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We had a seminar today by Mathew Hayward on whether celebrity CEOs got paid more (he thinks that they do). That prompted me — not quite sure why — to think about the broader economic impacts of Paris Hilton.

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The pressure of downloaded television has finally prompted a response from broadcast networks. Fresh off its decision to launch Tivo next year, Seven will now broadcast two of its most popular shows — Heroes and Prisonbreak — as close as possible to their US debuts. This means we will only have to wait until September for those series. Ten tried this a bit last year.

The pressure comes from the fact that these shows are amongst the highest downloaded programs with Australians a large share of viewers of those programs. The question is: what will users do with their download quota now? The smart money is that they will shift to slightly less addictive programs that they would like to see sooner or stuff that Nine broadcasts. This suggests that a stronger response is inevitable.

BRW profiles Chris Joye, the founder of Rismark; a company that developed and commercialised equity finance mortgages and also one that I advise. Chris has achieved a ton for a 30 year old including PhD studies at Cambridge and putting together the Prime Minister’s Home Ownership Taskforce in 2003.

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In this week’s Business Review Weekly, I write about the strategy of bringing Tivo to Australia; reproduced over the fold. It shouldn’t be a surprise that I think it is all good.

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Sleeps to go	US	Australia
Harry Potter and the Deathly Hallows	23	23
iPhone	2	365+
Battlestar Galactica (Season 4 start)	127	500+

Last year I wrote about a study of the impact of extended daylight saving hours during the 2000 Olympics. It didn’t reduce electricity demand. Now, Australia will actually move to Olympic level extensions in daylight saving. This is despite the fact that we had a trial and a study that showed no benefit to this. Indeed, it is possible that energy consumption may increase. I must admit to a feeling of “why bother” in terms of proper research on this stuff.

This week’s One Question comes from me:

The government is accused of playing catch-up politics, but is there some merit in such an approach?

In proposing this one I was motivated by two dramatic instances where the government appears to be engaged in ‘catch-up’ politics. The first was, of course, the whole issue of climate where in the past year the Howard government has made a spectacular change in its attitude. And the second, more recently, was its proposals on broadband last week. Read more

My post on Terry Tao brought me to his blog. Suffice it to say, it was a humbling experience. Now I think that my blog is vaguely informative about economics but that is nothing compared to what his does in mathematics. To the untrained like myself, there seems to be some real science going on there. It’s not so much a blog as a slog! This is not the average blogosphere experience.

Terry Tao is the Australian winner of the Fields Medal in mathematics. He edits the Journal of the American Mathematical Society. I was referred to his website to take a look at his journal submission policies. Suffice it to say, they are a hard-line attempt to encourage fewer and better submissions. For instance, because of a back-log they currently claim to be declining all papers. That is a strong commitment and I wonder if they could stick to it if something truly path-breaking comes along.

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Just one recent post at Game Theorist on some strange kid’s sporting incentives.

In the Wall Street Journal, Robert Barro tells Bill Gates where he would have liked his money to go: to Barro and everyone else [HT: Greg Mankiw]. Barro’s argument is that Bill Gates (a) contributed alot to social value by founding Microsoft; and (b) will largely replicate ineffective poverty relief programs by giving his money away to development causes. Instead, Barro thinks a $300 per person donation to every US citizen would be better.

There is so much that is incomplete in this argument that it is disappointing. Taking our starting point that Gates has a ton of money, what Barro is proposing has the same impact as a tax on the very rich in the US for the purpose of expenditure on a general public good in the US. This is compared with a tax that Gates is imposing for the purpose of public good provision in developing countries. It is hard to imagine how you can really rank one over the other. Certainly though, if Barro’s choice is preferred, then what would surely be better would be a straight out handing of $300 to 300 million enpoverished people.

But there is a larger question that Barro hinted at but ignored: is it better for someone to get rich by, in part, monopoly pricing and use the proceeds for the very poorest in the world versus having priced lower and having no profits left over to distribute? We are trading off ripping off the middle class in the US and redistribution to not doing this. The former leads to more public good provision to alleviate poverty while the latter leads to more productivity in the US. It is not clear which is better in an overall sense but that is the comparison that is surely of relevance when it comes to passing judgment on Bill Gates’ legacy.

Just thought I’d plug what a nice job ABC News have done in their website upgrade. They even allow you to set preferences. Good stuff, click here.

Here is the graph that drives the broadband. Look at Australia there at No.17 in the OECD. This graph has attracted massive political attention and billions of dollars of promises.

This next graph — also of OECD countries — comes courtesy of Andrew Leigh. It is expenditure on pre-primary education as a percent of GDP. The figures at 2002 but the ranking is unchanged. (This represents spending of about $1 billion per annum.)

In early childhood education, we are the bottom of the OECD. Ranked dead last. The political attention is similarly lower. For instance, Labor have promised $450m to fund 15 hours a week of pre-school education for 4 year olds. Over 5 years this comes to less than half its broadband spending promise but is a very large increase over what is currently spent overall (and is a big boost to the public contribution). Yet, it is absent from the real attentive debate.

There has been lots written about early childhood intervention and, for the big bang stuff, I agree with Andrew Leigh that randomised trials are desperately needed to work out what we need to do. But, when Australia lags so badly in something like this, the relative lack of attention is very worrying. This is one area that I hope can get some ‘catch-up’ politics attention from the government soon.

It is a week of op eds for me on broadband. It hasn’t stopped yet. Over the fold is today’s installment from The Age. Also take a look at Alan Wood’s sensible comments.

