Thursday, April 24, 2008

Broadband, by order!

New Zealanders need broadband, you say?  Okay, then if they need it as desperately as you say, why don't they seem prepared (as things stand presently) to pay voluntarily for the investment necessary?  Why does one of the two major parties think we need to be forced to pay for nationalised broadband, withdrawing more than $1.5 billion of investment capital from those New Zealanders who voluntarily choose their own investments based on reasonable return, and transferring it to a project that in the present environment is only apparently a goer as long as government force lies behind it.

Do you think perhaps there's a good reason, or several reasons, that New Zealanders haven't paid voluntarily for the sort of broadband that's now being talked about?

The fact is that the alleged need New Zealanders have for broadband -- a need that National says is worth spending taxpayers money at the rate of $2000 per household -- is only a problem from the standpoint of central planning, which necessarily views human beings as a collective incapable of direction, and which finds it simply unfathomable that individuals are capable of understanding and acting in their own best interests.

But this is quite wrong.  In actual fact, if government meddling and government restrictions were removed, then individuals are quite capable themselves of voluntarily redirecting their efforts and their investment capital to filling this alleged need, or any real need.  The fact is that if $1.5 billion of spending were to truly attract a benefit of $4.5 billion (and this figure that's been bandied around isn't just guesswork), then this is $4.5 billion of benefit to specific individuals.  Why wouldn't they be prepared to stump up voluntarily if their risk was minimised by the removal of the various restrictions on doing so?  Or as Annie Fox puts it in itemising the particular restrictions that need to go, "Remove the Red Tape, the Fibre Optics will follow."

Restricting investment and then using government force and taxpayer dollars to pick 'winners' was the leitmotif of an earlier National Government under Muldoon.  Liberty Scott recalls some of the 'winners' that the Muldoon Government picked in its 'Think Big' programme (some of which we're still paying for), muses on the resurrection of this flagship Muldoonist failure, and has eight relevant questions that any supporter of John Boy Thinking Big must be able to answer.

John Key's National Party?  They sure as hell aren't the answer.

UPDATE:  Says Matt Burgess at Anti Dismal:

    This is Think Big 21st century style.
    The objection is not that better broadband is a bad thing. In the 1980s, more electricity was a good thing but Clyde Dam was a disaster. The problem with National's plan is that it's likely to give New Zealanders less broadband at higher cost and lower quality than might otherwise have been achieved, much as Clyde Dam did for electricity.
There are several reasons for this pessimism...

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3 Comments:

Blogger Matt B said...

Great post PC. The first coherent objection to this plan that I've seen.

It is possible that this is an investment that is worth the cost to the country, but any incentives to invest in it have been undermined by a) price caps on residential voice and now business and residential data via bitstream and unbundling regimes, and b) the weak property rights in New Zealand. A fibre asset is particularly vulnerable to weak property rights protection because it is costly, sunk, long-lived, and delivers a service that is subject to political interests.

So this is a case, I suspect, of regulation begets regulation.

I have written elsewhere that I think this will be bad for New Zealand. This is a nationalisation of a large part of NZ’s communications access infrastructure. As a nationalisation, I confidently predict it will crowd out all competing investment. It will be late. It will cost much more than $1.5 billion. It will not perform as promised. It will be a political football kicked around by the 25% of households who miss out. The government that finally caves to their demands will pay billions more to lay fiber to Milford Sound or buy enough satellite bandwidth. And it stands a good chance of locking NZ into the wrong access technology.

4/24/2008 12:37:00 pm  
Anonymous Anonymous said...

Am i the only one who thinks that they govt should be channeling the cash tagged for 'luxuries like broadband' into taking a tax hit on fuel and food to enable normal hard working kiwis to get back to their basic right of living (we need to eat people!!!)

4/26/2008 10:44:00 am  
Blogger Steve said...

I guess Key is looking to bridge the so called "digital divide". If he were to spend an equivalent amount of money on bridging the "Triumph Bonneville divide" he'd get my vote.

I guess on a positive while we are all starving, struggling to fill the Cherokee and meet the mortgage payments we will be able to enjoy faster porn download. And, I guess there is a lot to be said about eliminating YouTube delay.

4/28/2008 09:21:00 am  

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