No one from the upper house can serve in the Ministry. The electorates could be single member or multi-member (2,3 or 5 but no more). Ideally the electorates would not be of equal size but a members vote would be equal to either the size (by total votes) of the electorate or the actual vote they received (that is for example you could have two-member electorates and both people get elected and have their actual 2 party-preferred vote - so the total vote in the house equals the national two-party preferred vote. To provide stability you actually need to allow members to appoint "proxies" for votes in the chamber and "alternates" for extended absences.
This new upper house is the true "legislature" that has no roll in executive Government. It should be limited in its powers on money bills, and quite possibly on the origination of any legislation.
There need to be a number of rules to ensure that things don't become ungovernable - some of which would be based on the concept of joint sittings. (e.g. in the unlikely event the lower house can't choose a PM).
One would hope that a political career would thus start by winning a constituency seat and as skills develop progrssing to the other house, alternatively external "leaders" can still make their way straight to the lower house.
I have some associated theory of party reform - that includes democratic rules that must apply within parties - no 50% union representation etc.
I was fascinated to read the suggestion today that "Recruiting outside experts into federal cabinet would not be possible unless Australia's Constitution was changed." The supposed source of this is s64 of the constitution.
Terribly inconveniently the constitution itself never refers to "cabinet" as such. The collective decision making executive in the constitution is the Federal Executive Council which is chaired by the Governor-General. These days that body largely only meets for the purposes of the GG exercising the executive power as in "The GG in Council"...but in the history of the "loans affair" it was the convening of the Executive Council and what transpired there that was the politically relevant act.
Interestingly the Executive Council Handbook explains that the title "The Honourable" is applied to members of the Executive Council for the term of their appointment - usually for life. (Which is why some opposition members are still called The Hon - as an aside some Australian Ministers wre also in the past appointed to the Privy Council whereupon they were called The Right Honourable - an honorific now not used in Australia). Any time an Act gives a power to the Governor-General (e.g. to make an appointment) this is actually a reference to the GG in Council.
The position for which one must be a member of either house of parliament is that of Minister of State (under s64), though one can be a Minister for a period of up to three months without holding a seat. Ministers are the politicians to whom other legislative instruments delegate powers - one of the documents produced along with a Ministry list is the "Administrative Orders" which details which Acts a Minister is responsible for (that is, who is the individual to whom a reference in the Act to "the Minister" refers".
Section 64 specifies that Ministers will be members of the Executive Council, but does not limit the Executive Council to Ministers - and as noted above technically everybody previously a member of the Executive Council continues to be so.
Elsewhere Henry Ergas has extolled the virtues of proportional representation. His primary argument appears to be to avoid the policy distortion inherent in marginal seats campaigning - built on the twin assumptions that the marginal voter across the country is different to the marginal voter in a marginal seat, and that expenditure programs can be better targeted geographically than taxation programs hence marginal seat campaigning results in excessive expenditure promises.
The first assumption is probably invalid. In the increasingly a-philosophical electorate the marginal seats are possibly well defined as concentrations of marginal voters - and the attempt in line with public choice theory to appeal to the "median" voter probably results in the same outcome. Ergas claims that the marginal seat focus results in "infrastructure where we don't need it" - which doesn't explain why the area of Sydney's "marginal seats" - from Greenway to Macquarie - is the Western Sydney area devoid of transport infrastructure and under-served with quality schools and hospitals.
Ergas second reason seems to be more partisan - being an observation that PR in Europe combined with the rise of the Greens has sen a fracturing of the progressive vote that used to be housed in democratic socialist parties (or social democrats). Hence he believes PR would be good because it would advance the conservative cause.
In my recent post on this topic I did suggest a possibly different variant that accommodated both the idea of formalising our increasingly "presidential" campaign style, the need to be able to secure relatively easily places for the prospective ministry and a better representation of minorities. The proposal bridges between US style "executive presidency" and the Westminster system.
The lower house (where the executive Government is determined) could be elected by a full national PR vote. This vote would be a "list only" ballot - you choose the Party (or group - though you might limit it to a party) - you choose the parties in order of preference. Basically each party would lead their ticket with their leader - that is candidate PM. One would hope that the highest ticket positions would be allocated by parties on the basis of people they most want in a Ministry. This would never deliver an absolute majority - but would work as an electoral college for the selection of a PM - that is the PM is formally elected by the House at a meeting - by an exhaustive vote of members (that is anyone can nominate, everyone votes, person with least votes is eliminated, and so on till one person commands a majority).
