The irony of waiting for the NBN in Palmerston via Gungahlin

The speed of my shaped broadband connection today

My 15GB download limit using wireless, the only service that can provide broadband speeds in the area I live, was consumed days ago. It is now the day before the download limit is reset, which happens to coincide with the day I have the most time to focus on my research. I need to answer a specific question about the NBN. 

I am aware of the plan to see Telstra’s copper networks decommissioned and also for Optus’ HFC network to be decommissioned, and that NBN Co will provide a national Layer 2 wholesale network. I am also aware that it will be possible for NBN Co and its wholesale customers to provide point-to-point services for enterprise networks and to operate as wholesalers using NBN Co's infrastructure. 

However, my question is, once NBN has control of the wholesale infrastructure, will the market for wholesale infrastructure be contestable? For example, what will prevent another provider, or indeed, an existing provider such as Transact in the ACT, from being a wholesale provider over a new or an existing network? 

Obviously it would be difficult to become a competitor to NBN Co as the major wholesale provider, but I haven’t been able to find anything about future contestability of wholesale broadband markets once NBN Co begins to operate. The question I want to answer (with appropriate references, of course!), is this:

Is there a specific law that gives NBN exclusive wholesale Layer 2 provision in Australia?

To answer this question, I have been using my shaped wireless connection to download copies of NBN Co's annual reports and some other information from the DBCDE website. The tabs for the NBN Co sites have been sitting there spinning for hours.

Just a few more hours to go before my plan is reset. Just a few more years before we get affordable high-speed broadband in Palmerston.

The irony is that right now, I am literally waiting for the NBN in Palmerston via Gungahlin.

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.

Duct Structure is the Problem AND the Solution

Photo © Michelle McAulay, UC

Today I was fortunate enough to meet a cable laying crew and get a glimpse of what it is like to be at the coal-face of the broadband industry.

What struck me was the myth perpetuated by proponents of the NBN who pointed to the problems of the past where telegraph and telephone infrastructure were over-duplicated by competing firms.

Not much has changed today. Admittedly, the extent of duplication is not over-crowding the above-ground scenery as it may have in the past, but there is still plenty of duplication by private and government networks.

Given that cable-laying is considerably less labour-intensive than it was ten years ago (my knowledgeable companions explained how, using modern equipment, a crew of 3 to 4 workers today can do the work that 10 to 12 workers did ten years ago), the civil works - digging the trenches and laying duct - is the biggest cost factor, especially as the distance increases.

[A] high proportion of costs in [a new build] scenario that are due to Civil Works – 87% and 89% in the urban and suburban geotypes respectively. Duct sharing therefore presents a significant opportunity to reduce industry-level costs versus duplicative new build construction (CSMG 2010: 52).

In the UK, BT's Openreach appears to be addressing the issue of  sharing duct structure as an efficiency measure. Nonetheless, broadbanding Australia is a considerably bigger task than broadbanding the UK (which is only slightly bigger than Victoria).

Canada provides a better comparison, of course, but it has a long history of sharing infrastructure because of the cable television industry (CSMG 2010: 15). That is not to say that Canada has a fair and equitable history of infrastructure sharing, as facilities-based competition has shown. 

And while the CRTC has a mandate to ensure that communications providers, in particular incumbent local exchange carriers (ILECs), provide access to the duct structure, it has been proven that the CRTC does not to have jurisdiction over utilities infrastructure, even though this infrastructure could be used by municipalities to provide broadband services.

But given that the Australian industry has only really engaged in infrastructure sharing since the late 1990s (CSMG 2010: 11), getting access to the duct structure is still a relatively new game.

With all the attention focused on the NBN and its various arrangements to access Telstra's duct structure, a great deal of faith seems to be placed in NBN Co's ability to negotiate what is effectively a new idea in the sector. A simple solution appears to be the building of a comprehensive duct structure that encompasses all networks, including roads, rail and utilities.

Regrettably, the constitutional imperative forces the Commonwealth's hand every time, and we end up with control systems instead of communication systems. Nonetheless, the most obvious role for government is constructing and managing access to the duct structure and leaving businesses to connect the cables. With the NBN stalled yet again, we can't afford to ignore the obvious any longer.

Consequences of communications control-freaks: Wireless-less tragedy of the SS Yongala

SS Yongala, before 1911

It is difficult to wade through the history of communications technologies in Australia without entangling oneself in the weeds of technological nationalism. These promise glory, but for the uninitiated, tragedy lurks beneath their murky camouflage.

