This article is by Michael de Percy, a Senior Lecturer in Political Science at the University of Canberra. It originally appeared on The Conversation.
analysis Nobody can ever state with certainty how much it will cost or how long it will take to deliver broadband services to more than 22 million people spread out over 7.6 million square kilometres. Even more difficult to project are the revenues from such a service years from now. Anybody who could know would certainly possess a global monopoly along with their crystal ball.
Likewise, there is no perfect technology that will solve all of tomorrow’s problems. Indeed, it is an iterative process. And network technologies create legacies that are difficult to anticipate. Telstra’s copper network, for example, is a legacy that just refuses to go away.
All of these facts didn’t stop another round of bickering between politicians after the release this week of the interim report from the Senate Select Committee on the National Broadband Network.
What are reasonable assumptions to make when analysing the progress of the NBN to date? Here’s a few: high-speed internet access is essential for a variety of social, political, economic and familial reasons. Fibre-to-the-premises (FTTP) is better than fibre-to-the-node (FTTN) but it costs more. It is expensive to deliver broadband to the bush. When the market works, it works, and when it doesn’t, government should act. And any broadband is better than no broadband.
So why are there so many reports yet so little action in delivering broadband services? Why should government insist on delivering it exclusively?
A history of interference
It is an Australian tradition that politicians use the communications industry as a big policy switch to be flicked when politicking calls for it. Flick the switch one way and provide numerous reports to support the view, then flick it the other and the process starts over again. And then focus so much on the minor short-term issue that the big picture is lost for centuries.
Politicking is the stuff of democracy. But when services that can be delivered by the market are caught up in politicking, the system falters.
Government has always been slow to deliver communications technologies in Australia (you only need to compare Australia with other OECD nations over time to see this). And with about 160 years of experience, Australian businesses have learnt that first movers pay a hefty price for taking the initiative.
Here’s a quick look at governments (of all persuasions) and their long record of failed interference in the telecommunications sector:
- A commercially sustainable private telegraph system was shut down by government when it threatened revenues for the South Australian Government’s network.
- The first Australian telephone exchange was run by a business (established two years before London’s exchange). Government shut it down to improve “quality”.
- Australian designs for telephones and exchanges were overlooked by various colonial governments in favour of foreign imports.
- Wireless was available right from the beginning, but government took control of it, refused to let businesses use it, and then did nothing for more than a decade. Amalgamated Wireless Australasia (AWA) – the first wireless agent in Australia – came about largely because the Australian government had infringed wireless patents trying to build its own systems.
- FM radio didn’t happen for decades because government decided we didn’t need it.
- Who can forget disconnecting all their non-Telecom devices any time there was problem with the phone line, otherwise Telecom made you pay just for turning up. We learnt quickly not to have the audacity to use non-Telecom products, even though Austel said we could.
- The “Rolls Royce” version of Aussat, Australia’s domestic communication satellite system, hardly made a dent in Australia’s poor access to television content. In the far north, you could either watch NQTV or the ABC. Everywhere else in the developed world you could watch hundreds of channels.
- Monolithic Telstra was created by government then prevented from acting like a normal business because government got its privatisation plan wrong.
Wasting time
How did the Rudd/Conroy government try to solve our broadband problems? It took control again, but this time with NBN. Instead of focusing on market failure in the bush, politicians decided to run the whole show.
In every instance more reports trying to figure out why it just wasn’t quite working as the politicians had planned. Always caught up in politics. Always slow and uncertain.
Politicians would hardly instigate a report that didn’t support their own position. And because nobody can ever be certain, we can bicker endlessly about assumptions in reports designed to support a particular political position.
The government’s recent strategic review and subsequently the Senate Committee’s findings are no different. Should we have FTTP or a multi-technology mix? Asking who is right or wrong is the wrong question. We should be asking: what is the point?
Businesses will build whatever the government pays for – they’ve been doing this since the first telegraph network was established. But will we have a vibrant and innovative communications sector? Not if Australians are to have affordable access to effective communications technologies – now and into the future. The question we need to be asking is what role government should play in facilitating the deployment of communications technologies.
TPG is pushing the boundaries and delivering fibre right now. NBN Co wants this to stop. Business is delivering, government is reporting. It’s not hard to work out which approach is addressing our broadband problems.
Let the market work where it works, let government step in where it doesn’t. Nobody should be surprised to learn that it is expensive to provide broadband to remote and regional communities. But instead of transparently setting out how much it costs to deliver broadband to the bush, government gets everyone in on the gig so it can hide the inevitable cross-subsidisation. Never mind the effect on industry, but it sure makes for good politics.
