This article is by Michael de Percy, a lecturer in government-business relations and leadership, innovation and change at the University of Canberra’s Faculty of Business and Government. It first appeared on his blog, and is replicated here with his permission. De Percy also writes on his lecturer’s blog, and Twitters at @madepercy.
opinion There is some speculation the Greens will de-rail the privatisation of the National Broadband Network in a few years time, based on a pledge made by Senator Scott Ludlam “to fight for the project to remain in public hands”. At a time when the NBN is the only real reason Labor is in power, this is just crazy talk.
The premise that the NBN will result in a monopoly holder is not a done deal. If anything, there are plenty of lessons to be learnt from the privatisation of Telstra. And the idea that Telstra’s privatisation left Australia with a monopoly provider as a direct result of privatisation is simply wrong — the Howard government made a mess of this on the basis of blind ideology. Ludlam’s pledge is another case of blind ideology making decisions, albeit in the other ideological direction.
But is privatisation necessarily bad?
It can be, but usually it is the government who messes it up. Businesses want to make a profit? Surprise, surprise, but this isn’t necessarily evil. A quick glance at most attempts at full privatisation or public-private partnerships (PPPs) demonstrates that it is rarely businesses who are the bad guys. After all, state governments refused to release details on the Harbour Tunnel and other PPPs, not the businesses who were calling for this to be done all along.
But what about Telstra? With Telstra’s share price taking a caning in the market, more meddling by government with the NBN should be over and done with as quickly as possible. Ongoing public ownership is not a solution, it is the problem that got us here in the first place. And handing over Telstra’s ageing assets to NBN Co is the best way to fix what should have been done before the decision to privatise Telstra was made on the basis of ideology and not practical reality.
Once communications networks are in private hands and there is real competition, there is no evidence anywhere in the world to suggest that market-based approaches don’t work. The single national solution provided by the NBN is just one approach to fix the mess created by governments since 1975 when the monolithic Postmaster General’s Department (PMG) was finally divided and conquered. But T3 released the untamed gorilla that perpetuated the policy failures of every government since PMG’s demise. It is very important to note that none of this was really the private sector’s doing.
And there is little doubt that government meddling in the market distorts everything from prices, to competition, to regulation, to share prices — even the information available for consumers to make decisions which don’t end up in tears.
From personal experience, I am paying $110 per month for a high speed, 10GB/month Wimax plan because nothing else is fast enough in Palmerston via Gungahlin. That’s expensive. But with the NBN due to be deployed in my suburb some time in the future, I am not very happy about government using my tax money to give me high-speed broadband while I am already committed to a two-year contract out of the necessity created by government meddling in the first place.
If the NBN improves the service I currently receive I will be happy, but if it means I have to pay out a two-year contract to move to the NBN I have also paid for, I will be quite grumpy indeed!
So let us applaud the NBN for how it will fix the broadband woes created by governments past. But don’t think ongoing public ownership of the NBN is a good thing.
The Greens really need to reconsider their approach to public ownership, especially where communications networks are concerned. If they want to keep the duct structure in public hands to ensure access for all competitors, then that is another thing. And this could be built out as part of road or other network budgets but that would require greater cooperation within our federal system. But for the federal government to own it all is nothing short of a return to the bad old days.
Australia really needs to get over its addiction to government ownership and start applauding the successes of our private sector. If we don’t, we risk hampering our future success. Can you remember a single occasion where our private sector was applauded for major feats of engineering? Not once!
Yet history has proven time and again that ideological approaches devoid of lived experience are doomed to fail. So any policy decision based solely on ideology, whether left or right, should be avoided at all costs. And we are already too far behind the rest of the world in taking advantage of the information revolution for government to meddle further with our communications industries.
Put simply, committing to public ownership for the sake of public ownership is a backward step that nobody should be seriously considering at this stage of the NBN’s deployment. It is just crazy talk.
Image credit: David Howe, Creative Commons Attribution 3.0 Unported licence
I totally agree as long as we keep ownership of the ducts so that government can decide who gets access instead of monopoly telco.
I also think that if the NBN is to be sold off, Telstra should not be able to buy it, or at least not all of it.
