Ken Schaefer wrote:
*From:* [email protected]
[mailto:[email protected]] *On Behalf Of *David Connors
*Sent:* Sunday, 14 April 2013 8:21 AM
*To:* ozDotNet
*Subject:* Re: Office365 ?
On Sat, Apr 13, 2013 at 9:13 PM, Ken Schaefer <[email protected]
<mailto:[email protected]>> wrote:
Currently the NBN charges are regulated by the ACCC, and they’ve
already signed a consent agreement around charges rising by less
than the inflation rate (i.e. requiring internal efficiencies).
The problem as you no doubt are aware is that NBN Co isn't *currently*
charging RSPs what it intends to. Specifically, there are no CVC
charges being levied. You are aware of that right? You do know that
NBN Co is going to charge CVC pricing that is within pissing distance
of what I can buy *domestic and international IP transit for* right?
They're waiving it during network build but you and the rest of
Australia are in for a lot of sticker shock.
I’m unsure how this addresses the point above. The price isn’t
something that the NBN just makes up, but something that needs to be
agreed with the competition regulator.
From what the ACCC has published, initial pricing should allow a
“smooth transfer from existing telecommunications networks”, and the
pricing increases will be CPI-1.5%
If you’re so opposed to these types of monopolies, perhaps you
should be agitated for privately provided sewerage pipes and water
mains? There’s good economic reasons that certain industries
(typically that require physical distribution channels) are called
“natural monopolies” – the potential market can’t grow bigger, but
adding more suppliers just divides the existing market between
them in ever smaller amounts. Most economists would agree (if not
all economists) that natural monopolies should be run by the
government, or regulated by the government. They aren’t free markets.
Let me do your homework for you Ken, then you can tell me about the
benefits you'll be enjoying after NBN Co adopts its commercial pricing
structure:
<lots of snippage>
This is all implementation detail as far as I can tell. You don’t know
for a certainty that this is how it’ll play out for 20 years, and you
should know, from your own examples of what has happened over the past
20 years, that it’s very **unlikely** to be the end-state.
PS Your pitch is 1/3 good. Most NBN "arguments from analogy" I've been
given involve roads and the F/35 + Colin's Class sub, not water and
sewerage.
I studied economics at Uni – natural monopoly and the problems arising
are well known: http://en.wikipedia.org/wiki/Natural_monopoly
The issue is: “What to do about it?” and as I said, most natural
monopolies are either run by the government, or regulated industries.
Otherwise competition simply doesn’t arise, except in small pockets
where secondary competitor can “cherry pick” profitable customers
(leaving the vast mass of customers to the mercy of the monopolist)
e.g. like being able to buy fibre in the Brisbane CBD that you
mentioned in your post – certainly there isn’t any running anywhere
near my house in inner city Sydney.
Obviously you feel, based on implementation details, that we’re not
getting a good deal.
I have a different opinion, that natural monopolies like roads and
transmission networks either need to be built by the government, or
built in a regulated environment (e.g. public/private partnerships
etc. that you see). And certain things, like local roads, fire
stations etc. have a too uncertain pay off for private enterprise to
build – it’s simply better for the local council to build those roads
and fund it through general levies.
Based on what I’ve seen happen to the economy through cheaper and
ubiquitous internet access over the past 20 years, I’m willing to bet
that providing universal, and upgradeable, fast internet access will
make the next 20 years even more of an economic tectonic shift. You
seem to be more concerned about what format your bill will arrive in.
Cheers
Ken
Ken,
Internet is *not* something that is a natural monopoly, not by a long
shot. Any small provider could run their own network in an area, and
barriers to entry are mostly artificial. I can see why someone could
make this argument, but it's not one that really suites at all, and even
history in this country has shown it isn't.
An example is that both Telstra and Optus ran other own coax, Internode,
iiNet, etc have rolled their own DSL hardware, and different providers
were running fibre in new estates. If you look at the mobile phone
network, there is competition there as well.
Since wireless is also competition and is getting faster and faster,
people who do not want to pay for fibre have another option if only one
provider runs past their house.
You are right about cherry-picking the profitable, and there is nothing
wrong with that. Are you going to claim that McDonalds are a monopoly
because they have a high barrier to entry (millions for fitout/land/etc)
and that they only cherry-pick places which are profitable?
Let's say one provider moves to an area and gouges, are there other
options? Certainly! Wireless, the copper network, Telstra & Optus Coax
(which are capable of 100Mbit, even 300Mbit), satellite, and if someone
for some reason can gouge, it would make it attractive for someone else
to move in on that territory.
To step back again where you talk about what is profitable, as you did
study economics, you would understand what installing unprofitable
infrastructure means that the investment is a poor use of utility, and
if that the utility is there for a network capable of 10,000+ mbit, the
market will be more than willing.
Am I saying the government has no role? No. But what I am saying is that
this isn't a natural monopoly, and to claim because it is going to be
one, we should then have a monopoly seems also like a silly idea. Even
if there was only one provider per suburb, at least via a comparative
pricing mechanism there would be de-facto competition, and also a
measuring stick for what a fair price may be.
And I don't mean to strawman, but before anyone tries to argue that
utility doesn't matter because fast internet is a right, I'd go and
spend a semester or two in a first year philosophy class.
Cheers,
--
Les Hughes
[email protected]