But while the traditional political game continues, the future of our communications industries will remain the subject of more reports, not action.
A long-term industry has been shackled to three-year political terms for far too long. The only way to unshackle NBN from politics is to get government out of the marketplace where it exists. Of course, the legacy of sunk costs will make this difficult. But by the time we stop bickering about the latest lot of reports, it will be time to deal with the next communications technology problem.
Much better to be using an affordable broadband service (regardless of whether it’s FTTP or FTTN) than reading yet another report trying to second-guess the market.
Michael de Percy does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published on The Conversation. Read the original article. Image credit: Believed to be public domain or out of copyright
“Much better to be using an affordable broadband service (regardless of whether it’s FTTP or FTTN) ”
Bunkum.. Spending near same money for fttn than for ftth is insane..
Do it once, do it right with fiber.
We all know that will not happen though, at least not with this government. Turnbull has wasted so much time vilifying the FttP plan that to admit an outbreak of common sense now would likely be political suicide.
Until a national communication network is fully implemented and profitable, it will always be at the mercy of the ruling government trying to score points with the voters. This would not be so much of a problem if those trying to do that had the slightest bit of knowledge about what they are trying to monkey around with in the first place. In Turnbull’s case, it is painfully clear he lacks much in the way of even a basic knowledge of IT communications let alone what one would expect from the Minister of such. The endless reports and investigations that do nothing but waste time and money while delivering a grand total of absolutely nothing so far is blatant proof of this.
Interesting article and I appreciate the history lesson which I wasn’t aware of previously.
“Let the market work where it works”
This is where I think the original NBN plan was spot on as a compromised solution to the whole spectrum of issues of providing telecoms infrastructure in Australia. The major companies were proven to be incapable and disinterested in upgrading infrastructure that wasn’t a continuation of captive, segregated markets that can be milked for the maximum dollar value. As such the whole nation suffered (productivity) as we were and continue to be hostage to Telstra and the Telstra wannabes.
The other side to letting companies compete where they wish and have the government pick up the tab elsewhere is that you don’t have perfectly demarcated regions. Instead you have the most vocal and politically organised regions capturing the limited government funds (ie corruption) while others miss out. Creating a process where segments of the community have to continually come back begging from the government for infrastructure is humiliating, inefficient and subject to the whims of the politics of the day.
Again the original NBN was by far the most sensible approach to the whole raft of issues, not that it was perfect and couldn’t be improved upon.
This diatribe is naive in the extreme.
Perhaps people without any clue should refrain from public comment. While Michael rails against the poor quality of the public discourse due to politicking, he perpetuates that poor quality of public discourse via his ignorance.
“Perhaps people without any clue should refrain from public comment”
And maybe people who attack articles and the author, without even bothering to point out where the article it is wrong, should have a special place in hell set aside for them.
Sorry Lionel, my comment was based on the assumption that anyone with even the faintest hint of a clue would already be able to see the issues.
This seems to have been an accurate assumption, based on the other comments which have been made. So I am happy that it was a fair one to make.
There is an anomoly which makes this assumption inaccurate though, and it appears to be yourself. I wonder why everyone else can see what I can see, but you, somehow, can’t?
Perhaps there should be a special hell reserved for people who, through blind ideology, refuse to see? Don’t worry, you won’t be alone down there. I am sure that in due time you will be joined by a certain Communications Minister.
There are many issues with the article, I had read it on another site. Point out some specific ones to discuss. Don’t just start insulting people as you did the author and now have done to me.
I think is the minister isn’t careful he will have a special place waiting for him here and he better not drop the soap.
This is an appalling article.
Take lessons from history and twist them to get their exact opposite meaning.
HAHA, i was in this guy’s unit (government business relations) at University of Canberra this term. Thankgod I withdrew the unit…….
So yes this guy is a university lecturer and judging by this article, not a very good one
University of Canberra? well that immediately destroys any credibility. ANU represent. Get on my level.
I agree market forces work best when they can work due to non interference.
Problem specifically with NBN is that the market can’t act because of historical inequality in the form of a single Telstra company.
If NBN is in the process of being politically strangled then maybe we need to start pushing for structural separation of Telstra so that the market can act on it’s own.
The rollout of HFC showed the failure of a purely commercial model. Optus and Telstra covered the profitable areas in duplicate, and left the unprofitable to suffer with dial up. As a result we have more ugly cable then need be strung between power poles in the major cities and slow speeds in the regional areas.
Imagine if electricity had been done the same way? Multiple voltages, slightly incompatible (maybe even some running 50Hz, some 60Hz), and large parts of the country relying on generators or simply going without.