The PM gets to appoint from the house the Cabinet which also equals the Ministry which also equals the Executive Council. (Whether it includes representatives from other parties then depends on any agreement reached for support). There needs to be a relatively simple process for votes to replace the PM - which needs to be more intricate than just the "no-confidence motion". A baseline suggestion would be "mini-impeachment" - that is the petitioning members make a written case of the basis on which they think the PM should be dismissed, and the PM gets the chance to provide a written response. Only after these are considered is the vote actually brought on.
Parties in Government don't get to just change their leader and hence the PM, though a PM can still resign mid-term.
The upper house is a house selected from geographically distinct electorates. No one from the upper house can serve in the Ministry. The electorates could be single member or multi-member (2,3 or 5 but no more). Ideally the electorates would not be of equal size but a members vote would be equal to either the size (by total votes) of the electorate or the actual vote they received (that is for example you could have two-member electorates and both people get elected and have their actual 2 party-preferred vote - so the total vote in the house equals the national two-party preferred vote. To provide stability you actually need to allow members to appoint "proxies" for votes in the chamber and "alternates" for extended absences.
This new upper house is the true "legislature" that has no roll in executive Government. It should be limited in its powers on money bills, and quite possibly on the origination of any legislation.
There need to be a number of rules to ensure that things don't become ungovernable - some of which would be based on the concept of joint sittings. (e.g. in the unlikely event the lower house can't choose a PM).
One would hope that a political career would thus start by winning a constituency seat and as skills develop progrssing to the other house, alternatively external "leaders" can still make their way straight to the lower house.
I have some associated theory of party reform - that includes democratic rules that must apply within parties - no 50% union representation etc.
Friday, August 27, 2010
As we finish the week
Let us ponder on years gone by....
A young Tony Abbott in profile and some hoon. Event some student meeting I think in the Wallace Theatre at SU.
A young Tony Abbott in profile and some hoon. Event some student meeting I think in the Wallace Theatre at SU.
Treasury Leaks?
It is impossible to know what the negotiating tactics of the various parties are in the fall-out from the election. There are suggestions that the coalition stance is motivated by a view that a new election would suit them - or that if they did form minority government they would suffer.
The alternative view is that they just want to establish ground rules that say they won't fold to just anything the independents want.
But the fascinating piece is that the coalition is still declining to send its policies to Treasury for costing - on the grounds that Treasury is biased and - shock, horror - leaks. To this I only say - "Godwin Grech".
If the coalition was concerned about leaks in Treasury perhaps they should have taken action to have the supposed leaker to their side charged, not use his (false) information for a political campaign.
Finally Sinclair Davidson has weighed in and suggested that the independents need to argue for a Parliamentary Budget Office (a coalition policy) and thrown in a Debates Commission. Stuffed if I know what the latter does unless you firsthave legislation requiring debates, and if that existed why the AEC couldn't administer it.
As to the respective role of Treasury versus a PBO - they are both meant to be independent. Why create a new body rather than fix any faults with the one we have? And doesn't the Parliamentary Library's research services extend to finances? Wasn't it there that the mid-election report on NBN costing came from?
But finally, the sheer hypocrisy of the Coalition is breathtaking. The Treasury is OK for doing election costings when it is "our" treasury, but not when it is "theirs".
Oh - and the NSW Right must be destroyed (of both parties)
The alternative view is that they just want to establish ground rules that say they won't fold to just anything the independents want.
But the fascinating piece is that the coalition is still declining to send its policies to Treasury for costing - on the grounds that Treasury is biased and - shock, horror - leaks. To this I only say - "Godwin Grech".
If the coalition was concerned about leaks in Treasury perhaps they should have taken action to have the supposed leaker to their side charged, not use his (false) information for a political campaign.
Finally Sinclair Davidson has weighed in and suggested that the independents need to argue for a Parliamentary Budget Office (a coalition policy) and thrown in a Debates Commission. Stuffed if I know what the latter does unless you firsthave legislation requiring debates, and if that existed why the AEC couldn't administer it.
