11 Apr 2009

Fibreoptic rollout

This article by Peter Hartcher makes for fairly extraordinary reading.

Kevin Rudd's bold election promise in respect of internet access in Australia indeed played a key role in his victory, largely because it was perhaps the most important thing that wooed Rupert Murdoch to his cause (the next most important thing was Howard's contempt for the education system, or perhaps just Howard's arrogance more generally).

Rudd proceeded on his plan by attempting to find a private contractor to do the job. This failed, since there were none willing or able. The main obstacle was that basically the only entity that is able is the telecommunications monopoly, Telstra, and they have an arrogance to fit their monopoly status, combined with the greed of a private-sector corporation.

Rudd's solution here is exactly what one would advise: he decides to do the whole thing as a public-sector project (though one presumes much of the work will still be through private contractors). The main problem for this is that the project as he originally envisaged it, fibre-to-the-node, relied on the usage of Telstra's local copper wire networks. The boldest step of all then, is to simply roll fibreoptic cable to every household in the country, at a gigantic cost of over $40 billion, 49% of the funding of which is to come from public or private subscription.

The genius of this is that it not just sidesteps, but ultimately kills, the privatised behemoth Telstra: Telstra's copper wire network will be reduced to its scrap value once every household has fibreoptic cable.

But of course, this is hardly socialism: it's the government stepping in to do what business demands in terms of providing infrastructure. It's being done on a maximally market model, though there is perhaps here at best a synergy of public and private interest that indicates that capitalism hasn't completely outlived its usefulness to humanity.