The regulated monopoly for infrastructure (either private or government owned, but regulated regardless) and a competitive marketplace for retail services that use that infrastructure is the best compromise in my opinion. I’ve worked for both sides of the electricity industry, and while it might not be perfect, it does a pretty good job. At least with ADSL we can choose our service provider and get some choice, but with HFC we are stuck with Telstra’s or Optus’s offering.
The NBN avoids duplicate (or worse) fibre rollouts, and instead makes sure the fibre covers as much of Australia as possible. If the government of the day had made NBNCo the retailer too then there would be hell to pay, but the Retails Service Provider model overcame the flaws of the old PMG/Telecom/Telstra model.
In New Zealand the Ultrafast Broadband (UFB) infrastructure is tendered out, and in some places Chorus (lines part of Telecom/Spark) do it, while in others it’s done by the local power company. Crown Fibre Holdings manages this. Regardless, there are UFB plans available from a number of retailers (between 5 and 10 depending on city or town). I reckon it won’t be too long before internet dependent businesses are relocating to NZ. Why live in a dirty crowded city when you can have beautiful mountains as scenery and a 100/50 Mb/s pipe to the world?
Actually Dave, before the Governments “interfered” we actually had multiple Electricity companies and even municipalities delivering electricity to their own little patches of turf, yes we had 110 Volt 60Hz , 240V 50 Hz, even DC.
I helped renovate an old house in Mitcham that still had the old US Westinghouse power board and meters for 110V 60Hz, then another a bit further out that was equipped for DC (Very old set up) , but then may well have been rural at that time The chaotic aspect was the models of lamps and appliances etc, had to stock for all types, difficult to manufacture appliances as all variants needed to be catered for .
Let us not forget the Rail Networks.
The Original South Aust Government Overland Telegraph took a major slice of the States budget and was argued against and considered Lunacy by the private sector, and economic and financial experts.
Once the value was realised the private sector wanted to cherry pick, destroying the Governments ability to recoup it’s and the States investment. The very same private sector that was not interested and called it irresponsible lunacy
“Fibre-to-the-premises (FTTP) is better than fibre-to-the-node (FTTN) but it costs more.”
If you’re going to make a reasonable assumptions about the cost, wouldn’t you say FTTP costs more in the short term and FTTN will cost more in the long run?
Just my assumption :)
I noticed that one as well Soth, its ridiculous to compare the cost of FTTP with FTTN without including the upgrade portion from FTTN to FTTP as well. Its like comparing half a comms system (FTTN) with a full comms system (FTTP).
“And any broadband is better than no broadband.”
I assume that assumption only applies if said service actually *works*?
Until as of late I’ve been paying for an ADSL1 service at the 1.5kbps rate (the highest I can get and still get since no ADSL2 is available) and yet for all purposes I probably would have saved a lot of money just sticking to dial-up since the connection would be throttled to dial-up speeds during peak hours till the early morning. It was only in the last 3-5 years or so when Telstra got off their arses and upgraded the exchanges w/ Top Hats that I’m actually getting the speed I’m paying for.
Having a service and the service working as intended is two very different things.
This whole article can be summed up in “Hurry up and build something”…
Nope, it’s another infrastructure competition is the best kind because governments are crap article.
It had a heading that was pretending to be about politicization, but what it really should have been was “taking the government out of the NBN debate”, this had nothing to do with politicization.
Economics 101, to have a free market companies must be free to enter and exit the market easily.
If it is not “easy” to enter the market, then it is not a free market.
Operating last mile networks is not easy, as such it is an application ill suited to a free market. This is evidenced by the 1.25 last mile networks in Australia. (Telstra = 1, optus = 0.25). The fact that optus exists proves that it is possible so there is no conspiracy to prevent it, its just not economic for other players to run last mile networks. Just as there isn’t a competing private road network, water mains, gas mains, or electricity distribution network.
Operating as a RSP is a market that is easy to enter and exit, and there you will notice a great deal of competition.
I can see avenues for allowing market competition but none of them end well for the customer if you allow for vertical integration and the creation of vertical monopolies. Allow private companies to compete to build and maintain the network if they can do it cheaper than NBNco in certain areas, they can then sell that service to NBNco who would onsell it to RSP’s. No vertical integration, no favouritism of last mile suppliers for particular RSPs you get the benefits of last mile infrastructure competition in “profitable” areas and keep out the bugbear of only being able to use one RSP.
Allowing vertical infrastructure competition leads to the situation you have in the USA, each area has one provider of cable internet and if they are lucky one of ADSL. There is essentially no competition because running a last mile network is too expensive to be commercially viable.
