The abject failure of the Institute of Public Affairs

Following on from Alan Moran's sacking from the Institute of Public Affairs for anti-Islam tweets, John Quiggin sticks the knife in by comparing the IPA to their American counterparts, the Heartland Institute.

Finally, there’s the question of how long the IPA can avoid the fate of Heartland, which has lost most of its corporate sponsors (except for a few diehards from the fossil fuel sector) and is a shell of its former self. the IPA has already gone a fair way down the same track, and is now, in large measure, a private plaything of Gina Rinehart. In return for her bounty, she has demanded the most humiliating obeisances, most notably support for Northern dam projects like the Ord River scheme. Until recently the IPA was a reliable critic of such boondoggles.

Similarly, Andrew Elder details the flimsiness of Dick Warburton's review into the Renewable Energy Target, and how the agenda from the right is to abandon economic rationalism in favour of killing off entrepreneurialism and disruptive innovation of companies like Silex and ARENA, and handing money over to established monopolists.

The government's anti-RET position means that current electricity provider(s) will be able to buy the intellectual and other property rights for the proposed solar facility at a fraction of the cost that it would have been worth as a going concern. This means that the incumbency of existing providers will be maintained without them having to do the hard work and take the risk that Silex/ARENA took, while reaping the rewards properly due to Silex/ARENA. 

Are we starting to see a pattern yet? How about the cost-benefit analysis of the National Broadband Network, yet another rubbish report prepared by expensive external consultants to produce exactly what the government wants to hear: specifically, that the Internet doesn't have exponentially expanding bandwidth demand and Australians aren't going to want any more bandwidth in ten years than they already do now. This is patently stupid, but nothing more than can be expected from the Minister for Ill Communication, Malcolm Turnbull.

David Walker at Club Troppo runs interference for Turnbull, which is understandable because Turnbull pushes all the buttons of a high-level wonk. The Minister sounds like he's well briefed and in command of all the facts; a cursory glance at the Delimiter story stream on Turnbull - culminating in an apology by Renai Lemay for ever thinking Turnbull was on the level - shows that his position is a Potemkin village that only impresses those who don't know the hollowness of the Liberal policy platform. Just as Henry Ergas believes his economics credentials qualify him to blog about politics without justification, David Walker thinks that as a journalist, consultant and policy wonk that he can grok broadband technology just like that, and wave through Turnbull's cunningly constructed consultancy conclusions.

Now, allow me to set out my credentials in this one: I was originally a technology journalist, starting in 1997 on weekly newspapers and then moving to bi-monthlies including Internet World Australia where I covered a lot of ISP and Internet industry stories during the dot com boom. Additionally, I spent a year or two in the mid 2000s doing sales for Neighborhood Cable, so I have some direct knowledge of what regular customers want out of their broadband connections.

Walker's justification for agreeing with Turnbull is that we don't need broadband for anything other than pirating video content.

Trouble is, most of the innovations we have come up with recently don’t use all that much bandwidth. Facebook and LinkedIn and Instagram are only medium-bandwidth even at their most intensive. Twitter and smart electricity grids are low-bandwidth. Networked games like Halo 3 use surprisingly little bandwidth too, with local hardware doing most of the work. And beyond a certain point, the speed with which you see Web pages has little to do with bandwidth; it’s mostly about server responsiveness and network latency.
Most projected e-health applications, including your latest x-rays, won’t use that much bandwidth either. Even fairly decent video-conferencing for education and medical consultations and business meetings uses perhaps 2 megabits per second, according to the demand document. To the extent that something is limiting growth in the use of such technologies, that something is generally not bandwidth.
The real policy problem with the NBN is that high-speed broadband just isn’t that much of a revolution. And to justify the cost of universal provision, it needs to be.

There are all sorts of things wrong with this mode of thinking. Correlation does not imply causation; perhaps the applications recently developed are low-bandwidth because they have to deal with crappy networks that don't enable innovation of more bandwidth-heavy content?

The assumptions in the demand document are slanted towards broadcast media. For instance, the 2Mbps quoted for videoconferencing is just for one-on-one calls, yet videoconferencing is made for more than two callers at a time, for collaboration in business and family or party calls in private usage. The one-on-one model is a relic of the broadcast media era, and that's the revolution that the NBN promises: the disruption of the one-to-one or one-to-many modes of communication, and the enabling of many-to-many modes.

