[clug] Light entertainment for this morning (NBN)

steve jenkin sjenkin at canb.auug.org.au
Mon Apr 13 06:23:57 GMT 2009

Michael Cohen wrote on 13/4/09 3:17 PM:
> <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.

Concur, Centralised Command Economies have been proven to not work.

> 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.

Generally agree.
The electorate doesn't get polled on what it actually wants or how it
would like services prioritised.
[There was a Health Report circa 2001 that reported on a US state
(Oregon or Washington) which did exactly this for public Health Care. If
you smoked, you didn't get expensive heart treatments.

> Governments should support existing markets with provable returns
> rather than speculate on emerging markets. 

This is philosophical position. We disagree.

> 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.

Good points.
What defines the success of services:
 - cost
 - availability

Mobile phones aren't that big in Canada and are everywhere in Japan.
Difference is pricing...
We saw GSM take off with cheap plans - and now G3 wireless data has hit
the pricepoint and taken off...

VHS beat Beta because the Adult Content industry went VHS (cheaper kit
or tapes?). The First Mover Advantage lost out to Survival of the First


> 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).

QANTAS is a counter-example. So perhaps are the Commonwealth Bank and
NSW State Bank it swallowed. Aggressive & profitable public businesses.

QANTAS was lucky when ANSETT collapsed in 2001, but it could have easily
failed. Good management is what saved it, not deep govt. pockets.
They have, and have always had, some of the toughest hard-headed
management around. The airline business is no-holds-barred.

There is a long and proud tradition (eg NSW trains) of poor services,
bad management and failed execution in Public enterprises.  I think this
more reflects failed Governance/Accountability and capricious Political
Masters more than the culture and quality of employees.

It usually seems that Private enterprises are forced to be more
efficient and market aware. Self-satisfied monopolies like Microsoft
show that doesn't always hold.

I strongly agree that for most goods & services in free/uncontrolled
markets, private enterprises outperform everything else and hence are
much preferred.

"It has been said that democracy is the worst form of government except
all the others that have been tried." Churchill.

We can agree on the thrust and disagree on the detail :-)

> 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.

Transact failed to capitalise on their First Mover Advantage.
They fell for the 'dot con' hype going in, then got done over when it
flipped to the 'dot bust' and funding for 'dot anything' dried up.

Good ideas, lousy execution.

I always thought they could've differentiated by providing faster DSL
speeds than ADSL - trivial to do at zero marginal cost. They also shot
themselves in the foot with separate charges (ISP + carrier).

Don't know their numbers, can't make definitive comment on their
execution. Will we ever see them written up as a Case Study for MBA's?


> 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.


You've nailed the whole argument here.

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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