Google is a special case there, They do things “because google” I feel its largely due to them having enough money and a board with a long term vision that they do things that will pay off in 20 years rather than the next quarter. This is a field governments are supposed to occupy, long term planning for the good of the nation, instead we have a political timeline of 3 years leading to short sighted soundbyte grabbing policies that sell off the fishing boat to pay for this months rent and beer and who gives a damn about next month.
Finally!! Someone who can say what is exactly what is on my mind! Infrastructure competition does not work; it cant.work.
“Infrastructure competition does not work; it cant.work.”
Mobile.
ADSL in exchanges.
Fibre in CBDs (PIPE, Uecomm, AAPT, Telstra, Optus).
Infrastructure-based competition does indeed work, but it’s not appropriate for all situations.
…….not sure if serious
Specifically infrastructure competition works where there is a reasonable chance of service duplication. That is multiple clients or services requested from the same termination point.
There are limited circumstances in the residential market that provide this. Either you move the termination point back to a common point (Exchange, Node, Basement, Point of Interconnect) or… Well that’s the only viable way to achieve infrastructure competition short of competiting technologies, which usually results in trade offs of some kind (e.g. Mobile vs Adsl, Adsl vs Cable) .
“Mobile.”
Works FAR less efficiently than it should…a centralized infrastructure would allow for less cost and much better service.
“ADSL in exchanges”
Again, FAR less efficiently than it should since those exchanges are all controlled by one of the retailers.
ISP’s often must rely on Telstra to fix their problems, and this can take days.
Honestly I don’t know why technical people are always so inclined to pick only one side of the story.
Infrastructure-based competition does work in many cases (hence, we have overlapping mobile networks in virtually every country in the world, and every CBD has multiple fibre providers).
Common infrastructure also works in virtually every country (with most having unlocked the copper networks to retail, ISP-based competition).
You use different paradigms where each is appropriate. It’s not a binary situation, with one or the other being 100 percent the only good option. Tech people often find this nuance hard to understand, in my opinion.
Linux or Microsoft? In my opinion, both — use each where it’s most appropriate.
Fixed or wireless? Again, both.
Apple or Android? Again, both.
Need I go on …?
The mobile network is different.
To a first order approximation the cost isn’t so much to cover an area as it is a cost per customer.
IE the “range” of a mobile network tower is something on the order of 30km, it needs to be subdivided to handle the number of users in that range (ignoring (as many carriers seem to) blackspots and the like)
This is very different to last mile infrastructure.
Allowing competition at the DSLAM level is totally different to competing for the last mile, that would be akin to NBNco allowing RSP’s to put gear into the POI and doing their own aggregation and backhaul, I don’t think there would be any particular issue with that philosophically or economically (technically it’d be challenging to implement but it is possible and also something that is on the roadmap for NBNco in the distant future)
The issue is that its not worth running a last mile network for a commercial return. Optus tried it in the areas they thought would be the most profitable when competing against a single provider whilst adding a value added service (paytv) and they nearly went under as a result.
If we follow the “competition” design we would have 4 or 5 different networks in the air.
Optus spent $4Bn rolling its cable to the “best” 30% of the population, they were presumably doing it as cheaply as could be done. if you expand that with optus, telstra, iinet and TPG all rolling their own HFC network you have spent $16Billion to cover the cheapest and most profitable 30% of the population and each network only has 1/4th of the customers, Your argument is that doing this is going to be cheaper for customers than the government spending $5Bn (guberment bad at monies) on it then wholesaling it.
I am not against infrastructure competition I am against vertically integrated monopolies. Haven’t you learnt from Telstra that that is a bad thing? All you do if you allow TPG to own a building/area is instead of having a nationwide monopoly you have building and suburb wide ones. Don’t like TPG? well they own your suburb so you had better move house. This is what happened in America in the 70’s and 80’s, they had Bell who was a vertically integrated monopoly player, they had an antitrust suit against them and they split it into geographic areas, now look at how many options for retail broadband they have. In general its 2. They have their pay-tv provider who branched out into internet services well after it was rolled out and their baby bell company providing adsl or vdsl. That is not a vision I want for the communications future for the country.
I outlined a plan for how to allow private enterprise to compete in the provision of last mile services that nobody has objected to, on philosophical or practical grounds. The only proviso is last mile providers can’t be retailers and must sell their service to nbnco.
The argument for fibre above all is that if the government is spending umteen billion dollars on it then they should at least put something in that’s going to last. I would support scrapping the MTM NBN, and going back to the original $5Bn plan to spruce things up a bit, service the people with nothing and separate telstra. The MTM is worse than doing nothing, you spend assloads and have no asset at the end of it.