Hahaha your argument is basically “I am in a 2 year contract, therefore fuck everyone else forever”
Take your libertarian rose-tinted glasses off and take a look at how well the private sector is doing for the US, from medicine to inequality to the real issue of poverty and lack of services the working class suffer from over there.
Completely agree. Hands down the most absurd article I’ve read on Delimter. I think it’s an embarrassment to the website this tripe was even reposted.
Good feedback Simon! We’ll try and do better next time ;)
Haha. Soryy Renai. That wasn’t the most constructive post I’ve ever made. However reading the rest of the comments here, it’s safe to say I’m not alone with my thoughts! I honestly think Delimeter should restrain from reposting such poorly written absurd blog entries like the one in question.
Perhaps if you’re going to post blogs criticising the NBN, then stick to posts that actually make sense and have some credibility.
Hi Simon,
I notice you are comfortable making claims that my arguments, including my personal experience of market distortion (which has been going on now for well over a decade) are irrelevant. You also note, while having your own platform as a commenter on my article, that my comments are irrelevant and therefore lack the credibility which your comments somehow achieve mysteriously?
What is your argument other than you don’t like mine?
Not one anonymous commentator here has argued for the ongoing public ownership of the NBN – something upon which the ALP’s initial policy made quite clear would not happen. Did you even read my article, or just react to the title because you are a fan of the NBN? I am not opposed to the NBN, but public money to fix a policy mistake made by a previous government? Give me a break!
My argument is that changing the rules for no reason other than ‘public ownership is good’ is not an argument. You clearly have no trouble challenging my credibility from a non-public position, yet you have no position other than agreeing with another anonymous person. Personally, I have no problem debating an issue with an anonymous person, but you and others have no argument at all, other than you disagree with me.
That is not a debate.
Nonetheless, I agree with Renai that this issue needs to be debated and I look forward to publicly comparing my research with yours.
What an idiotic article. If our public telecom authority had been left alone to get on with its job, we would already have a National Broadband Network. It’s only because Telstra was privatised and gutted that we now need to set up a new NBN authority.
If the network can make returns, why shouldn’t the public own it? Also means we don’t have to have this argument next time this happens.
IMO, 51% government ownership, 49% private would work well.
“successes of our private sector”
Such as?
Telstra has basically sat around on it’s arse doing nothing for years. You talk about some costly plan you’re on that only exists because the private sector has failed to invest anywhere but in metropolitan areas.
Your argument is one FOR public ownership. Critical infrastructure should not be in the hands of some private company to ruin.
Yeah, ironic that it’s Telstra that’s directly responsible for the FUBAR situation in those particular ACT exchanges.
Also, last I checked, there was no govt regulation that required you to be locked into a 2 year contract for broadband… that’s free enterprise at work there!
Actually Warren, contrary to “Yeah, ironic that it’s Telstra that’s directly responsible for the FUBAR situation in those particular ACT exchanges.” Might I point out that in areas such as Gungahlin, the ACT Government rolled out the infrastructure and then handed it to Telstra. The buck actually should rest with the ACT Gov on that issue (but no! They seem to get away scott free!)
God forbid that the NBN will be rolling past my door next month ’cause I’m in a two year contract. How shortsighted and selfish!
I’m all for keeping the NBN in public ownership. I would rather see a government-run monopoly than a private one à la Telstra.
This is a disgrace of an arguement.
You use the Inefficiency of the PMG/Telecom Australia (floated in 97′ T1) as the means for why your 3G which was brought in by Hutchison’s Three in 2003.
Telstra’s had more than 10 years to get its act in order. It’s failed at every hurdle protecting it’s flawed and diminitive networks (HFC) by pricing and scaling its other products out of the market (artifical cap on ADSL).
You can blame Howard all you like for not splitting Bigpond and Telstra Wholesale but the situation remains the same in that it’s cared only about its bottom line, ROI and to hell with the australian public and it’s best interest.
The way in which Telstra has created artifical barriers from access to the LLC, AGVC costs, international bandwidth charges, exchange access. Who is to say that a privatised NBN isn’t going to have the same mindset of protection.
“… a lecturer in government-business relations and leadership, innovation and change at the University of Canberra’s Faculty of Business and Government.”
