= Networker: Dreams of abundance

January 31, 2001

Networker: Dreams of abundance

In just a few weeks Canberra residents will have access to digital services that “the rest of the world can only dream about”, according to former Australian Capital Territory (ACT) chief minister Kate Carnell, quoted in the Canberra Times.

Now national development manager for TransACT, Carnell was talking about the new broadband services that will be rolled out across the capital over the next few months. As well as TransACT, ACT residents can sign up to the Foxtel satellite based service, or a range of Telstra services.

TransACT promises some exciting new offerings. For example, you will be able to watch all the free-to-air television stations, you will be able to connect up to telephone services, and you will be able to log on to the internet. In her enthusiasm Carnell failed to notice that she was trying to sell people things they already had. It isn't her fault, however. Most business in this area is simply fighting among various companies for limited customer dollars.

Competition is aggressive. Modern technological development mean that it is possible to deliver similar services in many different ways.

Telephone calls can be made via the traditional fixed line telephone network. Or you can use the mobile network (if you want to pay a lot more, sacrifice service quality, and take a slight risk of brain damage). Or with a little bit of fuss you can log on to the internet and use that instead, especially for expensive long distance calls where you don't care much about quality. Or you can use some sort of device connected to a cable television service and make calls that way. About the only option you don't have is to use satellite services (these were tried but the delays made them very unpopular).

If you asked the question, what is the best network for making phone calls, the answer is usually whichever is most convenient or cheapest for the user. But in a world where several service suppliers are competing for market share, the price they charge the customer has no relationship to the actual cost of providing the service.

Similarly, what is the best way to get a television signal? Here the choices are to pick it up from a local transmitter, buy a satellite dish and get it from space, get cable television or get it datacast over the internet. Once again technology has provided a range of paths for you. As with telephone calls the cost in each case has no relationship to anything but the aggressiveness of the marketing campaign of each television path provider.

Internet access is a third example, being available over telephone lines or cable television connections.

It is said that the free market promotes efficiency by rewarding those companies that provide services most efficiently. This is generally not true (because of collusion between the largest companies). In the case of telephone, television and internet services it is also false. There is now massive overcapacity in these services in Australia and other rich countries.

Efficiency will have nothing to do with determining which technology or path dominates the phone, television and internet delivery sectors. Instead it will depend on which companies have the deepest pockets, own particular technologies, and have the most power over politicians. About the only thing that can be said for sure is that the outcome won't be efficient or rational.

BY GREG HARRIS (<gregharris_greenleft@hotmail.com>)

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