As to the respective role of Treasury versus a PBO - they are both meant to be independent. Why create a new body rather than fix any faults with the one we have? And doesn't the Parliamentary Library's research services extend to finances? Wasn't it there that the mid-election report on NBN costing came from?
But finally, the sheer hypocrisy of the Coalition is breathtaking. The Treasury is OK for doing election costings when it is "our" treasury, but not when it is "theirs".
Oh - and the NSW Right must be destroyed (of both parties)
Thursday, August 26, 2010
Do we need a Minister for Co-operation Policy?
Without going into the detail now I've been doing some reading on the development of religious thought recently, and in common with some of the evolutionary economics as found in The Origins of Wealth
, there is a consistent trend in that the systems that are successful are those that facilitate co-operation in society.
Last night I had the great pleasure to attend an event to honour those from the telco industry who had been vigorously working together to develop the technical and operational framework for the NBN. I felt a little fraudulent attending as I really was only active for a couple of meetings at the very start at which I tried to enthuse people and not accept any we have to wait for NBN Co" thinking.
But it does set me to think again about the magic of co-operation. Starting in the 1970s a lot of attention got paid to competition policy, based upon the economic benefits expected to flow from competition. The under-pinning theory mostly relies on the idea of a dead-weight loss that occurs under monopoly rather than competition - and any restraint of trade creates monopoly like market power.
A different way to describe it though is the view of Hayek that the price system works to communicate individual preferences more effectively than a command and control system. Ultimately the victory of democratic capitalism over fascism and communism in the Long War (1914-1990) attests to that. But theorists don't spend a lot of time talking about the pre-conditions for the price system to work its magic - and the single most important thing to make competition work is co-operation. (From which Brandenburger and Nalebuff fashioned Co-opetition
)
It underpins my belief in the need for the state to actively break up any large entity that tries to "internalise" transactions through its own command and control structure. Ultimately Government needs to artificially create the need for economic co-operation.
Anyhow, I can at least take pride in the fact that the telco industry in Australia may not be perfect, but it continues to provide models of co-operation. I also thought of this when noting a story about delays in Mobile Number Portability testing in Thailand. The solution delivered in Australia in 2001 still stands testimony to the ability of the industry here.
It is a pity that the co-operation isn't yet complete. Better co-operation between industry participants and between industry and consumers may have resulted in better outcomes on mobile premium services, including the ability for Optus to avoid the ignominy of having to provide an enforceable undertaking to the ACMA.
, there is a consistent trend in that the systems that are successful are those that facilitate co-operation in society. Last night I had the great pleasure to attend an event to honour those from the telco industry who had been vigorously working together to develop the technical and operational framework for the NBN. I felt a little fraudulent attending as I really was only active for a couple of meetings at the very start at which I tried to enthuse people and not accept any we have to wait for NBN Co" thinking.
But it does set me to think again about the magic of co-operation. Starting in the 1970s a lot of attention got paid to competition policy, based upon the economic benefits expected to flow from competition. The under-pinning theory mostly relies on the idea of a dead-weight loss that occurs under monopoly rather than competition - and any restraint of trade creates monopoly like market power.
A different way to describe it though is the view of Hayek that the price system works to communicate individual preferences more effectively than a command and control system. Ultimately the victory of democratic capitalism over fascism and communism in the Long War (1914-1990) attests to that. But theorists don't spend a lot of time talking about the pre-conditions for the price system to work its magic - and the single most important thing to make competition work is co-operation. (From which Brandenburger and Nalebuff fashioned Co-opetition
)It underpins my belief in the need for the state to actively break up any large entity that tries to "internalise" transactions through its own command and control structure. Ultimately Government needs to artificially create the need for economic co-operation.
Anyhow, I can at least take pride in the fact that the telco industry in Australia may not be perfect, but it continues to provide models of co-operation. I also thought of this when noting a story about delays in Mobile Number Portability testing in Thailand. The solution delivered in Australia in 2001 still stands testimony to the ability of the industry here.
It is a pity that the co-operation isn't yet complete. Better co-operation between industry participants and between industry and consumers may have resulted in better outcomes on mobile premium services, including the ability for Optus to avoid the ignominy of having to provide an enforceable undertaking to the ACMA.
