[clug] [OT] The Register is trying to crowfund $100-$250K for indep study on NBN

jm jeffm at ghostgun.com
Sun Jun 23 05:38:01 MDT 2013

Michael Cohen wrote:
> So this is the way free markets work - if a company thought there were
> enough people who would pay $10k for fiber to the home, they would
> offer it. Of course if they are wrong about this assumption they would
> go out of business - thats perfectly fine - they would make big bucks
> if they were right but lose everything if not.

Can I just point out that this argument gets wheeled out a little too 
often like a badly aimed shotgun. The problem with this argument is that 
it is constructed on the basis of a Competitive Market and not a Natural 
Monopoly. Natural Monopolies work well at scale as the marginal cost per 
customer diminished. The problem is in reaching those scales. In which 
case your 10k per premise would be highly optimistic.

This is not such an issue in countries or regions with large populations 
but in countries with small populations like Australia it may be 
infeasible for such a venture to reach this point unless it starts as a 
monopoly. As such the operator has to either be the government or 
sanctioned by the government.

> Here comes the government, which thinks they can make this decision
> for most people. You wont voluntarily pay $10k? You dont think iptv is
> the really worth the hassle? thats no problem, we will coerce this out
> of you in due course. You, the citizen, have no idea what you want
> anyway. This attitude basically requires the commissioning of no
> studies - after all what does it matter what the study says? Its not
> like a company might go broke if they invest in the wrong technology,
> there is endless supply of money a government can just coerce from the
> people. If they pick the wrong technology to start with, they will
> just buy a new one later.
Actually, the problems with government are typically those you will find 
associated with any large organisation. bureaucracy, inefficiencies, 
in-group/out-group behaviour, inability to change, etc.

> It is actually very interesting to see how the NBN affects the telco
> market. Before the NBN we had competitive infrastructure deployment by
> many telcos - telstra, optus etc were laying cables etc. Once the NBN
> was announced  - it stops anyone else from laying infrastructure - you
> can not compete with a government player with infinite pockets who can
> just make people use their service (or at least pay for it).

Then again is it efficient to have two or more groups duplicating 
infrastructure which is not for redundancy? Such as when Telstra and 
Optus were both laying coax (an out of date technology at the time) down 
either side of Melbourne streets? Neither reached the scale required to 
make that pay off.

The important thing to remember is where is it important that 
competition exist. If we can get a cheaper reliable base in the 
infrastructure then have competitive firms run on that then there will 
be a wider choice where it matters for the customer at a lower price 
than have a number of firm attempt to built infrastructure with none of 
them reaching a scale which is cost competitive.

For past case studies good and bad we could look at AT&T, Bell, BT, 
Standard Oil, or our own PMG.

The other thing to remember is that the appropriate solution can change 
with time when we get sick of one form disfunctionality we can replace 
it with something different until we get sick of it's quirks. What I'm 
try to say is that there is no idea solution.


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