With these things, it's always instructive to follow the money. Who stands to lose the most from the rise of the Internet and its disruption of existing businesses? If you look at the bandwidth usage, it's video content that eats up a lot of it. Foxtel is the major provider of paid video content in Australia. News Corp is the entity most at risk if the Internet is used to bypass its paywall to access content-that-wants-to-be-free. (In previous years I would have included Telstra in this part of the rant, though they don't really care as much as they used to about this stuff, since they have started to give up on owning content and focus on getting paid to operate the networks no matter what runs over it.)

I got questioned recently on why I don't join much of the rest of the left in bemoaning the supposed dominance of the IPA, its ubiquity on ABC platforms, its frequent appearances at The Conversation, its infection of Liberal Party processes, etc etc. My contention is that the original aims of the IPA - to be the intellectual arm of the Liberal Party and guide its policy development along ideological lines - have comprehensively failed. These days, as Quiggin rightly notes, the IPA is a cheerleading outfit for Gina Rinehart, Rupert Murdoch and the tobacco lobby, at the expense of any policy credibility they might once have enjoyed. As Elder goes through, the IPA is no longer a defender of entrepreneurialism, but a paid shill of crony capitalists. They actively lobby against Schumpeterian creative destruction, because they are paid by the people whose businesses' destruction would be caused by healthy capitalist competition. They have almost completely abandoned Menzies' founding principles, as evidenced by their recent dabbling with anti-Islam bigotry.

The reason I am ambivalent about this situation - the IPA's continued success of getting their message out to the public, combined with the poisonous nature of that message - is summed up by Harry Clarke in a comment on the Quiggin piece:

The IPA has been spectacularly successful at getting its extremist message across. I congratulate them. The difficulty is that people don’t like their message. I think the great Australian descriptor “ratbag” describes them well. Fundamentalist economics that perverts what economic theory instructs. I agree with you – the CIS relies more on reason.

In the words of John Williamson, Australians revel in our ability to "tell our leaders to go jump in the lake (but we'll never knock Australia, you make no mistake)". Yeah, we're fair dinkum in this country about recognising galahs when we see them. I believe in democracy, and the capability of the Australian public to work out who is on their side. The more the IPA's message is disseminated, the more Australians jeer and laugh at it. I know enough about the IPA to conclude that it is a failure, a folly, a flailing flinger of falderol, a figure of fun... the rest of the nation is just catching up on the news.

By the by, it should be pointed out that Moran's "sacking" from the IPA hasn't stopped him from posting on Catallaxy Files. This suggests a schism developing between John Roskam, still lurking about in the race for preselection for the Victorian seat of Hawthorn being vacated by Ted Baillieu, and Sinclair Davidson, who runs Catallaxy Files and has done nothing to stop its strong shift to becoming a secular freak show of anti-Islamic hatred, to the extent where Davidson ran a guest post this week tying a possible Australian conspiracy by public servants around a Rotherham-style Muslim child sex ring to the abandonment of the repeal push for s18C of the Racial Discrimination Act. The cognitive dissonance of holding the belief that the appalling Rotherham case presages a global epidemic of Muslim-on-white-teen rape after having defended the Catholic Church against allegations of a global epidemic of organised Catholic-priest-on-white-teen rape does not seem to bother anyone there. It is at the point right now where many Cat commenters would be welcome to speak at a Catch The Fire Ministries event, since their ideologies are functionally identical. With the abandonment of ideological principle, the IPA and its blog Catallaxy Files don't have much left to talk about, so they are in danger of descent into contagious conservative fear.

Telstra: master at the art of telco suckage

Every now and then it seems prudent to remind ourselves why the National Broadband Network is necessary, by reacquainting ourselves with how screwed up the current Australian telecommunications industry is. Old mate Ben Barren provides in spades today, detailing yet another sorry story of monopoly and market failure.

BB's work is spectacularly difficult to parse in detail; in my experience, it is best to assume he knows what he is talking about and let his stream of consciousness wash over you to get the general effect, rather than get bogged down in his unique phrasings. (He's the reason Cliffs Notes were invented.) The story is one of Telstra owning the dominant mobile phone and data network hardware, at a scale so large that none has dared seriously challenge them for decades, and playing them like fiddles to control resellers within the ecosystem.

Unfortunately Australian telecommunications market always tends towards these types of monopoly or at best oligopoly. But as Telstra has the only quality mobile network at the volume end of the market with an adequate level of performance (the NextG 3.5G network urban and regional reliable coverage in dense city and remote country areas) - mobile telephony is tending towards a monopoly.

Just when you have a breakout such as Kogan’s $29 unlimited calls and text with 6gb mobile data, market forces are brought to eventually favour the monopolist not the consumer.

