On a tangent to Frank’s discussion on the costs of corruption, I asked myself a slightly related question.
While I am of the opinion that government should be kept to a minimum, and that the market should be largely left to it’s own devices, I am dismayed by the lack of broadband in this country. I would like to put existing arguments concerning the legacy of state monopolies and local loop unbundling aside for a moment and ask a straight forward question.
Should the government have mandated several years ago, that all new housing estates be piped for fibre to the kerb or even fibre to the home technology? I ask that given that the housing boom has led to something like half a million houses being built in quite a short space of time.
Now I can imagine that a person in favour of free markets would say – if the market does not demand this technology, then developers will not provide it. And if people do demand it, they will either ask for it, or specifically choose a development that does incorporate it.
But is there not a bigger picture? Is there not an argument that says economies that have implemented such policies (Korean and Scandanavian models come to mind) have benefitted from the foresight, and that such government interference has actually led to the market benefitting from something that, if left to it’s own devices, may not have happened?
I know it sounds like I’m saying the governments knew best, but it puzzles me that given such massive house building we are still in the same situation we were a decade ago – copper to homes where DSL may not reach.
It may have been sensible for developers to approach ISP’s or TV stations and offer a deal to cable homes with extremely fast connections, both to save money digging roads up again later, and give companies instant access to customer’s homes without a proxy like eircom – or even to enable a huge amount of homes to have technology that may not be available to them over copper.
Did Korean people demand super fast broadband and then benefit from it, or did the government see the benefits in advance and force it on a market that did not see the potential positive future effects on the economy?
Incidentally Cringely’s piece this week covers a similar subject.
Comments welcome!
Comments
5 responses to “Intervention for broadband”
Personally, I’m of the opinion that part of the government’s job is to preserve the freedom of the market, and I’m in good company, and that it ought to be useds as a bulwark against where the market’s great strength–its amorality–come into conflict with the best interests of society as a whole.
You’ve probably guessed that Soros and Schumacher are two of my heros. 🙂
To quote Mary Harney: “There’s only one thing worse than a public monopoly, and that’s a private one”. I’d argue that what we’re seeing here isn’t the legacy of a state monopoly, but the natural result of what happens when a company, any company, gets into a monopoly position. The great problem with eircom is that it ought to have been divided in two before it was privatised, with the half controlling the network made a non-profit semistate trust whose sole responsibility being the administration of the network, and rest of it privatised. At least then competition could have gone unhindered, with the trust selling off maintenance contracts for the network in return to access. But that would have been using the monopoly to encourage the market while keeping the government as much out of the business as possible.
Just so long as you put the responsibility on the people it should be on, namely the developers. But then again, they do everything they can to dodge out of providing the amenities they already have to provide. Putting it on eircom’s shoulders would be counterproductive though as they have no control over the developers.
If you assume that their primary desire is to provide housing rather than earn a few quid. But that’s not the case: once the houses are built and sold, their responsibilities to the residents are few. And their ability to do this is aided by the degree of speculation going on in the market; people buying a house for themselves might look for these things, but for property speculators it’s not so important.
South Korea has a number of advantages over Ireland: it’s very densely populated, far more so than Ireland if you leave out Dublin, and it’s outside of Dublin that the real problems with broadband penetration lie. Companies will use this excuse, as they do in the US, to explain away (a) the lack of demand and (b) the economic infeasibility of the enterprise.
A separate network administration trust could have helped encourage the kind of growth seen in Korea, but wouldn’t have required the kind of public investment the Koreans needed to make to achieve their goals. By creating a separate market for network mainenance, private competition for the contracts would have lead to reflexive growth of the levels seen in France at least. It’s about using the market’s greed to make a long-term good for all into a short-term good for its individual participants.
Markets are fundamentally shortsighted and greedy. This is what makes them so efficient in resource allocation, but it also what makes them blind to the long term public good, a point missed by both laissez-faire capitalists and anti-capitalists.
Telecom companies have been crying out for neutral ducting in all new housing and have been lobbying like mad for more than a decade to get regulations standardised in every county so it is easier for them to lay pipes and fibre. There has been a draft bill with the Dept of the Environment for the past two governments as far as I know and it hasn’t gotten anywhere. They warned about this before the latest building boom and were totally ignored. eircom have been arguing strongly that telecoms be classed as an essential service so that they can gain access to every house in a private development but so far Dick Roche ain’t listening.
I know Magnet have been laying fibre to the home, but so far its very limited, more like a pilot.
Gavin, it sounds as though you’ve found yourself in one of those uncomfortable places we all realise we’re in sometimes where what is clearly common-sense (in this case: don’t sell off the vital public utility without keeping strong controls over its actions to make sure it acts in the best interests of the nation as well as its shareholders) clashes with ideology (Governments bad. Light or no Regulation on free markets good).
The only thing I can say is to go with the pragmatic common sense action and then work out how that effects the over arching ideology later.
As much as I like Cringley’s piece this will not happen, at least anytime soon.
It has possibilities in dense metro areas but implementation in most of the US
is a long-shot. FTTH has serious upfront costs and the current munipal implementations of FTTH around the US (Project Utopia Utah) have been pretty much complete failures. Municipalities are moving towards free WiFi but the upfront cost for municipal implementation of FTTH is a big stretch, especially considering municipal budget issues. The FCC has given the rights to the CableCos and Telcos to own the last mile if they build it they own it. I don’t like but they not the municipalities , have the finances to do this. Bill St. Arnaud, who was quoted in the article, is a bit of a network utopian! Althought I love his ideas Mr. Bill goes off the deep-end in his proposal to do something called reverse PON(Passive Optical Networking). His Reverse-PON is based on a technology called WDM-PON. Althought some implementations of WDM PON exist its still pretty much a lab experiment. I would give it 5 years before it is ready for prime-time implementation and by that time other technologies are likely to leapfrog it including 10G Ethernet PON. I love the idea of a neighborhood controlled aggregation model but fiber is still tough. A better, perhaps, more cost effective idea would be a Ultra-Wideband aggregation in the neighborhood with carrier service selection controlled by the subscriber. Of course this is still a few years off until UWB gets going.
DRW