Wednesday, August 25, 2010
Factions and recriminations
An extraordinary aspect of the just past Federal election was the way Tony Abbott managed to portray the ALP as the party of "instability" while portraying the "coalition" as stable.
In the preceding year the Liberals had knifed a leader and installed the new one with a majority of one. Their coalition partners of course get no say in it (though they would have improved the Abbott majority). Meanwhile the ALP changed leader to unanimously appoint Julia Gillard. How was the coalition more "stable".
We now see in the recriminations disquiet among the Liberals in NSW, with accusations that an electable candidate in Lindsay was ruled out by the libs own "right wing powerbroker". Meanwhile the feud between Nationals and Country Liberals continues unabated.
The ALP is turning its attention to the their own Karl Marks.
Meanwhile Paul Kelly reminds us of the magnitude of the task facing the independents. Ultimately they are all "anti-party" and still face having to choose a party to make Government.
Mind you only the ALP is a party proposing to form Government - the "coalition" is an amalgam of four parties, Liberal, National, LNP, CLP - which also gives the lie to Abbott's claim that more people wanted him as PM - that's only if you count coalition votes. The ALP outpointed the Liberals. Anyone who has followed Queensland politics would tell you the LNP is nowhere near the united" party that some would have you believe.
A lot still to watch.
The NSW Right must be destroyed.
In the preceding year the Liberals had knifed a leader and installed the new one with a majority of one. Their coalition partners of course get no say in it (though they would have improved the Abbott majority). Meanwhile the ALP changed leader to unanimously appoint Julia Gillard. How was the coalition more "stable".
We now see in the recriminations disquiet among the Liberals in NSW, with accusations that an electable candidate in Lindsay was ruled out by the libs own "right wing powerbroker". Meanwhile the feud between Nationals and Country Liberals continues unabated.
The ALP is turning its attention to the their own Karl Marks.
Meanwhile Paul Kelly reminds us of the magnitude of the task facing the independents. Ultimately they are all "anti-party" and still face having to choose a party to make Government.
Mind you only the ALP is a party proposing to form Government - the "coalition" is an amalgam of four parties, Liberal, National, LNP, CLP - which also gives the lie to Abbott's claim that more people wanted him as PM - that's only if you count coalition votes. The ALP outpointed the Liberals. Anyone who has followed Queensland politics would tell you the LNP is nowhere near the united" party that some would have you believe.
A lot still to watch.
The NSW Right must be destroyed.
Tuesday, August 24, 2010
50 year planning
With the NBN much in the news an interesting question emerges, can one undertake a 50 year plan and could a Government agency do it.
The latest TJA covers the fact that the journal is 75 years old. One item covers the document known as the Community Telephone Plan 1960. This was the plan for automated switching (andhence dialling) across the country.
It includes a table that estimates telephone requirements for 2010 (i.e. now) - reproduced below.
How did they go? Population of 33 million is too high - currently the ABS has it at 22,434,746.
How about telephone lines - or "exchange services". Telstra results to 30 June report 8,660 thousand PSTN lines. Interestingly they overshot the population estimate but got the exchange line density about right. Especially if the 1,308 thousand ISDN services and the 831 thousand ULLs are added. (46% in the plan, 48% in reality).
The latest TJA covers the fact that the journal is 75 years old. One item covers the document known as the Community Telephone Plan 1960. This was the plan for automated switching (andhence dialling) across the country.
It includes a table that estimates telephone requirements for 2010 (i.e. now) - reproduced below.
How about telephone lines - or "exchange services". Telstra results to 30 June report 8,660 thousand PSTN lines. Interestingly they overshot the population estimate but got the exchange line density about right. Especially if the 1,308 thousand ISDN services and the 831 thousand ULLs are added. (46% in the plan, 48% in reality).
Reforming the Parliament or Electoral Reform
An interesting grab bag of commentary. Firstly the "news" that the AEC will investigate the informal vote. Actually I think they do this every time. It will be interesting to see if it was a conscious or unconscious increase in informal votes.
Then some interesting commentary about the significance of postal vote campaigns. The postal vote is the closest we get to what happens with votes in voluntary voting where candidates spend resource in getting the vote out, not just on getting the vote decided.