I would presume that the credentials are supposed to give credence to the article. Unfortunately the article flatly undermines them.
“Put simply, committing to public ownership for the sake of public ownership is a backward step that nobody should be seriously considering at this stage of the NBN’s deployment. It is just crazy talk.”
Put simply, that the private sector can be trusted with national infrastructure, without draconian regulation (that nasty government meddling) to prevent short-termist shareholder appeasement by gouging the population or leeching the equity out of it to foreign pockets (Telstra anyone?) … is just crazy talk.
This guy is just mad that he is stuck paying $110 a month for 10GB and believes if the private market was in charge that the increased competition would result in him paying a lower price. What he fails to realise is that the capitolistic view he holds so dear has infact put him in the position he is in now and even if a thousand new isp’s started offering better plans in his area he would still be liable to get a fine for breaking his current contract.
I think he also fails to remember what Telstra was like in public hands. Repairs were done quickly, there was a unversal standard of service instead of delivering services only to the places they would definately make a profit at and there were definately no repairs made using plastic bags and standard sticky tape!
There is nothing wrong with socialism and infact keeping the essential services we depend on in public hands works out best for the public at large. Take the hospital system for example. In Australia if you break an arm its free to get fixed, but go to America where socialism is evil and you’re looking at $9000 or more. The best thing about private companies (other than far lower prices) is that any profit made goes back to the government which means they need less taxes from the public. So faced with higher prices, outsourcing of jobs to save money, lower levels of customer service and higher taxes, you’d be a deadset fool to think having the NBN privately owned is the right thing to do.
Hey lets sell off Money making assets. So the Companies can get Rich so they can pay absurd money to executives in bonus’s and the like, while ripping of the public. Spending little on Expansion and improvement.
OR
The government can keep it, and eventually will be a source of revenue for the public in the future. Money that can be spent on the network, improve and expand the network. Or fund other initiatives all together
Enjoy your wimax latency, and i see you mention High Speed 10gig plan.. whats high speed? and more importantly how fast is it in peak times.
But i guess im just Talking Crazy talk
When the PMG ran the phones, there was no expectation everyone would have a phone.
Broadband in the second decade of the 21st century is a completely different proposition. If we all pay to build it through our contributions to Consolidated Revenue, it should stay in public hands and remove the pressures to maximise profits from the equation. I suggest it be made free to RSPs to promote the rolling out of new services to maximise competition and the network’s contribution to the nation’s well being.
Won’t two years be up by the time the NBN reaches Michael’s place?
I was going to write a long and serious response to this article, but the more I considered the arguments and motives put forward by the author, the more I lost interest.
So instead I’ll just repeat Simon Reidy’s comment. ‘I think it’s an embarrassment to the website this tripe was even reposted.’
And I’m not suggesting arbitrary censorship of opinions. Only that basic standards of logic, research, and credibility be accepted.
Case in point …..
“From personal experience, …. while I am already committed to a two-year contract out of the necessity created by government meddling in the first place.”
Nothing but subjective self interest to support an argument for a nationwide course of action.
Maintain some standards, otherwise ‘Garbage out, die.’ and it would be a shame to see this site expire.
I totally agree with you George. I was going to write back a response refuting his baseless, superficial and ignorant arguments…but then I thought why should I reply to this tripe that should not have been posted in the first place!
Hi George,
You are advocating nothing because you are an anonymous avatar with no argument. Post your argument if you have one. “I was gonna”? Give me a break!
Cheers,
Michael.
Your confused article confirms just how half baked and poorly thought out Labors NBN idea actually is. To be this far into the roll out of Australia’s largest ever infrastructure build and still be getting this level of commentary from the media shows exactly what is a recipe for absolute financial disaster the policy from Conroy will turn out to be. The government of the day will beg, beg, private enterprise (Telstra) to buy it after the cost of the ongoing interest payments on the billions of wasted dollars to build this white elephant become a ball and chain around Australia’s neck.
I hope Malcolm Turnbull can save us from this madness!
zzz…. Whilst I am not a labour fan, at least they are doing something on the way of broadband. Australia is majorly far behind the rest the world on this issue and it’s about time we caught up.