Despite the introduction of the Wireless Telegraphy Act in 1905, Australia was a wireless backwater for a decade longer than it should have been.

Before the introduction of the Wireless Act, it is quite clear that the Postmaster-General's Department (PMG) ‘wanted absolute control’ over wireless. However, from 1902 to 1910, the Australian Government deliberately delayed the introduction of wireless technologies in Australia (Moyal 1988: 110). And while the Australian Government was influenced by ‘a British post office hostile to Marconi’, it rejected a decade of offers from a variety of other companies including Telefunken and De Forest (Moyal 1988: 110).

Despite setting aside £10,000 in forward estimates to establish a coastal wireless service after the Marconi company conducted a demonstration of wireless telegraphy from Queenscliff, Victoria in 1906, nothing happened until the first coastal station was built at Melbourne's Domain in 1912.

But by then it was too late to prevent one of Australia's worst maritime disasters. The SS Yongala disappeared off the coast of Queensland during a cyclone in 1911. The most unfortunate part of the tragedy is that the ship was still in sight of land when a nearby signal station received a telegram warning of the cyclone but without a ship-to-shore wireless capability observers could only watch as the ship sailed into the storm (Maritime Museum of Townsville 2008).

The Australian Government was criticised for its cavalier attitude towards wireless but the control-freak nature of things didn't end there. Although a number of coastal wireless stations opened in Australia in 1912, the coastal station in Melbourne's Domain was established using what the Commonwealth claimed was its own equipment (Deloraine and Westbury Advertiser 1912: 1; Barrier Miner 1912: 3; Given 2010: 60.3-60.5).

It appears that the government went to extraordinary lengths to maintain complete control of the coastal wireless stations by attempting to avoid the use of the Marconi system. 

After an introduction in London, Prime Minister Andrew Fisher appointed John Balsillie, the Australian-born founder of the British Radiotelegraph Company, as the PMG’s engineer for radiotelegraphy.[1] Balsillie established twenty stations by 1915 (Cleland 1979), the first of which used his own ‘invention’.

The Barrier Miner (1912: 3) reported on the Commonwealth’s reluctance to reveal any details about the first coastal station in Melbourne:

The Commonwealth Government, in fitting up its wireless stations, is using what it claims to be a system of its expert (Mr. Balsillie). Nobody knows what this system is. The Commonwealth claims that it is one which does not infringe any existing patents, but in almost the same breath as this it was announced by the Postmaster-General [Charles Frazer] that if any other system was being pirated the Government would be prepared to make suitable reparation to the owners of the patents…

When the Melbourne station was opened certain persons connected with the wireless companies in Australia sought permission to inspect the plant with a view to seeing if it was really all that was claimed by the Postmaster-General. Mr. Frazer, however, declined to allow such inspection, at the same time reiterating his statement that no patents were being infringed.

The representatives of the Marconi company in Australia are not content to take the Postmaster-General's assurance about the exclusiveness of the system of his expert.

Further, the contracts to build the major coastal wireless stations at Sydney and Perth did not go to the Marconi system. Instead, these contracts were granted to Australasian Wireless Ltd, a Sydney firm with the patent rights to equipment developed by the German company Telefunken (Goot 1991).

A series of patent disputes with Marconi commenced in 1912 and the Commonwealth settled out of court with Marconi in 1915. In the meantime, Marconi's Australian operations had merged with Telefunken's Australian operations to form AWA.

By 1922, the Commonwealth entered into a public-private partnership by purchasing a bare majority in AWA (for £500,001) to extend the international beam wireless service. This arrangement would last for thirty years (sound familiar?) because neither the Commonwealth nor AWA had any idea how to dissolve it.

The arrangement also meant that the Commonwealth was locked into the radio broadcasting industry because, at the time of making the arrangement with AWA, it had been unable to guess what might have happened in the future.

None of this helped the 122 poor souls who lost their lives on the SS Yongala in 1911. The location of the wreck wasn’t confirmed until 1958.

But one can only imagine the helplessness felt by the lighthouse keeper on Dent Island as he ‘watched Yongala steam past into the worsening weather. It was the last sighting’, knowing full well that the technology to save them could have been installed nearly a decade earlier.

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[1] The Australian Government decided to use circuits designed by Balsillie exclusively in an attempt to avoid patent problems with Marconi (Goot 1991). However, the 'Balsillie System' of wireless telegraphy had been found to be ‘an infringement of the Marconi patent’ in 1911 (Cleland 1979).