Governments botching the technology issues

An entrepreneur building a FTTH would have to charge customers serious money to recover a $20 billion investment. Interminable arguments at the ACCC and the courts over competitors’ access and what the network owner should charge competitors for network use would continue. It would be iniquitous for Telstra to own and control the network while competing with other companies using it; vital infrastructure should be available on equal terms to all who want to use it. In retrospect, it was a mistake to lose control of vital infrastructure by privatizing Telstra. A FTTH project would be risky for a private investor as it might conceivably be superseded by a new (wireless?) technology.

The government should not try to recover the capital cost of the network, but set charges for the use of the infrastructure very low, even zero, thereby maximising public utility. A modest annual fee (perhaps $100 per premise) would be much more functional than fees for use.

The network should be used to give Australians free national phone calls and free, fast, access to the Internet. This is appropriate given the zero marginal cost of use. Cheap communication enhances democracy and public discussion. Governments should encourage vigorous competition for equipment (fixed phones, mobiles, PDAs, home networks etc) and services (e-commerce, movies on-line, video phones, always on telephony, e-education, e- health, mobile commerce, local commerce, VOIP, internet services etc) that use the infrastructure.

The estimated $20 billion needed to establish the network in cities looks modest compared with the federal government’s 2007 allocation of about $3.7 billion a year for roads (I am unaware of what the states and municipalities spend on top of this). The situation is analogous to railways. In the 19th century, governments and entrepreneurs spent large sums building railways. The entrepreneurs often went broke, but society as a whole benefited hugely.

The delays over FTTH exemplify Australian governments’ botching technology issues - continued neglect will make Australia less competitive. Bad decisions have often resulted from governments’ indulgence of vested interests. Examples of Australian governments’ technological policy incompetence and backwardness include:

• digital radio, which is available in Britain and America, but not in Australia (except on an experimental basis). Valuable digital spectrum has been given gratis to incumbent radio networks; a sure and certain way of stultifying innovation and new services.
   
  Policy on digital television might as well be written by the incumbent moguls. The government will evidently preserve the incumbents' oligopoly indefinitely, killing consumers' access to new technology, new services, and cheaper prices. Consumers have been treated with contempt;
   
• Australia's management of water resources has become a political football and a politically intractable problem. Governments appear to be much more concerned with the rights of people who possess entitlements to water (but what did these people pay for their quotas?). There is no sense of overall optimisation, or recognition that what happens in Queensland affects Adelaide residents; and
   
• Governments’ habitual support of old industries with political clout (especially automotive and agricultural) costs consumers and cramps new industries. Australia should be manufacturing lasers and computer chips, not stamping out car parts designed overseas.