White Elephant? Only if they screw it up. The concept of the NBN is hugely beneficial to Australia.
What you *should* be appealing to Malcolm to save you from is *not* the NBN, but the filtering – filtering is the stupid part.
Oh dear, major investment in infrastructure is first “crazy talk”, and now “madness”.
Do you see anyone else stepping up to improve our technological access?
I don’t really care who owns it, but since it’s a monopoly the prices will forever need to be regulated and set by the people and not by market demand. I also feel that since the risk is so low (as it usually is with a monopoly that has a very high barrier to market entry), the profit margin should be kept VERY low.
Beyond that, who cares?
I’m not saying that universal broadband access is not required, but NBN is not a step up.
Let’s be clear, the NBN is not an ‘investment’, it’s the handing out of our tax dollars to where private enterprise did the math and won’t touch with a barge poll.
The opportunity lost on not being able to spend the NBN billions on more crucial areas of human need in our society is heartbreaking. If anything, we should at least be sharing the risk with the private sector. But this idea goes against Labor’s grain…they need to bring themselves around to working through it, or else we are just being held captive to ‘socialism on steroids’!
Of course, its public infrastructure – private companies dont go there unless $$$. This is needed by the public, therefore the government invests in it.
Simple.
Are you kidding me Jack? Labor’s intention all along has been to have a public private partnership. They have stated this from the very beginning and that is why this bandied $43billion is ridiculous hyperbole. It is the Greens who want to keep it in public ownership.
Now I’m not giving my opinion on what is correct but get off your Coaltion loving high horse and get the facts straight. There are many projects that require investment and money but very few offer a return. Roads and transport, hospitals, education are all sink holes where you put loads of money in but get nothing in return. Of course these need investment as well but they are things that we have to be prepared to lose billions over every year. Our massive country that is spread out into dotted big cities is extremely unique. To just say that other areas need stuff more misses the point of what the NBN is capable of doing. It also misses the point that although the NBN might not offer a 10yr return of profit, it will be capable of doing so in the future. As time goes on the viable “business” case becomes more attractive and the NBN will get more interest from the private sector. I can assure you investors are probably licking their lips waiting for the government to roll out the NBN so they can pick and choose what they want.
Anyway, my point being that Labor, who you wrongly accused of wanting to keep it in public hands, is actually advocating a private ownership eventually.
You think it should be privatized because of what… oh thats right you didn’t have a point, it just should!
Seriously, commentators should stop commenting on thing they have no understanding of.
You are right there Dylan. The hack does not even have a PhD! He has been doing one for over 6 years now – he is lucky that he even has a job.
How exactly do you expect “real competition” to eventualize if we have a private NBN? Do you think Optus or VHA have a spare $43b in their wallet and are going to rush out and wire their own fibreoptic cables to 93% of houses in Australia? I would expect a business student to understand that monopoly and competition are mutually exclusive.
The NBN is a wholesaler, there can be competition beyond that. As long as there is well written legislation holding it together.
This is the backbone of the future of Australian industry, it should be controlled buy Australia.
What a terrible argument.
No, the private sector does not have our interests at heart, they report to shareholders, not the polling booths.
Telstra has held this country back so much and it’s amazing that you want the same thing to happen again. Please sir, stop writing articles.
Yes let’s privatise it like everything else…
Let me see Electricity is going up, up, up. Water is going up, up, up. What else ah yes gas is going up, up, up… so much for competition.
The only competition I can see is who can make the most money.
Let’s privatise everything and really screw the people over.
The the governments are selling us out, and we’re taking it up the rear, how much more will it take before we come to our sences .
I find this a pretty weak argument. The real question that needs to be asked here is whether there is any harm in the NBN remaining in public ownership (under suitably competent management). And the answer clearly is – none.
As they say, if it aint broke, don’t fix it.
There is an inherent and irreducible contradiction created by selling the NBN. Any regulatory regime that would allow the sale of the NBN, would also allow rent seeking. Any regulatory regime that is sufficiently strong and prescriptive (such as prescribing overall rates of return) to avoid such outcomes, would have a potential private owner buy bonds instead.