The NBN is not going to solve competition in the mobile network - at least, not in the short term - but this case is not materially dissimilar to the Internet service provider industry, which it will transform by turning Telstra into just another reseller. Gen Xers like me and Ben haven't known the broader telco industry to be any different in our adult lifetimes.

The NBN is Ethan Hawke, wearing that stupid daggy shirt but promising a much more interesting life than boring corporate dweeb Ben Stiller. Ethan is currently in Chicago attending his Dad's funeral, but hopefully he'll see the light and return home to start a beautiful relationship.

Turnbull and Albanese talking NBN on Lateline

Turnbull wants to punch the Internet in the face. And Albo too.

Malcolm Turnbull is far more knowledgeable about his communications brief than is Anthony Albanese, having not only had years in the portfolio but direct previous business experience during his time at Ozemail, so last night's Lateline NBN debate was always going to be lopsided in terms of detail. Emma Alberici tried to keep things relatively top level - she clearly struggled to do the sums that one gigabit is a thousand megabits - which was always going to benefit Albo. When Turnbull did try to nail the debate on detail, however, he exposed the underlying flaw with the Coalition's NBN policy: that it is based on an outdated view of the Internet which fails to address the needs of today, let alone the much-mentioned future.

I am old enough to have had several careers, one of the early ones being as a technology journalist in Sydney in the late 1990s as the first Internet boom happened. Back then, tech companies would sometimes invite journalists to general briefing sessions to improve their knowledge base, and subtly push their point of view on how a certain part of the industry should be reported. Telstra was one such company who had the funds to do this, and they invited me and many other journos along to some talks that their boffins delivered. I remember Geoff Huston, in particular, giving a presentation on carrying Internet traffic over frame relay, and as I watched something became clear to me: Telstra's strategy was to nobble the Internet.

This was understandable from their commercial point of view. Back then, they pretty much carried the entire Australian Internet across their networks. The AARNET section, pioneered by Huston and paid for in full by the government through the universities, wasn't the problem. Businesses paid through the nose for closed virtual circuits (CVCs, more on those later), so they weren't the issue either. The rapidly growing private version for everyday Internet users at home was the problem. It was threatening to cost Telstra a lot more money than they were making back in revenues in the short term, as they invested in hardware with the resultant profits skimmed off the top by consumer-facing retail ISPs. The more infrastructure they built to meet the influx of traffic demand, the worse their balance sheet looked, the worse their newly floated share price looked, and the worse their executives did in performance reviews. Media pressure was ongoing not to charge monopoly rents on third party usage of their infrastructure. Telstra employs a lot of bean counters, and the beans added up to an inescapable conclusion: the Internet was a cost centre to be minimised as much as possible.

To put the technical situation in readable terms, one only has to look at Geoff Huston's blog, where he wrote a long post about the competing NBN policies which contained this gem, which was used in a different context there but also applies to what I'm talking about:

This always strikes me as such a strange business model. It's like building a slow car by taking a specialised high speed racing car and bolting on additional leaden weights in order to slow it down, all to charge the customer a lower price than the price of the original high speed car!

This was not Geoff's fault of course, but his talk, and the argument we subsequently had about it, firmed in my mind the view that this was an untenable situation. Unfortunately, John Howard's association with the Telstra float meant that he was hamstrung from changing the situation even if he had wanted to. He had a choice between propping up Telstra's share price on one hand, and reforming the telecommunications sector on the other, and he chose the former to the detriment of the industry and consumers. Of course he was going to prefer succouring those middle class suckers whom he conned into buying Telstra shares. This policy of abandoning any thought of serious telco reform to protect Telstra shareholders continued all through Howard's long reign, and has become ingrained in the Liberal Party's culture.

It was only with the advent of the NBN concept that a solution to this impasse has been found. I will cover the NBN itself in more detail in another post, but for the purposes of characterising Turnbull's argument in the Lateline debate last night, I related the previous history to illustrate where he is coming from when he starts talking about 1 Gigabit per second CVCs costing $20,000 per month. Turnbull knows his stuff, but his mindset came from that era in the late 1990s when the Internet was seen as a cost centre to be squashed into a box devised by serious telcos who were embarrassed to have to deal with such riff-raff.

John Gilmore once said the Internet sees censorship as damage and routes around it, but telcos see the Internet as viruses and try to punch it in the face as if they are Agent Smith and the Internet is Neo. Turnbull is on the side of the losers in that debate, and it was lost twenty years ago. The copper wires of the POTS are those leaden weights that Huston talked about, and we as consumers demand to drive those fast cars at full speed whether the Libs like it or not.