Monday, February 21, 2011

NBN vs alternatives, again

I don't really want to offer a counter anecdote at this stage, because there is something more fundamental about the NBN plan than the simple "Cost for Cost - speed for speed" rationalisations of the argument between the plans broadly outlined by the Government and opposition.

The fundamental thing for me is the experience Australia had with the privatisation of Telstra in the first place, and whether the mistakes made then can be made up with a new plan.
The rationalisation of privatisation at that point and generally was that investments formerly provided by the Government would be made by private enterprise, and that costs would be borne by the end consumers who were most willing to pay for the services provided.
The main unexpected downsides was that voters even in cities were not happy with the disparity between country and city services, so a regimen of regulation was built up so high, Government became a virtual "owner" of Telstra's minimum service, but in a much more inefficient way than *actually* owning the associated infrastructure.

A second downside was the inefficient duplication of things like mobile phone towers, which provided neither more coverage, nor extra reliability.

A third issue can be illustrated with an anecdote. When a *Telstra* Fibre cable was accidentally cut, all services *other* than Telstra, including mobile phones stopped working for huge swathes of regional areas, including many which ostensibly should not have even relied on that connection. Ironically many Telstra services continued working at a slightly lowered reliability.

The ownership structure of the NBN is the real key to why it will resolve the failures of privatisation without harming its successes.


Me Again said...

"unexpected downside"? Being introduced by a government that included rural populists, if I recall correctly, I am sure the high levels of regulation were always seen as a feature of the privatisation, rather than a bug. A government of lawyers that doubled the size of the law and never gave any thought to the compliance burden they imposed on business... I've just decided I don't miss them anymore.

Marco said...

Points -

- Rural populists were, on the issue of equal access in rural areas, very popular in the cities as well, giving them disproportionate clout.

- Excessive regulation weakens the whole rationale of privatisation in the first place. I don't think it was thought a "feature" as much a thought that it would neither be a burden on the Government nor on private enterprise, but it was both, and would continue to be under the Coalition's alternative.
You either have small Government influence, or you have guaranteed minimum service - trying to have it both ways means you end up with neither. I am not pretending that the NBN plan is a small gov solution by any means.

- In some ways, there is an echo to the crazy days of the dot com boom in the US, when private enterprise was increasing bandwidth without a hint of a thought to profits in the future. At least with the NBN, the "last mile" to the premises has been given due consideration. In the US, what was built in the crazy dot com boom, has eventually had traffic increase to the point where it made sense to have built such eccessive bandwidths in the first place, even though the entities that funded them had long gone.

Chris Fellows said...

(BTW Marco, if you mind me posting an off-topic diatribe, just delete it and tell me to get my own blog already!)

It leaves a sour taste in my mouth that the one time the UN can get together it is to kick a man when he's down...surely the time for sanctions against Qaddafi was when he invaded Chad, or blew up that passenger plane, or fomented Tuareg rebellions in neigbouring countries, or killed thousands of unarmed prisoners, or had Sadat assassinated for making peace with Israel (the last not proven, but as proven as some of the allegations being used as justification now)?

If I was part of a mob burning down a police station and calling for the violent overthrow of the government, I would consider that I had crossed some red line between being a 'civilian' and an 'insurgent' and that it would be pretty much justifiable self-defence if the government used deadly force against me. And if there were people all over the country burning down police stations, I would think the government was pretty much justified in imposing a curfew and shooting me if I broke it. And if my whole town was in the control of police-station-burning hooligans, I would think the government would have a pretty good case for sending the air force against us. The hypocrisy of the UN condemning Qaddafi for doing what almost every UN member state would do if they were in his shoe is kind of icky.