The NBN once established cannot be over built (in all practical senses). Therefore it cannot be competed with at the physical level. Therefore anyone owning it has the power to price to what the market will bear. Of course, management freedom does also mean having the power to innovate. But when we are talking about what is essentially a highway – physical pathways along which bits travel – then the only innovations that can occur are the inevitable and obvious improvements to the electronics that define the speed of the network. Obviously a private owner can do this. But so too can a similarly competent management operating under public ownership. Its just that the publicly owned NBNco is more likely to develop a “service” culture. Whereas a privately owned NBN has a very clear path toward rent seeking that the shareholders would without question demand.
Telstra is a perfect example of how managerial-ism ignored technical innovation in favour of rent seeking. The NBN should never be allowed to head down that path. It would be a disaster..
Yet history has proven time and again that ideological approaches devoid of lived experience are doomed to fail. So any policy decision based solely on ideology, whether left or right, should be avoided at all costs.
I had to laugh at that bit.. Ideology.. the kind that sees any communication network as necessarily a “private” thing. The kind that can’t comprehend a network being the same sort of beast as a road network. The same kind of ideology that believes that private ownership is good by virtue of it always having the “good stuff” whereas government owned things don’t. Well, the “good stuff” – when it works – is great.. technological innovation.. finding new and better ways to do things. That’s what markets and private capital are good for. But stuff that’s just basically plumbing – where the only way to improve the bottom line is put a bigger price tag on it – that’s not innovation. Yes, the NBN does need innovation – but all that requires is a few very good engineers, not a bunch of suits.
So, let me get this straight.
You are forced to use a wimax provider with a costly 2 year contract, because broadband in your area is underprovisioned somehow. Presumably by bad quality copper, copper runs incapable of sustaining high enough datarates on ADSL (too far) or a RIM (a cheap copper aggregating technology that allows multiple telephone lines to run via less copper, thus making it impossible to have a complete copper run to the exchange – even if you WERE close enough, which even in this case you probably aren’t).
Do you know why they installed rims? or copper over very long distances?
Long Distance: because it was too expensive to build a new exchange.
Rims: because it was too expensive to lay HEAPS of copper (especially over long distances).
Do you know that they (the privatised monopoly) were installing RIM’s even just a few years ago to new housing estates?
Now, why is it that this privatised monopoly was trying to save money? Oh, perhaps its because their entire goal was not to provide the best service to as many of its customers as possible, its goal was to provide the bare minimum that they were *required* to, at the minimum cost, with the aim of *making money*.
Their goal was money, and the vast majority of people didn’t care about broadband 10 years ago. Therefore they installed the cheapest, nastiest technology to satisfy demand for communications. At that time, telephones.
As far as I am concerned, I hope it takes them 8 years and 2 months before the NBN services your area with broadband. Just so you have to keep paying your 110 dollars per month on 24 month contracts 5 more times, AND you have to payout the 5th one 2 months in, just so you can support the private sector building technology for you. That’s what you want right? The private sector to aim to screw you out of as much money as they can whilst providing you with the minimum service you are willing to put up with?
my problem with private companies is maintenance.
maintenance always comes at the detriment of profit. when competition is in play, maintenance is done at minimum expense.
if the NBN is a public asset, maintenance can be done for the LONG TERM. dedicated experts can spend their entire careers looking after our internet connections.
while a private company would consider a congested pipe highly profitable and therefore worth maybe hiring a sub-contractor to fix it, other pipes that aren’t as high traffic would be ignored and late to be repaired.
“profit” from a government owned NBN would be re-invested into maintenance, upgrades and expansion. they would fix low-use pipes where a private company would just write it off, ignore it or just band-aid it.
in the long-term this means better value, better priced broadband that is reliable.
lastly, it goes to show how public support for the Greens continues to grow when they are the only ones speaking sense and learning from the failures (Telstra privatisation) of the past. no wonder they are now in government.
Comments speak way louder than the article…. Albeit news and opinions are helpful in that they allow you to see an issue from many different view points, even if they are batshit insane like Mr Percy – Delimiter has heaps of left & right winged articles to browse through.
Thanks for the opinion, you can go back to your bubble of telecoms ignorance now ‘Michael Percy’. Hands off our public infrastructure!
