[clug] Light entertainment for this morning (NBN)

[Michael Cohen]

<warning rant=1>

As much as I would like the faster network as the next person, It
seems to me there is a disconnect between our idea of what a
government is supposed to do and what commercial enterprises should be
doing. Socialist soviet governments were involved in all aspects of
enterprises - they made cars, houses, grew food, allocated mining
resources etc. The USSR proves a very inefficient way to do this as
history shows. China also does this today, but they mostly focus on
making things to sell to the US rather than produce things for their
own people.

At the end of the day if you ask a random person - would I prefer to
have my kids educated well, or my relatives not dying in ERs due to
lack of funding to hospitals, vs waiting a couple of extra seconds to
download my pr0n. I think its a no brainer.

Governments should support existing markets with provable returns
rather than speculate on emerging markets. You argument that IPTV can
be a reality and that will start a new kind of economic growth may be
true - but its highly speculative with a high level of risk. It may be
a success, or it may not be able to compete with existing cable tv
providers who will no doubt compete very strongly with IPTV in the
market place. History is full of examples of technologically superior
produces who failed to compete - e.g. VHS bs betamax, Apple IIe vs PC
XT etc.

The problem with governments running speculative venture capital
projects is that governments dont have limited capitalization. When an
entrepreneur invests in a venture capital project they have a limited
budget. If the project works out they make it big, if their funds run
out, the investor can just stop loss the deal. Governments cant stop
loss  because they have a lot of political capital invested. If down
the road the economics change its very difficult to pull out of the
project because most tax payers will complain that a lot of money was
invested without a return. The fact that the project ends up being a
black hole is beyond most voters comprehension. This kind of thing
happens all the time - most defence projects go way over budget and
deliver much below what they promised for this very reason (one would
argue that when it became apparent the colins subs were going to cost
so much more and had so many problems with them a rational decision
should have been to drop them and write off the loss - and buy
something off the shelf).

At the end of the day most people expect the government to provide
basic social services like health care, road construction, law
enforcement etc. These are services which without governments could
not exist at all. The commercial sector can provide higher quality
services at a premium, but the government should provide the basic
minimum version of these services. Currently testra has to provide a
minimal service quality of 2400 baud (i think thats the government
mandate). If you want a faster service you should pay for a company to
provide this.

Governments have no place in commercial enterprises because they are
not guided by the same rules as commercial entities. Large government
interference in some sectors actually removes competition as smaller
operators cant compete with the government. (An example was a
government owned telecom offering services at much higher prices than
a competition bound telstra).

Finally the closest similar experiment was the transact network which
IMHO was a huge failour. When it was installed there was little choice
in canberra (other than dialup) and the business case seemed good.
Rather than just deploying ADSL1 widely at little cost, they went for
a VDSL network which was the Rolce Royce at the time. Now about 4 to 5
years after total deployment it cant compete with commercial operators
- the VDSL technology is outdated with ADSL2 dwarfing it now. The
paytv options proved less popular than anticipated. The business model
where an ISP is divided from a carrier proved too confusing and
uneconomical (as is evident by the small number of ISP options
available on transact). Finally the high initial cost means that they
have large debts to service which keeps their charges uncompetitive.

Governments need to be stable, careful with spending and accountable -
its not their money and they shouldnt be gambling with it. Too much of
the Obama fiscal carelessness has rubbed onto our collective psychy so
we are numb now - oh whats another 42 billion dollars?.

Michael.

PS I think this whole thing is a big storm in a tea cup - its nothing
more than spin. Ruddy being the media whore that he is cant acknoledge
failure with the first proposal, hence they have to announce a bigger
plan to seem more like father christmas. Of course it will be dropped
down the road (after the feasibility study) due to lack of funding or
another reason. Ruddy is just waiting for something big to hog the
headlines while he announces the death of this NBN. The same thing
will happen with whole censorship thing too. What is slightly worrying
is that in a recent interview, Conroy came across as being hell bent
on sticking it to Telstra. The last thing we need is an irrational
vendetta driven minister to make decisions.


