Time for a Specialist Comms Regulator

With the ACCC increasing its staff ahead of NBN Co's ownership of the wholesale communications network, it is timely to consider a new, specialist communications regulator for Australia to tackle the issues of technological convergence which are largely being ignored in the detail of the NBN.

In 2001, the Productivity Commission found little evidence to suggest that a specialist regulator works any better than a generalist regulator. However, using a comparative approach at the industry level, researchers suggest that a specialist regulator generally produces better outcomes in the communications industry.

The current laws governing Australia's communications industries are outdated, and competition is better seen as occurring across all media communications industries rather than just '"telecoms" or "media".

The ACMA already has this mandate, but the regulator is really the ACCC's poor cousin when it comes to its impact on the communications sector.

Canada's policy and regulatory model provides an important example of how the Australian framework might function, with the ACMA or a similar body taking on the specialist role adopted by the Canadian Radio-television and Telecommunications Commission (CRTC). 

Already, NBN Co is creating a few challenges for the ACCC:

ACCC Commissioner Ed Willett: This is something of an uncommon process for the ACCC, [having to assess] an undertaking for a company which currently has no market power and no network. What rules should govern this new company to ensure a healthy competitive industry and positive outcomes for consumers are some of the questions we are grappling with.

Far be it for me to suggest that the ACCC cannot do its job, but comparison with other jurisdictions suggests that specialist regulators are not so focused on competition theory and are better able to take on a more active regulatory role in the industry. This is particularly important during interconnection negotiations which will no doubt take up a great deal of the regulators time and effort.

Why change to a specialist regulator? According to Roehrich & Armstrong (2002):

[A]n active regulator is more likely to produce an active negotiation [in interconnection arrangements].

At $43 billion, a little bit of the pie spent on a specialist regulator is surely a good investment. Why this issue never enters the debate over the NBN is certainly a reflection of the interests that are being protected, rather than a focus on the interests which should be being served.

3D television just a far-off dream for most Australians

While sitting in my lounge room last night enjoying less-than-broadband speeds at the price of a 1.5 Gbps connection, SBS News mentioned that 3D televisions would be available in Australia from as early as next month. 

The big problem is that there is no 3D content broadcast by Australian providers. But SBS may have other plans.

According to the Australian newspaper, the SBS is considering broadcasting a FIFA World Cup soccer match in 3D. The Australian also reported some findings of an Ipsos survey:

This week, a study from research firm Ipsos found 70 per cent of Australians were aware of 3D TV and 22 per cent said they would "definitely or probably" buy one. "There is definite excitement about 3D TV, which is interesting considering 53 per cent of the respondents haven't seen a 3D movie, let alone 3D TV," Ipsos executive director of media Mark Grunert said.

Movies and computer games are expected to drive demand for 3D televisions. But where does it all end? And is it really that simple?

This is how I have reacted to the slow implementation of new technologies:

1. After paying more than $350 per typical month for home telephone, Foxtel, broadband, two mobile phones  (which included an iMate JAS-JAM - like a pretend iPhone) a few years ago, I ditched the mobiles and Foxtel. I also waited to see what would happen with the "Big Box". The result has been a more peaceful life (people called my mobile when they wanted something from me, rarely did I need it for me). Now, when I am away from my desk - well, now I am really offline. Try it sometime!
2. An inexpensive Bush digital set-top box fixed the old television problem, and a PC to TV adaptor means I can watch anything on the Net on my old TV - as long as the rest of my suburb is asleep because the broadband is always dialup at peak periods.
3. I am glad I didn't spend a cent on a big television now that 3D TVs are on the way. I will either save a fortune buying an "old"  new flatscreen TV or a second-hand unit.

Assuming Australians are rational economic actors, it would simply be irrational to purchase a 3D television unless you were either very rich, or you happen to really need to see soccer in 3D. The figures from Ipsos certainly suggest that Australians are interested in the technology (even if they haven't seen a 3D movie), but will they pay for it?

My guess is they will not. And why? Because in terms of communications technologies, Australia is now caught in the past. Convergence is largely ignored and the traditional boundaries continue to dictate the structure of the media communications industry.

It is obvious that competition is the answer to the current state of the industry. But this doesn't just mean Telstra. The ABC and SBS are the only providers delivering full-length television shows via the Net. There is no incentive for the other networks to do so.

Competition requires a number of competitors. If the boundaries which currently separate the traditional communications industries in Australia were removed, there would instantly be more competitors and therefore more competition. No longer could the old players dominate their peculiar and protected markets.

3D television provides an opportunity for the old rules to be re-written. Television networks, pay TV providers and telecommunications companies could all compete with movie-makers and even computer game companies once the new game is played.

But until policy-makers choose to recognise that each new communications technology is another nail in the old game, policy will be the reason Australians are still dreaming about watching affordable 3D televisions in the years to come, and not a lack of demand.

Why we need the National Broadband Network: Some statistics

There has been a ridiculous amount of criticism of the NBN, even though broadband in Australia is slow and expensive. Indeed, it can be so bad at times that a colleague pointed out recently how restrictive a typical Aussie broadband plan is compared to the UK - the download limits are such that students attempting to access content in an off-campus environment are disadvantaged by the cost more so than their UK counterparts.

Even the Wikipedia page about the National Broadband Network has an entire section devoted to "Criticism" with not a single word about why the NBN was ever needed in the first place. The Wikipedia contributors are happily arguing over NPOV (Neutral Point of View) contributions but not one mention of praise or of the need for reliable and inexpensive broadband.

Yet nobody has been saying: "The NBN will fix all these obvious problems, the NBN will be a good thing". Well it's about time someone did!

But let's start with the Oz Broadband experience: How bad is it? Let's take a look:

In the top end of town (subscribers with theoretical speeds above 5Mbps), Australia fares pretty well. But in the lower end (subscribers with less than 256Kbps), Australia and New Zealand are still in the pioneering days.

But that's not all. When we look at the average speed and the amount of data we can access on a typical broadband plan, the situation is much worse (note that almost 100% of plans in Australia, Canada and New Zealand have data limits, compared to only 13% of UK plans):

Just when you thought things couldn't get any worse, if you want to buy additional data, then Australia leads the pack at 5 times the price per Gb in Canada and 10 times the price in the UK:

So my colleague was right - when we are designing online university courses, we need to consider that Australian students are not accessing first class and affordable infrastructure.

We also need to get over the fact that the market has not delivered. The next time you hear criticism about the NBN, take a moment to reflect on the state of Oz broadband in comparison to the rest of the Commonwealth, and remind the critics why we need it.

We can accept that the way the NBN is deployed should be the subject of much debate, but whether or not we need the NBN is simply a dead argument. And so will the capabilities of young Australians if we cannot keep pace with the rest of the world.

NOTES:

(1) Data from Akamai State of the Internet Report, Q2 2009
(2) Data from OECD Broadband Statistics Sep-Oct 2008