1. AU’s gov’t sux because the Lucky Country has enough mineral wealth to ensure a high quality of living WITHOUT requiring smart governance. If / when China challenges AU (& other now-secure lands) this may change.
2. Addressing the issue of the article:
a. In the City of Stockholm (Sweden), fast-enough Internet can be had from a publicly-owned entity, which offers UNLIMITED 100 Mb/Sec symmetric (ie, both up- & down-speeds are 100 Mb/Sec) for around AU$ 44, last time I checked. (It may well be cheaper, today, eg, due to the rise of the Aussie dollar.)
b. In France, an Internet company – Free.FR – offers fast-enough Internet (up to 100 Mb/Sec, depending on available delivery medium) – again UNLIMITED; they also include an innovative IP TV recorder box with plans (for those subscribers, who sign-up for longer than minimal subscriptions). Cost (again, last time we checked) was ~ AU$ 44. (I believe this was a private company service offering.)
(NOTE: By “UNLIMITED” (above) we mean there is NO penalty fee for uploading and/or downloading “until the cows come home” … NOR is the speed cut back, eg, after an arbitrary amount of usage has been made of the service.)
My point is that it’s NOT so important WHAT FORM the Internet service provider entity takes, it’s what its purpose is.
If the purpose is to provide Internet service at World’s Best value, Internet will be Fast, Cheap & Unlimited.
If not, then the myriad of plans – such as Australia has today – will arise… from Telstra-inspired “poverty traps” (unlimited, but any usage after the first 200 MB / 2 GB cost [at least] $150 / GB, depending on which the delivery medium) …to the genuinely unlimited plans that might not provide the expected speed speed performance across the day or month.
Charging for data uploads – another of Telstra’s pricing “innovations” – restricted (at least in the early days) who could be a host their own (popular) web site… or devise & test the next big web application, from their garage-based data centre.
3. In AU, Telstra’s de facto monopoly has caused many smart people to find ways around the monolith’s costly phone pricing, eg, from Skype to VoIP.
Consider how much more of their own specialty work they MIGHT have been doing, if, if they didn’t have to re-create a phone system!
At the same, many Swedes & French Internet users save that time-cost, & go on developing the technologies & social innovations they consider to be in their fields of interest… perhaps leading to some additional “lead time” over overseas competitors.
4. Over the years, AU’s government has been stupid enough to protect its de facto monopoly (Telstra), and there are additional – if smaller – examples left in current telecommunications regulations that affect “communications hobbyists,” to this day:
In USA, Radio Amateurs are free to connect their VHF / UHF repeaters to the telephone system, eg, using “auto-patches” (ie, mobile and/or portable radios can be used to make phone calls, if they can contact mountaintop-based Amateur repeaters… this has enabled people who come upon car crashes to ring for ambulances or retrieval teams, & hikers can call for assistance, from places where their mobiles have no coverage).
In AU, it is still FORBIDDEN for Radio Amateurs to make similar connections to the Telstra’s (or others’) phone networks… because – from the start – the AU gov’t stood to lose revenues from Telstra, for each call put through!
5. I’d prefer that we suspend our “beliefs” (read: ideologies), for a while… and – irrespective of which type of entity (eg, Public / Monopoly / Private / Amateur …or some new kind yet to be created) provides the communications services – ask:
“Are there (or we putting up any new) barriers to communications?”
If so, we need to take them down &/or not go forward to create new ones.
6. Cost is a barrier, and it would seem that at least 2 World’s best examples are staring us in the face:
a. Stockholm’s public Internet provider(s)
b. France’s Free.FR
Let these be today’s standard for our NBN (& any competitors):
i. Fast-enough (eg, symmetric, 100 Mb/Sec),
ii. Unlimited (no arbitrary usage limits), AND
iii. Cheap (just like our freeway road & highways)
Who’s want anything LESS than World’s Best?
