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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

So much for competition « Previous | |Next »
June 14, 2003

This is depressing.

"The cosy, and now profitable, duopoly of Telstra and Optus is on the verge of being restored. But at a staggering cost.

In an implosion of wealth that dwarfs the $2 billion collapse of One.Tel for sheer greed and incompetence, billions of dollars have been spent on new telecoms networks that will never be used and thousands of jobs have been sacrificed to, quite literally, pipe dreams to break open the increasingly comfortable Telstra-Optus nexus."

Years of competition, lots of wastage and it reproduces a duopoly. And that is that can be said for deregulation? No wonder economists have difficulty with offering a plausible definition of rationality, or even wimp out. What is rational about what has happened in the telco industry? It can hardly be called utility-maximising behaviour. Can it be even be called the intelligent pursuit of self-interest by economic agents? Rationality implies the systematic use of reason (ie., the disciplined use of reasoning and reasoned scrutiny). What we have is debt-ladened, underfunded companies with few customers, duplicated networks that will never be used and merchants banks that have made multi-millions from fees from helping to create a frenzy of ditch digging and cable laying.

If it is judged that there is rationality embodied in thedestructive processes of the telco market (creative destruction?), then this is a rationality that is stripped, or dissociated, from human conduct in civil society. It is a rationality that is disconnected from from value and ethics (other than the value of economic self-interest). What the individual telco (X) values is chosen entirely according to their self-interest, and it (x) only sees other telcoes insofar as they hinder or facilitate X's self-interest. The Telco industry is a good illustration of the consequences of this.

This not a use of reason to promote a better kind of society.

Now the same is being done with water. You can see the early results here.

| Posted by Gary Sauer-Thompson at 5:03 PM | | Comments (7) | TrackBacks (1)

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Economists, it seems, have difficulty with offering a plausible definition of rationality, or even wimp out. Gary over over at public opinion has suggested that market rationality is one of the maximisation of self-interest and implied that this has li... [Read More]



I always wondered how telcos could compete for long. To rely on Telstra's line would always constitute the sort of 'business plan' into which only the acutely troubled could invest. To roll out a gratuitously duplicate network, well, that would just be mad. To argue, as every bloody smarmy suit has argued since about 1975, that new technology would undermine the natural monopoly argument, is to invite the question: 'how?". Yet it seems no-one accepted the invitation, and we're a score of billions down the shitchute as a consequence ...

We coulda split the physical network from the 'value-added' digits that rode upon it back in '88, when the ROSA Report suggested as much to Bomber Beazley. We coulda had all-but-free telephony, coulda seen a national diffusion of the internet unrivalled the world over, coulda had Oz businesses competing internationally with almost no communications overheads, couldabeen the Anglophonic world's core provider of data streaming, coulda avoided producing hundreds of thousands of 'ma & pa' investors losing billions, coulda kept our investment banks from investing in fibres that will never see a single pulse (wonder how they're currently hiding those 'assets'?), coulda kept uglifying sagging cables from our suburbs' electricity poles, and coulda kept Murdoch from dipping into our phone company's telephony revenues with impunity.

But we didn't. Instead, we got absolutely everything horribly and lastingly wrong ...

Nonsense, my dear fellow. Things have gone swimmingly.

Your faith in a public authority generating the results you suggest might have been possible is touching, but isn't err likely, at least not in this universe.

I will get onto this topic later, but I can see that there's a lot of myths to be debunked.

Well, just as long as while you're debunking 'myths' you deal with the reality and don't just install a bunch of your own myths.

The government could have provided the basic infrastrucure as a national investment---the highway of the 21st century so to speak---to look after the public good, and then let the entrepreneurs do their creative thing with their value adding.

Privatising the highway is just bad governance.

I guess I'm more interested in the consumer's persepective- it's of little interest to me why companies overpaid so much for these assets.

Gary, you are considering communications networks to be analogous to the transport networks. Not good.

Tim, I don't tell you how to do your job; don't tell me how to do mine.

Scott Wickstein wrote: "Things have gone swimmingly."
I can see who didn't buy into Telstra 2 in this comments box!

Gary - I have to confess I find your criticisms (at least I think they're criticisms!) confusing . . . what exactly is your problem with what has occurred?

It seems to me that, as a group of consumers, we've just had a whole lot of infrastructure built to which the government hasn't had to contribute a cent. The bigs are now buying it up cheaply, which is a good thing for consumers because the prices they will have to charge to get an economic return from it will be commensurately lower.

So why aren't we happy? Are you feeling sorry for the poor, miscalculating capitalists?!