But it does seem a tad old-fashioned given the advances in IT (anyone who previously had a postal vote can be invited to by the AEC), the greater availability of pre-poll voting, and the fact that all mail is now air delivered. Surely the closing date for postal votes could be brought forward. Similarly you'd think that even more of the pre-poll and absent votes could be counted quicker.
In discussion on parliamentary reforms the Greens seem to favour more time for private members bills. Really a bit pointless - unless like RU486 there is a conscience vote only legislation supported by the Government is worth debating.
There are better ways to fix this - including greater more effective use of the committee system.
Other calls have been for reform of question time. This largely misses the point that question time doesn't really sit well with party discipline - every second question is a government Dorothy Dixer, every other is part of that days orchestrated attack. Very very little is about genuine "ministerial accountability". Further, Senate Estimates that gets closer to that is mostly about similar crap.
Meanwhile our media is increasingly sanctimonious. Just witness the way Q&A spun the decision reached by Julia Gillard and Mark Arbib that David Bradbury would be a better choice for Q&A last night. Arbib would have been the topic - not just a discussant.
Meanwhile I have my own plan for reform. It is to invert the entire current process. The house of Government should be the one elected by proportional representation - so that front benchers are drawn from these list candidates. The upper house should be the one of constituent representatives - and they should not be able to be Ministers. The two houses sitting together would formally vote to appoint the Ministers. I've sometimes thought that the US Executive presidency makes more sense - but ultimately the President is chosen by an "electoral college".
Thoughts?
Meanwhile - the NSW Right must be destroyed.
Then some interesting commentary about the significance of postal vote campaigns. The postal vote is the closest we get to what happens with votes in voluntary voting where candidates spend resource in getting the vote out, not just on getting the vote decided.
But it does seem a tad old-fashioned given the advances in IT (anyone who previously had a postal vote can be invited to by the AEC), the greater availability of pre-poll voting, and the fact that all mail is now air delivered. Surely the closing date for postal votes could be brought forward. Similarly you'd think that even more of the pre-poll and absent votes could be counted quicker.
In discussion on parliamentary reforms the Greens seem to favour more time for private members bills. Really a bit pointless - unless like RU486 there is a conscience vote only legislation supported by the Government is worth debating.
There are better ways to fix this - including greater more effective use of the committee system.
Other calls have been for reform of question time. This largely misses the point that question time doesn't really sit well with party discipline - every second question is a government Dorothy Dixer, every other is part of that days orchestrated attack. Very very little is about genuine "ministerial accountability". Further, Senate Estimates that gets closer to that is mostly about similar crap.
Meanwhile our media is increasingly sanctimonious. Just witness the way Q&A spun the decision reached by Julia Gillard and Mark Arbib that David Bradbury would be a better choice for Q&A last night. Arbib would have been the topic - not just a discussant.
Meanwhile I have my own plan for reform. It is to invert the entire current process. The house of Government should be the one elected by proportional representation - so that front benchers are drawn from these list candidates. The upper house should be the one of constituent representatives - and they should not be able to be Ministers. The two houses sitting together would formally vote to appoint the Ministers. I've sometimes thought that the US Executive presidency makes more sense - but ultimately the President is chosen by an "electoral college".
Thoughts?
Meanwhile - the NSW Right must be destroyed.
Iron bar
Amongst the rst of the news we should note that voters of O'Connor have done what the Liberals didn't have the spine for - removed Wilson Tuckey.
Mind you I don't follow this Nats logic. He wants 25% of mining "royalties" returned to regional WA. But he opposes the mining tax. Why not support the mining tax - it is on "super profits" - but still ask for 25%. That gets more for his regions.
Mind you those in the West who claim they subsidise the rest of the country should think wider. We only need to defend Australia because of its natural resources. Without the Federation (and without the British Empire) could WA defend itself?
Mind you I don't follow this Nats logic. He wants 25% of mining "royalties" returned to regional WA. But he opposes the mining tax. Why not support the mining tax - it is on "super profits" - but still ask for 25%. That gets more for his regions.
Mind you those in the West who claim they subsidise the rest of the country should think wider. We only need to defend Australia because of its natural resources. Without the Federation (and without the British Empire) could WA defend itself?
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