The article’s author seems to be “crying into his beer” that his address (in Canberra?) can’t get any better Internet service than one that’s required him to sign-up to a 2-year contract to get…
1. first, the NBN won’t change that in the contract period of his concern,
2. many Canberrans are lucky to have UNLIMITED (at least After Hours) Internet available at very low cost (~ AU$ 30 / mon); he’ll find some of the lucky locations on http://BC.Whirlpool.net.au (Broadband Choice; good site, except they seem to be capable of REMOVING posts that might offend unnamed sponsors, eg, Big Pond, Internode, etc.), and
3. he can always move… ;-)
In any case, I did not notice any commitment (in the article) to advancing Australia[‘s Internet availability and/or affordability] fair.
Nothing to see, there, folks… move along… ;-)
Blind ideology. Thats the only way to describe it. Just how exactly will the NBN in private hands provide competition? Will selling the NBN magically conjure into existence another wholesale Internet backbone?
The wholesale Internet backbone, much like a metropolitan train network, is inherently a monopoly. Or are you suggesting its going to be viable for another company to build a second NBN?
Now, is that monopoly best for the public as a government run enterprise without profit as the main motivator? Or as a private entity that will leverage its monopoly as much as it can to increase profits as much as it can, services provided be damned?
We have all been down the latter path, and you’ll be hard pressed to find many people impressed with the current private monopoly provider.
I agree this article is a waste of space. But that is the good thing about the internet (and the NBN). Space is no longer at a premium.
What is good about the article is it hones the audience’s powers of critical thinking. With a ubiquitous NBN and (hopefully) constraints on political donations, more political campaigning will move to the internet where it should be subjected to more critical analysis than was delivered by a very disappointing mainstream last time http://blogs.abc.net.au/files/john-menadue-interview.mp3
Another pro-privitisation fanboy with an argument tailored towards big-business making money.
Article is a complete waste of space and goes against the fact that Australia is still paying for the follys that we have made previously when it comes to the privitisation of our assets.
+1 to this asset staying in government hands.where it belongs.
Wow this guy is crazy talking crazy.
He wants better internet and privatisation? Where has he been for the last 15 years!!!
People like him should be muzzled and put into the mental asylum – sprouting lies is what has put us into this hung parliament crap where nothing will get done and Australia will lose.
My preference would absolutely be to keep the NBN in public hands, but there are many ways you could “skin this cat” if you wanted to go down the privatisation road, and not make the same massive mistakes that occurred with the Telstra sell-off.
Firstly, if you were to sell the NBN into private ownership, the first thing they would need would be a licence to act as a private telecommunications operator. You could make it a legislated constraint within the Telecommunications Act that as a condition of their licence, they must charge the same wholesale price to all retail service providers. This eliminates the possibility of the anti-competitive practices under which Telstra Wholesale have operated for years. You therefore have the level playing field which is truly required in the market.
At this point, the exact wholesale price becomes a matter of a number of different factors, such as uptake, maintenance and administration costs, reasonable return on investment, and the offer of a reasonable price to the retail providers leading to a reasonable price to end customers. It becomes a balancing act between these and other factors.
The bottom line is that as privately held company, the main pressure is to provider return to shareholders/stakeholders in that private company. It would be a mistake to float that company, as then it falls to the mercy of the market, and as we’ve already seen with Telstra, unless there is a massive shift in market sentiment towards telecommunications as a whole, it will all just happen again.
Australia cannot afford that, and in this context, I believe the NBN needs to be taken from two completely different angles.
In the project stage, depending on who you believe, it will cost between $26b and $43b to build. This stage is an infrastructure project, much like railways or freeways, new hospitals or new schools. These are never built with a view to “making a profit”. They are undertaken to support the economy on a complete level. The NBN is a macro-economic policy, not a “simplified” micro-economic project as many of the financial detractors would have you believe.
Ignoring the cost, it is necessary infrastructure. Including the cost, it is expensive, but the overall effect on the economic POSITION of Australia – (rather than the concept of whether or not we’ve “paid off” the setup cost) – twenty years from now should be of massive benefit to the rest of the economy.
Okay – the NBN is built, and we move into a purely operational phase.
At this point, absolutely it has to be financially viable, and there would be some case for privitisation. As I’ve explained above, I believe that any privatisation would need to be very strictly controlled with legislative controls on ownership limits and pricing structure, or the setup cost will be for nothing – we’d have the same market dynamic that we have now.
