34 thoughts on “Monday Message Board

  1. Peter M said (#25) “However, they do have ownership of set of well-engineered ducts and conduits in urban areas that will be expensive for the new corporation to replicate.”

    I wondered about the ducting. I thought there was some caveat on it allowing its use by other organisations. But you may be right. Nevertheless, if the only leverage they have is some keys to some tunnels, it’s a bit of come-down.

  2. OK I’ll be good with the snark, albeit I notice it elicited an immediate post in defense of the Rudd Govt’s first big foray into the new ‘social democracy’ John. I’m skeptical of that and believe it’s simply middle class pork dressed up as imperative national infrastructure.

    That said we need to go back over some recent history here to discern the facts of the matter. Essentially the Howard Govt believed telecommunications technology was moving too fast to be left to public servants to protect taxpayer interests and hence privatisation. In particular here, recall the coming of wireless(3G and soon 4G) and pilot testing like Misubishi Electric with 500 households in Hobart using the existing electricity grid (whatever happened to that?)Labor who had privatised Qantas and the Comm Bank in Govt, were clearly outraged by such a move and played spoiler, in much the same way as it did in SA with electricity privatisation, when with the Keating Competition reform gun to its head, the Olsen Govt at the time(also facing Labor’s State Bank fiscal nightmare), mooted privatisation. In SA’s case they split the poles and wires delivery from the power generation, but facing concerted spoiling action and criticism, artificially inflated the poles and wires side of the equation(some estimates put that at 3.5 times true worth), in order to deflect that criticism. As there’s no such thing as a free lunch, that would have ramifications for any new add-ons to the grid at true marginal cost, like my mate recently paying $17,500 to put power on to a 3 unit development(street needs a transformer upgrade). Since power privatisation cost the Olsen Govt the next election, no doubt Howard had learned the lesson and privatised Telstra lock stock and barrel. Naturally Federal Labor had its chance to split wholesale delivery infrastructure from the retail service, in a bipartisan way but you know how it is and here we all are. Actually, here’s a Federal Labor Govt with the rod of their own making, who can’t get over the obvious, that Telstra is no longer its political plaything to cross-subsidise the bush. Well, not without pushing Telstra shareholders around by legislative fiat, a course that will have serious ramifications for any overtures to private investors in future.

    With that background in mind, Labor’s election promise of $4.7 bill subsidy for a private FTTN tenderer for 98% of the population, was always flogging a dead parrot as Alan Kohler succinctly put it and the GFC would simply put a few more nails in its feet for good measure. When the three amigos stated the obvious from Telstra’s point of view, Labor was between a rock and a hard place, with Conroy still talking up the parrot to the other prospective carriers. They did the dutiful thing and listened attentively and then told him what the three amigos said. Hence the massive backflip, $43 mill in taxpayer dough and only 90% coverage now. Already Govt ministers are ducking and weaving on how much taxpayers can expect private investment to take on some of that massive risk.

    So where are the punters at right now? Well basically they want the same superfast broadband they get at work, for the kids at home on Myspace and Youtube, etc and preferably for the same price they get at work. All the carriers know that they’re only prepared to pay ADSL prices at home and that’s what they lagely get. That’s why no other carrier/consortium was prepared to punt on their own fibre network, preferring to piggyback off Telstra’s inherited copper. With a new Labor Govt offering some taxpayer billions they pricked up their ears before working it was dead parrot sales pitch, particularly as Telstra was off planning to pick the eyes out of SE Oz with a 100MB/sec hybrid add-on to their Foxtel network.

