Sunday, 19 February 2012

Government control of communications: Where is the evidence of success?

Photo by Bidgee CC BY-SA 2.5
The Commonwealth has a long history of controlling new communications technologies. Typically, the monoliths developed to control these technologies create demands on policy actors, particularly if dissenting voices are to be heard during the melee of government and well-organised industry interests battling it out within the constraints of the existing institutional framework.

Bureaucratic approaches adopted to control communications technologies limit participation in policy-making to well-organised firms and government-sanctioned, well-organised policy actors. Enabling a space for dissenting voices proves problematic as the Commonwealth's propensity to control new communications technologies in Australia typically results in the technology being controlled by a government-sponsored monolith that can't quite keep up with technological change. 

NBN Co is simply continuing a long tradition of government-controlled monoliths - PMG (1901-1975); AWA (1921-1951); Telecom Australia/Telstra (1975-2006); and now NBN Co (2009- probably 2040) - all products of the Australian way of "ensuring" regulatory certainty.

Regulatory certainty typically refers to ensuring the rules are clear or that barriers to entry to certain industries have some economic justification. But in Australian telecommunications, the culture of the monolith is so embedded that regulatory certainty means:
more than simply knowing prices earlier or having a ‘streamlined’ process for setting prices. Regulatory certainty requires that parties, both monopolist and access seeker, can predict what prices will be next year and how they are likely to evolve in the long term. This requires knowledge of both: (a) how regulated assets will be valued in the near term; and (b) how the level of compensation over the asset’s life will reflect that valuation (1). 
Broadband, the latest major communications technology "problem", appears to have been "solved" by creating another monolith: NBN Co. But how are these monoliths justified?

Simple. Whenever there is a policy problem in the communications sector, government produces a report that states just how well government is doing:
The importance of telecommunications in this country has been widely recognised and much has been done to ensure the adoption of modern forms of communication and in providing efficient services in all settled areas of the Commonwealth (2).
The following table was used as evidence for the statement above from 1960:
Australia ranks high in world telephone development. This is shown by the comparison of international statistics in Figure 5 (2).
Australia ranked "high" in 1960 but this needs to be put in perspective. During the 1950s, most of the countries Australia outperformed were still recovering economically from the destruction of World War II, whereas Australia ranked lowest of the neutral countries or those relatively untouched by the devastations of total war.

The "Australian way of 'doing' communications policy" does not work because the evidence, if considered objectively, doesn't stack up to support a continuance of the same approach. As Albert Einstein supposedly said, insanity is"doing the same thing over and over again and expecting different results"

Dissenting voices are hard to find, but here are two historical examples you won't find in your typical self-congratulatory analysis:

Amos (3), in his 1936 Story of the Commonwealth Wireless Service, was hardly enamoured with Australia's communications laws in his introductory statement:
Having passed this draconic piece of legislation [the Wireless Telegraphy Act of 1905], the Second Deakin Administration took no further action in this matter
Nonetheless, Green (1976), Secretary of Postal and Telecommunications, was quite comfortable with government's role in the radio broadcasting industry (4):
It can therefore be said that, for nearly thirty years while broadcasting was in its infancy, successive governments have found departmental control a satisfactory means of exercising the communications power.
But the Federation of Australian Radio Broadcasters (now Commercial Radio Australia Ltd) was not so pleased with the "satisfactoriness'" of government control:
Here is an early indication of the poorly-concealed objective of the authors of this document clearly exposed in the assertion that Governments found "departmental control a satisfactory means of exercising the communications power". Whether it is satisfactory to the community is a question which does not appear to have been asked (5).
Attempts to improve consumer participation in industry standards have appeared from time to time (6), but this has occurred within the monopolistic industry structure. As government centralisation tends to be matched by centralised industry bodies, it follows that a process of decentralisation might be resisted by the centralised industry bodies. A consequence of government control has been the top-down establishment of the major consumer organisation to represent the interests of consumers in the telecommunications industry: the Australian Communications Consumer Action Network (ACCAN).

Although the government claims that ACCAN has been successful, the government has a habit of finding the positives in everything it does. Peeling back the layers of history is like peeling an onion: it makes you cry, but someone has to do it!

Notes:
(1) Ockerby, J. (2009). 'Reform of Part XIC: Regulatory Certainty: Increasing regulatory certainty for telecommunications assets in Australia: A report for Optus'. Competition Economists Group.
(2) Postmaster-General’s Department (PMG) (1960). Community Telephone Plan for Australia 1960. Melbourne: Postmaster-General’s Department.

(3) Amos, D.J. (1936). The Story of the Commonwealth Wireless Service. Adelaide: E.J. McAlister & Co.
(4) Green, F.J. (1976) Australian Broadcasting: A report on the structure of the Australian broadcasting system and associated matters. Melbourne: Postmaster-General's Department.
(5) Federation of Australian Radio Broadcasters (1976). Australian Broadcasting: A report on the structure of the Australian broadcasting system and associated matters: A critical appraisal. Milsons Point, NSW: Federation of Australian Radio Broadcasters.
(6) Consumers' Telecommunications Network (1994). Raising the Standard: Ensuring consumer participation in telecommunications standards setting. Redfern, NSW: Consumers' Telecommunications Network.




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