My overall view is that the NBN needs to remain in public ownership – the operational phase of the project could be contracted out on five or ten or twenty years contracts – (with performance clauses of course) – to private companies, who will need to manage the contract in an entirely fiscally responsible way, or they will lose out when the contract is up for renewal.
Yes – the contractual model does have dangers, but if the contracts are constructed intelligently, and with the interests of the CONSUMER at heart, it can be win-win.
HE seemed to be leading up to a rational argument with a logical conclusion – but then then the kicker was “its just crazy talk”.
I’m confused, did the salient reasoning for the argument get lost in the editorial process?
This article literally made no attempt whatsoever to support its hypothesis. Truly terrible ‘journalism’.
The answer is simple…… The NBN should remain in PUBLIC hands and never be privatised. Privatisation is only ever a short term money grab by cash strapped governments, state or federal, a case in point would be the Bligh govt of Queensland. The end results of privatisation or constantly rising prices due to a failure of the company to invest a proportion of profits back into the infrastructure and a need to constantly raise extra revenue. Infrastructure projects such as the NBN sould not fall victim to “so called” cost benefit analysis. If all infrastructure projects needed to justify their building then we would never have had the Overland Telegraph (funded by the S.A govt) at around $5000 per head of pop. Telstra’s CAN (funded by the Australian govt) at around $1200 per head and the NBN at around $1220 per head.
I hope the author wasn’t serious when writing this opinion piece.
“Ongoing public ownership is not a solution, it is the problem that got us here in the first place”
Whaaaaaat?
One must ask themselves just how well our roads, highways, sewage system, water supply would be if they we’re treated in the same manner as this countries telecommunications infrastructure.
Dave…my point is that the Labor/Greens coalition is confused and it’s clear they don’t see eye to eye on this policy. Confused government policy over the years is why we are in this situation. Confused government policy will quickly burn through our tax dollars. But it doesn’t sound like you are that fazed. In that case let’s spend our way to a solution or a financial black hole, or both!
It is not confused government policy that is the problem, it’s the paranoid fear of debt, courtesy Peter Costello’s long reign.
Debt arising from excess of current expenditure over current debt is bad. Debt arising from assets (schools, hospitals) remaining on the country’s balance sheet can be good (for things like roads, water and electricity distribution and so on).
In the simple world in which politicians have to campaign, this is a point too confusing for the average punter. Sadly these days you can’t advocate a major project and not at the same time say you are going to get it off your balance sheet because of the dreaded debt ogre.
Once you say we HAVE to sell, you have to come up with something attractive to purchasers. Because of its ubiquity, the NBN should not be sold and if it is not sold (because the national good is more than what its customers will pay e.g., the ABC) the price of its services to wholesalers can be kept low to maximise use and innovation.
The bottom line is, if you don’t want the NBN sold, the country has to learn to be more relaxed about debt. This would be easier to explain if the national accounts were run on an accrual instead of a cash basis. And that we have politicians prepared to lead rather than worship at the altars of focus groups.
Renai, reposting de Percy’s article has done absolutely nothing to convince me of your pro-NBN-privatisation opinion any more than your twitter responses did. his article does *nothing* to justify hope that government will suddenly ‘get it right’ this time around, provides no instances of glowing privatisation success stories, and, frankly, is a bit of a joke from what sounds like someone still blinded by the pretty headlights lights of private ownership of major mass infrastructure and not yet looked at the roadkill beside him. and i don’t give a frak if anyone’s locked in to a contract with their current ISP when the NBN rolls in to their town – irrelevant ripe. what else ya got to justify NBN privatisation? cuz this ‘aint it.
hey Anthony, I’ll see what I can put together to crystallise my thoughts on the issue. I think it’s one that needs debating, and the reaction here certainly proves that. It’s a good time for it too — with Labor winning Government, the NBN is definitely going ahead, so it’s time to turn to the specifics of the rollout and planning for the future.
Hi Anthony,
Perhaps you would like to stake your own argument to the contrary? I agree with Renai that this is a debate which should occur and I am happy to debate this publicly. But at the moment you have just disagreed. Big deal. Where is *your* argument?
Cheers,
Michael.
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