Thursday, April 16, 2009

Henry Ergas, Kenneth Davidson, the big bloody useless elephant known as Telstra, and broadband as a form of sneaker storage

(Above: new bully boy Telstra proposal to fix broadband, and provide convenient access to spare pair of sneakers).

The sanctimonious piety of Telstra supporters is beginning to grate, as we spiral on and on in the virtual world of broadband bashing.

It produces a funny unity between capitalist monopolists and socialists happy with Telstra being given the structural keys to broadband, one side having thought all along the noble company should never have been privatized, while the other side can't stand to think of all those company assets being thrown open for the use of any passing rival with a couple of bucks in their pocket.

Well the cat's been out of that particular bag for some time, and there's no use crying over spilt milk.

Chief amonst the monopolist offenders is Henry Ergas, a well known consultant for Telstra who is regularly given space in The Australian to bag the government, and its broadband policies, and on cue he offers up PM orders high-fibre diet.

Remember that it's been Telstra, one time monopolist, forced to contemplate competition, that has been the chief hurdle for anyone wishing to sensibly establish the infrastructure for faster broadband in Australia. It made the tendering process a farce by sending off a flip non-conforming offer, and it's idea of negotiation is to race off and build its own set of pipes, while threatening the wrath of god will fall on any regulator that might dare to suggest a fair price which would allow the competitors access. 

And why the access, you might ask, to what is a private network? Well the dumb Howard government gifted Telstra the public's property - a set of copper wiring that criss crossed this fair land - and then somehow thought others should be able to use this asset to provide Telstra with competition. As if Telstra would play godmother rather than hardball.

Have no doubt that after the failed tender process, Telstra would have used its control of the copper pipes to screw as good a price as possible, doing down the government and its rivals in the process, and incidentally making the consumer pay for the privilege of seeing it getting back into the high seat.

Here's Ergas on this minor issue:

... the Government claims its proposed approach is cost-effective because it avoids the need to pay Telstra for use of its copper network. But this is like saying that it is cheaper to dig a tunnel underneath a property than to pay the owners compensation for building a road through it. The payment to the owners is largely a transfer, which at most redistributes society's resources; in contrast, the digging is a cost, consuming resources that could be put to other uses. Confusing costs and transfers is a sacking offence in even first-year cost-benefit analysis.

Hang on. The taxpayers owned the resources, until they were re-distributed to the taxpayers by them paying for them again as mum and dad shareholders. And still go on paying for them by way of onerous charges for fixed line connectivity, though surely in the day of mobile phones, that little rort will begin to slowly disappear. 

So what does Ergas propose, apart from hinting that compensation might be a good and cheap thing - an interesting shift since at one time Telstra throwing its infrastructure into a national system was a bit like imagining Christopher Hitchens throwing his lot in with the Papacy.

Well once he's got his bleating about a central planning approach off his chest, and muttered about how it would be best to leave it to the market (and that elephant in the room that starts with a T), and pragmatic approaches (which hardly explains the recent monstrous behaviour of that T elephant) and having an anxiety attack about cost (as if that elephant T was the model of efficiency rather than a gaggle of ineptitudes), the good Ergas calls for an enquiry:

Were the choice indeed between this costly, risky and poorly documented scheme and doing nothing, then it would be wiser to do nothing. But telecommunications is vital to our future: it deserves more than a stunt. With so much at stake, the Senate should demand a comprehensive, independent and fully transparent review, in the best tradition of Australian public policy, before any final decision is taken.

That's right, when confronted with the possibility of action, what does any sensible monopolist do? Call for yet another government enquiry, so that the whole issue can be politicized and argued over at great length, while Telstra burrows away seeking maximum advantage, and any consumer interested in real broadband shoved to the back of the queue once again. 

Well Henry, Sir Humphrey always told me that no one should ever suggest running an inquiry unless its outcome is determined beforehand, so I suppose with the senate in the grip of loons like Senator Fielding, that'd make it game set and match for Telstra, and diddly squat for consumers.

While a lot of loons chipped in as usual in favor of Ergas and Telstra, I was struck by Observer of Melb's comment:

Henry, other markets do not have a strangulating behemoth with monopoly powers called Telstra. You may know them as one of your main clients. They were put in this position by the Liberal Party, you will know them as well... Your calculation numbers do not add up at all and show fraying signs of bias and lumbering predjudice, they fly in the face of every other national high speed network infrastructure implementation on the planet. The only stunt here is your continual attempts to disparage the policies and efforts of this government to overcome the market scourge we have called Telstra...

Couldn't have put it better myself, but that's no consolation for Melbourne reader of The Age, with that hapless Kenneth Davidson fully under Telstra's thumb as he evokes the possibility of Telstra embarking on building its own high-speed network. (see Telstra may bring PM's plan undone).

Actually Telstra's already done that. It was supposed to start in Melbourne, and be finished by Christmas, and on news of the announcement, the share price of Telstra tumbled by 3%.

Kenneth's solution? Well Telstra is the elephant in the room, so let's give it all to the elephant. After all they've already cornered the market for high speed broadband. Why bother with a new network? Everything's fine and you really don't need much speed do you? (Just like you really didn't need the internet before it was invented, and didn't mind BBS's and dial up, did you?)

The elephant's done such a wonderful job with broadband in Australia to date.

Proper process would show that upgrading the existing Telstra network would be more than adequate to meet the nation's needs and save billions of dollars into the bargain.

Oh yes and it's been ever so smooth a ride for Telstra competitors seeking to access the existing Telstra network.

Surely Australians cannot be so stupid as to repeat the $5 billion waste of money on a parallel pay-TV cable which, so far as I can see, is mainly used now by youths as a line to hang their redundant sneakers.

Actually Kenneth, some people use their pay TV cable to get half way decent broadband from a rival supplier because (a) Telstra's copper cable is stuffed; and (b) Telstra is stuffed.  And yes the Telstra pay cable into the house does come in handy when I want to bully local schoolkids and remind them of the joys of watching good ol' Shoe in Wag the Dog.

That said, given the remorseless, bloody minded stupidity and outrageous aggressiveness of Telstra, if Telstra is left holding the baby, fast, decent broadband in this country will be doomed in the short term.

Monopolists and leftie economists and the elephant in the room, the scourge of broadband in this country.

By golly, if I just had someone I could throw a sneaker at right now in best Iraqi style ...

Telstra's twelve point proposal for fiercely pro-active broadband infrastructure build, driven by a sound Senate review (apologies to Sir Humphrey and Yes Minister):

1. Informal discussions - Telstra to lead
2. Draft proposal - Telstra to provide.
3. Preliminary study - available from Telstra
4. Discussion document - Telstra to do
5. In-depth study - Telstra on the case.
6. Revised proposal - to hand at Telstra
7. Policy statement - provided by Telstra
8. Strategy proposal - under review by Telstra driven Senate review
9. Discussion of strategy - with Telstra, no need to consult further.
10. Implementation plan circulated - within Telstra
11. Revised implementation plans - Telstra very helpful.
12. Cabinet agreement - to be live streamed by Telstra, unless drop outs and system overload intervene because they still can't get their shit together.

1 comment:

Anonymous said...

Thankyou for saving me the trouble of debunking Henry's 'article' - I hope he reads this.