Watched one of those UK Property auction shows recently.
Most buyers tend to do a reno, retaining much of the existing aspects, plaster, wiring, plumbing to minimise cost for a rental propert.
Last time a professional Developer purchased a reasonable good sound property, gutted it replacing, all wiring, plumbing, plaster etc. As he stated, yes costs more, but as a full rebuild actually quicker, this will now be rented with no repairs every 12 to 18 months at top dollar as excellent effectively new property in a desirable area, just expected minor maintenance. Just rent and forget, on with the next.
The difference between a professional long term view and an amateur short term view
So tell me, what’s so different about the water/sewerage mains and powerlines that run down the street compared to the last mile of telecoms infrastructure?
Why do we think that having competing telecoms infrastructure is a good thing but would not think the same of every other piece of infrastructure?
Why do we not have competing road infrastructure? I don’t see 2 competing toll companies rolling out duplicate roads next to each other to fight for motorists.
Is it because it’s easier to monetise the services over fibre? That being said, what benefits to consumers get out of competing infrastructure? I tell you, absolutely nothing!
How do consumers win when say company A spends $2b to roll out fibre to some locations and company B also spends $2b to roll out fibre (or some other technology) to the same area? You now have $4b in costs that the two companies are looking to recover from consumers to pay for the capital BEFORE any profits are made. If only 1 company (ie, Government) spend the money to roll out the infrastructure, then we only need to recover $2b from consumers before we start seeing returns (ie, benefits) instead of $4b.
This blind ideology that monopolies are bad is terribly misguided. The reason why governments build things such as roads, powerlines, water and sewerage mains is because they are considered NATURAL MONOPOLIES.
Renai just dislikes when people claim all infrastructure should be infrastructure monopolies. (And he is right).
Example of good infrastructure competition: Mobile networks.
Example of bad infrastructure competition: HFC Networks. (obviously; this is my opinion).
He isn’t going to make your argument for you; but he will point out mistakes.
*sigh*
You wouldn’t think that I would be slammed for pointing out mobile as a valid infrastructure-based competition arena, when almost every country in the world does it that way ;)
However, Delimiter’s comments don’t always represent mainstream thinking in the telecommunications industry — often people are just pushing whatever ideology they believe in, despite global evidence that things are going the opposite way.
“You wouldn’t think that I would be slammed for pointing out mobile as a valid infrastructure-based competition arena, when almost every country in the world does it that way”
If your friend jumped of a cliff, would you do the same? :)
Just because almost every other country does it that way, it in no way means that it’s the best way to do it.
I’m not slamming you, but that argument always reminds me of my brother’s normal whinge of “but CHARLES gets to stay up late…” when we were kids.
Do you have another reasoning for overbuilt mobile networks being more efficient?
I can’t believe this:
Mobile Phone networks are an appalling example of inefficiency. The original idea was that wherever the network had a blank spot, a small operator could step in a fill it. But the way it has worked out is that you are locked into a given network and cannot easily hop between networks. The phone companies have used the technology to create effective monopolies. The original phones had provision to automatically select your preferred network, now you have to swap SIM cards to change networks.
> …people are just pushing whatever ideology they believe in, despite global evidence that things are going the opposite way.
What the hell has that to do with anything? Do we really want to make America’s mistakes all over again?
Do you have any evidence of a country where the national mobile networks are not run on an infrastructure competition basis?
And how are they a monopoly? In Australia you can be on one of three networks.
Think about this:
Why don’t we have automatic roaming between mobile networks? If you reach the edge of one network, why doesn’t your call automatically switch to another available network?
The superficial reason is that it would be technically difficult, but that is only because the system was designed to lock you in, to actually prevent you swapping networks.
If the phone networks were forced to provide a wholesale only service and provide seamless migration between networks, you could scrap government networks. But of course seamless inter-working is an anathema to private networks.
This is why the original PMG network was created in the first place. The private companies had made a such a mess of it that reportedly you couldn’t even dial between some competing networks.
In rural and regional areas — that is, the only areas where there is really a substantial problem with a lack of coverage — the smaller carriers (typically Vodafone) so have the sort of roaming agreements you describe, with larger carriers such as Telstra.
But in the metro areas, there is no need for this … so it doesn’t exist.
“In rural and regional areas — that is, the only areas where there is really a substantial problem with a lack of coverage”
And isn’t that reason enough to look for an alternative?
Why would you perpetuate a model that can be improved substantially, especially when it would also be cheaper…
“would you perpetuate a model that can be improved substantially”
Do you have any real-world evidence that it can be improved substantially (as in, examples where it has), or is this just speculation based on theory?