    Welcome to Labor’s problem now. Basically it made a promise it couldn’t keep due to past politicking and refusal to face economic realities. Hence the shiny new parrot or breathtaking, bold infrastructure for the future. Which is it? Well they can ignore markets but not the marketplace. They have unlimited access to future taxpayer liability but still there’s that pesky marketplace. Firstly the marketplace is opting more and more for wireless internet and a mobile phone like my son. How good will 4G, 5, 6..etc be over the next decade or so of their rollout? Hmmm… Then there’s Telstra off picking the eyes out of the most profitable, high end, metro market in SE Oz. That presents an immediate problem for mandated FTTH. If they start from the extremities and work in that will leave the ADSL network intact to compete for the low end users, but that will starve profitability for the first few years and be unattractive to investors and invoke political criticism. OTOH to start at the metro end will smash existing ADSL investment, with competition ramifications and even if they do, Telstra will be competing hard in that fibre market to prevent any fat for cross-subsidising the bush. You can ignore markets but you can’t ignore the marketplace but they can belt Telstra shareholders to change that marketplace. That’s what real investment dough is watching very carefully right now, in conjunction with past salutary lessons like Brisconnect, the Sydney Tunnel and the like. Your move social democrats they’re saying.

  3. Changing topics entirely .. and it is Wednesday. But anyone following Defence proposed purchases recently, especially RAAF ones?

    F-35, the great white hope, is starting to look like the Dreamliner (Boeing 787). A debacle that makes the old F-111 one look like a happy fairy story.

    And how many billions are we supposed to pony up for something that is starting to look like a WW2 Spitfire could take out.

    Now here is an area where the neo-liberals anti-Govt spending rhetoric could be right, defence. “Never is the History of Mankind, has so much money been wasted, by so many people, for so little impact”. Whoops forgot, NL’s love armament spending, the only socialism they really love.

  4. 28# Oldskeptic

    Last time I heard, the grossly inflated purchases made on the grossly inflated defence budget were all on US equipment (hardware) and hardly any on labour. Doesnt that make us in debt to the US for years….?? (probably under the Free Trade Agreement as well).

    Im sorry to appear snarky ( I reaaly cant jhelp it….Ive had years of feeling uncomfortable over the direction we were travelling) but JHs political ideologys glowed like beacon in a stormy night. Unfortunately the beacon wasnt pointing out to sea.

    Unfortunately also, I dont think we even got first rate equipment…that we will be paying off for years.

  5. 27# Observa

    If the market wont deliver the telecommunications technology we need for the 21st century, then its a market failure and like the 1800s the government builds the communications network and we pay for it with our taxes…..no big deal (providing all are paying their fair share of taxes).

    I dont know why people even think with a population under 25 mill that a private provider is going to want to roll out infrastructure across this wide brown land…. (very wide).

    We in Australia always needed the government more than bigger populations with lesser transport and distance issues (and a larger naturally occurring consumer base).

    A social democracy is our (Australia’s) naturally most effective method of management in terms of economic growth and employment.

    We could wait forever otherwise…and the public debt will add anet benefit to growth.

    We have been too long trying to fit models made for different markets, to our economy, with its different characteristics, like a sqaure peg in a round hole.

  6. All I can say Alice is unlimited wants and limited means and on the latter point I note a report today Melb and Adelaide now have about one year’s supply of drinking water in the MDB. Perhaps you can think of a few more limited means that need delimiting with $43 bill worth of taxpayer resources. Struggletown, who can’t even afford ADSL at present, could too no doubt. However, if subsidised, superfast broadband is the only game in town for clawing back my taxes, then I’ll gladly join in the gaming. I’m ultimately a realist not a martyr for lost causes.

  7. Living near Adelaide, all I can say is that historically, we have always had drinking water as long as I can remember. Ergo, we will have enough drinking water in the future too. Until we don’t. Then we blame all those greedy upstream states for pilfering our SA water. Damn cheek. Then again, it could be due to the drought (don’t call it Global Warming or Climate Change, whatever you do – a decade long drought is just a drought, get’em all the time, all of the time).
    In the meanwhile, we’ll keep on flushing our toilets with drinkable water…what a laff, arf, arf!

    What a historian in 2100 will make of this century, I don’t think we’ll come out of it smelling of roses.

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