On Mon, Apr 13, 2009 at 2:22 PM, steve jenkin <sjenkin at canb.auug.org.au> wrote:
> Paul Wayper wrote on 13/4/09 10:43 AM:
>
>> <satire>
>>
>> Indeed.  Why don't we all go back to dial-up, since no-one really needs
>> to use the internet for anything but email and those that do should jolly well
>> wait.
>> ~ I can't conceive of any use for internet connections faster than dial-up.
>>
>> </satire>
>
> <snip>
>
>
>> Have fun,
>>
>> Paul
>
> Paul,
>
> What you consider satirical is actually well-held (& considered proven)
> belief in certain quarters. Which unfortunately include too many people
> who can write cheques, pass legislation or otherwise influence decisions :-(
>
> In 1984 I administered the first public e-mail service in Australia for
> O.T.C.
>
> There was a serious argument, not just from the Engineers but also the
> Marketers, that there would *never* be any need or demand by the market
> for more than 300baud: 30cps or ~360words/min - faster than you can read.
>
> In the same fashion that 50baud Telex was as fast as ever needed for
> business communication: 66.66 words/min - fast continuous typing.
>
> 1984 was the year that G3 fax exploded on the scene and within 5 years
> Telex to First World countries was all but dead. Within a year or two,
> OTC & Telstra were investing in G4 fax (over ISDN) and 'Teletex'
> (2400-baud page-based Telex replacement). X.400 got a run too. So
> successful were they, nobody has heard of them these days and they sank
> without trace... Of course, 'The Internet' was repudiated, reviled and
> mocked by these same experts...
>
> These same 'Masters of Telecomms' had more than a dozen dial-up services
> in just one section to the OTC public email - paying real money for
> connect time & line rental to Telstra.
>
> I was not thanked when pointing out we had permanent free circuits &
> 9600-baud modems to the exchanges - all they needed was two serial
> multiplexers and the pay-back period was a month or less...
>
> The heros who got that system installed were out manoeuvred by the X.25
> crowd. A year later, real X.25 switches were installed in the offices
> and another batch of Heros from Engineering Branch were born. PC's and
> ethernet were rolled out sometime later and a real internal email system
> deployed. Perhaps before O.T.C. lost the battle for sovereignty and were
> swallowed by Telstra.
>
> They also got Hawke/Keating to create Aussat for some $100M's with
> promises of Rivers of Gold. Optus was given the duopoly Telco license on
> the condition it take over those costly satellite services.
>
> Into Current Time:
>
> Turnbull is leading a 'push' (qv 'gang') that seems to be saying two things:
>
>  - There is no demand because people aren't buying the service now
>   (circular arg.) and
>  - 100Mbps just has to cost 'heaps', which no sane user will pay
>   (eg. it costs $50/mth for ~10Mbps on ADSL2, so 100Mbps will be $200)
>
> You can't argue either case from current technology, pricing and usage.
>
> There is also a sub-text that only services that can be profitable
> immediately should be allowed or built with Public Funds...
>
> Which is counter to a fundamental precept of Government: the provision
> of Public Goods that enrich everyone, but which no person/group could
> afford. It's called a Common-Wealth because that is what it creates.
>
> How long ago did 50% of businesses get broadband?
> When was the 1.5Mbps cap on ADSL speed removed?
> Since when is any telecomms service 'cost-plus', not 'what the market
> will bear'??
>
> => A reasonable guesstimate is that users double their access speed
>   around every 2-3 years.
>   If 1.5Mbps is the current median access speed, ADSL2+ tops out
>   in about 5 years... Which means we're starting too late.
>
>
> Circa 1987, it cost $8,000/yr for a 1200baud SYD-MEL leased line from
> Telecom (now Telstra). This was a *huge* saving over X.25 - the
> break-even was 3-4 hours use per week. Until AARNet, this link and other
> dial-ups formed the backbone of ACSnet in Australia.
>
>
> Turnbulls' thinking is classic 'hard nosed business thinking', the sort
> taught to MBA's and that led directly to the on-going Global Financial
> Crisis. It is patently faulty to everyone but MBA's, Consultants and
> Merchant Bankers.
>
>
> MBA's, according to Russell Ackoff in 1986 were inculcated with 3 things:
>
> "The second was to give students principles that would demonstrate their
> ability to withstand any amount of disconfirming evidence."
>
> quoted in "MBA:Mostly Bloody Awful"
> <http://www.abc.net.au/rn/backgroundbriefing/stories/2009/2526727.htm>
>
>
> Some real cynicism:
>  This is just another political football for Labor and the
> conservatives. What they profess/argue is probably not what they
> personally believe. Getting re-elected and into Power is all that matters...
>
> Hope you aren't all depressed by this...
> [Look forward to being disproved, too :-)]
>
> regards
> stevej
>
> --
> Steve Jenkin, Info Tech, Systems and Design Specialist.
> 0412 786 915 (+61 412 786 915)
> PO Box 48, Kippax ACT 2615, AUSTRALIA
>
> sjenkin at canb.auug.org.au http://members.tip.net.au/~sjenkin
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