“Do you have any real-world evidence that it can be improved substantially”
Obviously not, since (as you point out) it is the one area of telecommunications that has not been tried as a government owned infrastructure. That said, I would like to point out that:
1. All the other areas that have been government owned infrastructure have been more efficient.
2. Modern telecoms would increase efficiency in a government infrastructure by allowing privately held competition in the retail of that infrastructure (things like service, value adding, etc. could be greatly enhanced while maintaining a fair competition with a much lower barrier-to-entry).
3. As there is no “real world” comparison possible, you cannot use mobile as an example of infrastructure competition working better either, as there is no comparison possible.
I agree that we are both spouting theories with no example to base a comparison on yet, but for the life of me I cannot think of a reason why privately owned infrastructure would increase efficiency. Retail competition most certainly, but not infrastructure competition…
“it is the one area of telecommunications that has not been tried as a government owned infrastructure”
Excuse me? Mobile was almost universally government-owned infrastructure in most countries until those countries’ incumbent telcos were privatised (including Australia) … and it remains government infrastructure in many countries which haven’t gone through full privatisation.
“All the other areas that have been government owned infrastructure have been more efficient.”
Um … yeah. Not really correct, dude. Almost universally, it has been shown that the private sector can run most endeavours much more efficiently than Government. Hence the long-term trend towards privatisation in every first world country over the past 20 years …
Braindead analysis combined with historical revisionism. The NBN was created to deal with the problem of regulating the natural monopoly of the last mile and the demonstrable lack of private sector development compared with mobile. It staggers me that he somehow skips all the drama of the Sol years; that actually provided the impetus for the NBN.
The only real debate is whether it’s better to spend money on regulating a private sector monopoly which naturally tries to obfuscate the real cost of providing the service, or spending that extra money on government inefficiency but with better transparency. That answer usually comes down to which side of the political fence you sit on. The third option of competitively building multiple freeways to your door has already proven to be economically mad!
The problem with TPG et al cherry picking is that while it speeds things up, they will charge the same prices or more without any benefits of cross-subsidisation. So now you have two problems, regulating the NBN and regulating TPG and other entrants and the crazy overhead associated with that (see also electricity). TPG can only be in this position because the government put Telstra in golden handcuffs.
Hang on.
The ACCC and regulatory bodies will have an empire building fest, as will the lawyers.
Get your priorities right
I wasn’t aware the cross-subsidies in the NBN were hidden. There were many cries of “I’m not paying for someone else’s pr0n,” which were generally rebutted with “Get the cheaper plans, and they’ll be paying for yours.”
The sad fact is we are holding our breath and the government will not deliver because too many voted libs.
Most who have some true understanding know it’s wrong.
Now we are all screwed. MT/LNP will not do fibre. They’ll hand FTTN to telstra or it’s evil spawn and make sure NBN will never rise again.
It’s accepted that regional and rural areas cost more to deliver broadband. It doesn’t matter if there is a cross subsidy in the distribution of a “national carrier” or if the government allows the market to supply the cherry picked areas and the government picks up the tab for rural and regional areas, it’s still paid for by either the taxpayer or user which are one in the same as everybody uses telecommunications services.
Huge difference.
Those that benefit most from the private sector option are also those that scream for smaller Government and reduced taxation, tax to focus on GST which is to include life essentials which will have minimal impact on the well off.
Reduced tax pool, where will the money come from for all those “transparent” subsidies and the hidden ones squirreled away in Health, education, rural aid. govt. services, National Security, Defence, the disaster organisations.
Obviously will have to be cuts in Public health, education, Social Services etc, don’t forget the Billions in taxpayer dollars being spent and increases promised on infrastructure to keep the cities and CBD’s viable for the high value citizens and companies
The whole “cross subsidy” issue is a red herring anyway, there is _always_ some level of cross subsidy in any endeavour in Australia (or any business/country really).
“Nobody can ever state with certainty how much it will cost or how long it will take to deliver broadband services to more than 22 million people spread out over 7.6 million square kilometres.”
The population density in Australia is similar to most other developed countries. Most of the 7.6 million square kilometers is empty – always has been and always will be. One can simply check out the CIA’s data on kilometers of paved roads vs population to see that the ratio is just like the USA. The length of paved roads is an excellent indicator of where the population is located.
Australia’s problem is its inherent disorganization and (ironically) its over-government.
