My latest on The Conversation: NBN and Politics

The politics of unshackling the NBN from politics

By Michael de Percy, University of Canberra

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.

Politicians are unlikely to commission a report that doesn’t match their position. Stefan Postles/AAP

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.

Book Notes: "Homage to Catalonia" by George Orwell

Homage to Catalonia by George Orwell

My rating: 5 of 5 stars


I received this book as a gift at around the same time as I had started Hemingway's "The Fifth Column and Four Stories of the Spanish Civil War". I must say I was impressed by Orwell's (or should I say Blair's) writing style as it seemed very distant from 1984. I found it difficult to put Homage down despite being very busy with work and other pressing issues. Nevertheless, I intend to explore the rest of Orwell's work. It is a real shame that he died at such a young age. One can only wonder whether such genius had more to offer or otherwise simply ran out of steam. Regardless, I am rather grateful for being gifted such an important work.



View all my reviews

From: The Conversation: Archaic cross-media ownership laws won't save local content

© Depositphotos.com/@marzolino

Communication minister Malcolm Turnbull’s proposal for changes to cross-media ownership laws has reignited calls for the government to protect local content.

On the surface, it appears reasonable to expect government to regulate for the provision of local news coverage. Indeed, Nationals leader Warren Truss wants to ensure that “genuine localism” is maintained should there be any changes to cross-media ownership laws.

With Australia’s population concentrated in the larger metropolitan regions, “the bush” is rarely seen as a profitable market for commercial media operators, hence the assumption that government should intervene. But are traditional concerns about content versus carriage relevant in the NBN era?

Content is one thing…

Nine Network chief David Gyngell has labelled Australia’s media ownership laws “archaic”, arguing media companies will struggle to invest in their local news content without the ability to expand beyond the current level limited by the law.

Commonly referred to as the “two out of three rule”, ownership of more than two of either television, radio or newspaper services in a given region is prohibited. And no individual provider is permitted to reach more than 75% of the population. Further, regional free-to-air broadcasters are required to provide local media content throughout Tasmania, and regional areas of NSW, Queensland and Victoria. It is likely that any consolidation of existing media interests will signal the end of regional broadcasters WIN TV, Prime Television and Southern Cross. But will this mean the end of local content?

Carriage is another…

When you can access global content via NBN, the distinction between television, radio and newspaper will no longer matter. And how can you limit a provider’s online reach? Improvements to broadband, driven by the NBN, enable global content to be consumed ubiquitously. Consequently, restricting cross-media ownership for the sake of parochial interests will only assist global competitors. Existing ownership rules restrict the business models available to local firms.

With global competition, it is folly to think that government can legislate for localism. Today, major portions of content on television and online are actually generated by consumers (famously labelled “prosumers” by Alvin Toffler in 1980). However, old-school localism is substantially one-sided.

The former Australian Competition and Consumer Commission chief Graeme Samuel argues the issues of carriage and content are being confused. If there is demand for local media content, then the market will deliver it. This view reflects the global trend towards the reconvergence of the communications industries that were deliberately segregated during the 19th century.

The concept of the common carrier emerged to ensure telegraph operators could not control the distribution of news stories to newspapers. Obviously, regulating carriage in an era where television, radio and newspaper content can all be delivered via the internet is rather passé.

Part of the cross-ownership legacy is the way we watch television. Many lounge rooms are dominated by a television. Consequently, free-to-air programs remain popular as it is comfortable to simply sit down and watch TV. But devices such as the XBox and Telstra T-Box enable online content from global providers (such as Youtube and Netflix) to be watched in the same manner. This means the government’s ability to protect local content through regulation will be increasingly over-stated as online content becomes part of our ingrained habit of consuming television programming. Indeed, the government has indicated it is unwilling to prevent Australians from accessing legitimate services from overseas providers.

Defining localism

Often neglected in this debate is whether localism ever existed in the first place. Until the 1990s, regional areas such as Queensland’s far north had only two local television stations. Local, yes, but hardly diverse. And viewers had virtually no ability to participate in the development of local content. Localism is much more than simply requiring commercial television stations to provide local news services. Which begs the question: what is “genuine localism”?

Broadband services certainly enable greater consumer participation in news media production. And the rise of Facebook and Twitter have seen changes in the ways that news media content is consumed.

Discrete groups of like-minded individuals sharing information via social networks would be the closest thing to a “genuine” localism. But how any Australian media provider can compete in this global space with one of its three “arms” tied behind its back is anybody’s guess.

The traditionally separate news media carriage services do not have the influential power they once had. The reach of news media services is not restricted by the type of infrastructure used. These older telecommunications and broadcasting networks were necessarily controlled by national governments and regulating content was much more practicable. The reconvergence of news media services, facilitated by NBN, makes the cross-ownership laws increasingly irrelevant.

Social networks transform the traditional top-down localism of television programming to a more participatory localism driven by consumers. This further erodes the relevance of Australia’s cross-ownership laws.

There are valid concerns for the regions that market failure may prevent local commercial news service delivery. But equally, regionally-focused companies with markets demarcated by outmoded ideas about communications technologies will not help.

Placing restrictions on cross-media ownership where the distinction no longer exists is hardly the recipe for a commercially viable and internationally competitive communications industry. Ideas about localism need to change too if the advantages of reconvergence are to be realised by Australian media companies. Indeed, regulating for localism may well benefit overseas competitors rather than the people it was designed to serve.

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.