On a random note… was there any “hidden intent” in that picture of Neville Chamberlain proudly holding up a “guarantee of peace” letter from the Fuhrer believing he had “averted” war through appeasement. Which we all know in hindsight the letter was complete bollocks from the Germans =P
.. or just a complete random coincidence =P
It’s just a picture I like to use occasionally to demonstrate the “politics” theme :)
First time poster here. The posse I incite will determine if it’s the ONLY time. :)
What I’m finding … sad … about the discussion on this article is the almost complete lack of any point-by-point analysis of the article from those who disagree.
I see people criticising: “This diatribe …”, “This is an appalling article.”, and “Braindead analysis”>
I see snide comments: “Perhaps people without any clue …”
What I DON’T see is any significant rebuttal of the claims in the article.
Now, before the offended get up on their hind legs, I’m NOT defending the article. I don’t know enough about the facts in question to form an opinion. Instead, I’m criticising those who claim to be better informed, but who won’t go to the trouble of informing me, and those like me.
Renai goes to a lot of trouble to analyse issues in his articles. It’s a pity that his readers can’t, or won’t, follow suit.
+1
This has also frustrated me about this comment train. It doesn’t appear to me that much of what de Percy is saying in the article is that controversial. And yet people are slagging off his entire writing without actually addressing what he’s saying.
It’s hard to rebut a straw man argument David.
The main thesis is that the history of previous telco failures is due to government intervention ergo the failure of the current NBN is due to the failure of the government to privatise Telstra correctly and leave the market alone. As he says, “Government has always been slow to deliver communications technologies in Australia (you only need to compare Australia with other OECD nations over time to see this)”; but nowhere does he provide an example of an OECD country that has performed better than Australia with a market based policy, or a theory of how that might happen, or even why the attempts at competition failed. An example of TPG cabling one apartment block in 2014 is not proof in itself that free enterprise would cable Australia.
“the failure of the current NBN is due to the failure of the government to privatise Telstra correctly and leave the market alone”
Can I just point something out here: It is ALMOST UNIVERSALLY ACKNOWLEDGED in Australia’s telecommunications sector that the failure of successive governments to successfully privatise Telstra (especially via structural separation) is behind ALL OF THE CURRENT PROBLEMS BEING SUFFERED re lack of upgrades/investment.
This represents mainstream thinking in Australia’s telecommunications industry. And the reason people think that is because we have the examples of the UK, New Zealand and many other countries where the incumbent was successfully privatised and largely split, and the required investment and upgrades is occurring.
I hope people can understand these facts. Because if you can’t, then you really have no role taking part in telecommunications debate in this country or on this site.
*end rant*
… and there’s no argument from me on that. But the article invites you to read into it what you like and shake your fist at the sky without offering any argument of substance. “Let the market work where it works, let government step in where it doesn’t.”. Where has the market worked? If as the author claims, government intervention continually fails why is stepping in going to help?
It’s rubbish.
“The only way to unshackle NBN from politics is to get government out of the marketplace where it exists.”
Just like Mexico one presumes, because that is such a success story. http://www.ibtimes.com/mexicos-telecom-reform-pits-president-enrique-pena-nieto-against-billionaire-tycoon-carlos-slim-helu
hey Brett,
apologies, I’m not confident you’ve understood the argument being made in this article, and your comparison with Mexico is not appropriate in this context. You’re not arguing the nuances of the debate, but focusing on extremes. Because of this, I’m placing you on a pre-moderate list. I’ll evaluate your comments for rationality before I approve them.
Kind regards,
Renai
Actually Renai, I beg to differ. Mexico is an example of unfettered private enterprise controlling what is now national infrastructure and the cost to the economy without government interference. In fact an example of what the author was proposing. Sure maybe a little extreme, but consider if Telstra had been allowed to do it’s vertical monopoly FTTN in high value areas
The author was proposing a mix, not ‘unfettered’ … Honestly, this comments train is full of ideologues …
The problem with the article is this:
Let the market work where it works, let government step in where it doesn’t.
How do you define what “works”? If you set your bar low enough that “there is broadband available” is what “works”, then yes, you can let the market cherry pick profitable areas and taxpayers can subsidise the bush. But that is a short-sighted, narrow-minded and unsustainable view. The (original) NBN takes a holistic, forward-looking view of the telecommunications industry and the delivery of last mile infrastructure. It takes the view that last-mile telecommunications on the whole is somewhere that the market does not work – because an inequitable system with lesser outcomes that is paid for out of taxpayer subsidies is broken, no matter that the market “worked” in a relatively small proportion of profitable areas.
The NBN as it was envisioned by Labor in 2009/2010 was a ‘mix’ – public wholesale infrastructure monopoly, private retail service competition.
The author on the other hand was not proposing a ‘mix’ as you say, he was proposing ‘unfettered’ until the unprofitable point, from which the taxpayer can foot the bill.
I’ll try to answer each of the points in the article. Unfortunately I will have to keep it short, and I don’t have access to my library at present.
– A commercially sustainable private telegraph system was shut down by government when it threatened revenues for the South Australian Government’s network.
– The first Australian telephone exchange was run by a business (established two years before London’s exchange). Government shut it down to improve “quality”.
The Government had decided that we were to adopt the English approach rather than the American. This meant that there would be no private communications networks. This was a fundamental political and philosophical decision, it couldn’t be any other way. To argue that this was an “inefficiency” is ludicrous.
– Australian designs for telephones and exchanges were overlooked by various colonial governments in favour of foreign imports.
Once the PMG was up and running, we designed and built own own equipment (sometimes under license), it was recognised world wide as of excellent quality. As always, we went with the worlds best equipment. How was this a bad thing?
– Wireless was available right from the beginning, but government took control of it, refused to let businesses use it, and then did nothing for more than a decade. Amalgamated Wireless Australasia (AWA) – the first wireless agent in Australia – came about largely because the Australian government had infringed wireless patents trying to build its own systems.
In the early days the technology was very crude, and consequently there were few networks of any kind. Once again, the Gov had the policy that there be no private networks. Plus the experience of a World War (or two) had National Security very much in mind. To argue that this was an “inefficiency” is ludicrous.
– FM radio didn’t happen for decades because government decided we didn’t need it.
Actually, no. The Commercial AM broadcaster were terrified of FM. They did everything they could to stop it. The TV broadcasters successfully lobbied to get the FM band allocated as TV channels, and that mess took decades to unravel.
– Who can forget disconnecting all their non-Telecom devices any time there was problem with the phone line, otherwise Telecom made you pay just for turning up. We learnt quickly not to have the audacity to use non-Telecom products, even though Austel said we could.
This is nonsense. Much of the imported gear was cheap plastic rubbish. It was perfectly reasonable for Telecom to charge if it turned out to be faulty or was installed incorrectly.
– The “Rolls Royce” version of Aussat, Australia’s domestic communication satellite system, hardly made a dent in Australia’s poor access to television content. In the far north, you could either watch NQTV or the ABC. Everywhere else in the developed world you could watch hundreds of channels.
This is the biggest lie of all. The original design for Aussat gave every Australian access to the Free-To-Air channels (plus many more) in every State. The Regional Broadcasters panicked and lobbied furiously to stop people watching City TV via satellite, as this would bypass their local advertising. At the last minute Aussat was encrypted via BMAC and viewers had to buy a hideously expensive and unreliable BMAC decoder box.
– Monolithic Telstra was created by government then prevented from acting like a normal business because government got its privatisation plan wrong.
Many would argue that it shouldn’t have been privatised at all, but yes they certainly got their privatisation wrong. It should have been split into Wholesale and Retail from the start. But how on earth does this support your argument?
Thank you. This is much more what i’d hoped to see.
hey guys,
I’m going to close comments here. I’m not satisfied the real issues are being discussed, and there is a general attitude that telco infrastructure must be held by the Government, or else it’s pointless. That’s clearly not true and does not represent mainstream thinking in the telecommunications sector. With this in mind I don’t see the point in debating what are clearly edge cases.
I’d encourage readers to understand that things are not as black and white as you may think. In some countries (predominantly throughout Europe), there is little infrastructure competition and telco incumbents have generally had to wholesale their networks as they do in Australia. But in the US and Asia, things are completely different. I think you’ll find a great deal of infrastructure-based competition in both these geographies.
Claiming that infrastructure-based competition is not possible or efficient in telecommunications is just inaccurate. So is claiming that infrastructure-based competition is the only way things can work. The truth is that both are valid approaches in the right context. Even in Australia, we have infrastructure-based competition in mobile but only to a certain degree in fixed broadband. Both scenarios exist side by side.
I’d like to remind people once again that this is NOT a BLACK AND WHITE debate. There are nuances here. But if people don’t choose to acknowledge that the truth is usually grey and not black and white, then I will shut the debate down. Delimiter is an evidence-based site where I only want readers with open minds. I don’t like people taking fixed positions for all eternity and I don’t have to have that kind of rigid push/push debate on my site.
Look around you, people. Look at the EVIDENCE. Both infrastructure-based competition and non-infrastructure-based competition clearly exist and both are clearly functional when in the right context. If you can’t get your head around that concept … then Delimiter is clearly not the site for you.
Yours in disappointment at the failure of another thread,
Renai
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