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I have an opinion piece on, of course, broadband in today’s Courier Mail (over the fold). Read more

I have on op ed in Crikey today on, you guessed it, broadband. It is reproduced over the fold.

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This news report summarises issues that many of been worried about for some time, that the real limits on broadband are not the last but the first mile (or 10,000 miles).

“This is the big fraud on fibre-to-the-node,” Mr Slattery said.

Mr Slattery was referring to plans being considered by the Government to use fibre to upgrade Telstra’s copper access network to carry 50Mbps broadband services in metropolitan areas.

Under the current backhaul pricing scheme, consumers with a monthly 80GB download quota could expect to run a 50Mbps internet service for about three hours before reaching their download quota, based on data provided by Pipe Networks.

Download quotas are almost uniquely Australian. They have existed forever while in other countries no one would know what they are. In the US, for instance, this has allowed the proliferation of free WiFi; impossible here because it would be ‘over-used’ relative to our first mile capacity. And when Telstra claims their NextG network is a substitute, it is even worse. Download limits are much more stringent there allowing only a few minutes of real use per day at decent speeds.

This is an area where the Australian government could come in and expand capacity and negotiate international interconnection deals (say in line for the Australian US Free Trade Agreement) to ensure cheap connectivity with the rest of the world. Without this, we will be limited to speedy data flow within Australia. But at the moment download limits cap that too (unless you go to internal Telstra sites, say).

The Daily Telegraph has found two babies born on April 1st. The paper outlining the research is available here.

On the weekend, Telstra’s ads said that one of the differences between its proposal and G9′s is that it allowed competing networks while G9 had only one. Today, in relation to the Government’s decision to have Opel build a competing regional network, it said:

Telstra Countrywide managing director Geoff Booth says the successful bid duplicates work done.

“I don’t think it’s a good thing for regional Australians. I think you don’t build two roads from the same location,” he said.

“You don’t build two hospitals in regional Australia side by side. Why then would you duplicate two broadband networks?”

So competing networks are bad, today. For consistency, we are forced to conclude that Telstra thinks the G9 proposal is the easy choice. Either that or there is one argument for the country and one for the city? Now we are just confused.

The basics of the government’s broadband policy are out. First things first, they have announced the plan to complete the regional roll-out of basic broadband services with Opel (formed by Optus and Elders) the winner. But there is a kicker: $300m+ in additional funding for a higher speed solution (12Mpbs) utilising WiMax in outlying areas. On the face of it, this seems broadly sensible. Everyone has agreed that at least basic broadband needs to be available everywhere. The nice thing about this is that it positions a competitor to Telstra to invade its traditional regional monopoly on telecommunications in general. We might actually have some bidding for universal service obligations there in the future.

Second, they have announced the process to build a high speed network based on fibre to the node. The process will utilise an expert panel with Ken Henry, Jenny Goddard, Tony Show, Rod Shogren, Joe Dimasi, Len Bleasel and Dick Warburton is the sort of panel one would expect and there are lots of hard-heads as well as experienced competition folks there. At this stage, it is unclear how far this network will reach but I presume that is part of the process. It is also unclear that there will be just one provider but the competition issues are still in the background just as they are for G9 and Labor’s proposal.

In summary, while far from what I would have done (local solutions and more potential for long-term competition), it is also a long way from the worst of all possible outcomes: giving in to Telstra. If I had to guess, broadband has been taken out as a key election distinction between the parties. And that is probably a good thing. There are far more pressing issues that should be taxing the attention of the Australian voter.

[Update: Actually, that might not be such a good thing. As I think about it more, what neither party has done is say how they will resolve the key regulatory issues that have always driven this mess. They have a process but what the electorate deserves to know is whether they are going to weaken or strengthen our competition regime. To accept any proposal, both parties need to do one or the other. I, for one, would like to know what it's going to be.]

A couple of new posts up on Game Theorist this weekend. In this one, we invent a market-based means of restoring injustice. In another, I solve a complex chauffeuring problem.

In its latest round of full page ads in our newspapers (targetting those opinion-holders who read printed news rather than on-line), Telstra asks for our opinion on the latest broadband proposals. It is titled “It’s a no-brainer” arguing in favour of Proposal One which is put forward by Telstra against Proposal Two which is put forward by SingTel-Optus G9. If you read this ad, it is hard to know where to start; let alone work out the ‘no-brainer’ aspect. So let me offer a list of thoughts:

• Ownership: apparently, we have a choice between ‘Aussie-owned’ versus ‘foreign-owned.’ Not that I care about such things but notice that they didn’t say ‘Aussie-run’ versus ‘Foreign-run.’ Also, am I to understand that there is no foreign ownership in Telstra. How will the management exercise their stock options?

• Bush subsidy: Telstra’s proposal will subsidise regional areas where the G9 will not. Hold that thought for a second as we come to …

• Aussie shareholders: apparently, Telstra’s proposal protects Aussie shareholders but at the same time is giving their investment money over to non-profitable areas. What gives?

• Profits: apparently, the Telstra proposal keeps profits in ‘our’ economy. Notice they didn’t say the Australian economy but apparently profits will go overseas under the G9. Again, am I to understand that Telstra’s CEO is not being paid bonuses based on profits? And if he is, his income will stay in Australia.

• Existing network: Telstra’s proposal will leave the old network around whereas G9 upgrades it. Apparently that is bad too.

• Prices: Telstra will guarantee prices for 14 years. Now remember that in the past 14 year, prices have fallen ten fold; despite inflation and interest rate changes. What this means is that we wont have that in the future.

• Risk: apparently, Telstra will take all of the risk whereas consumers will take the risk in the G9 proposal. What does this mean?

• Service disruption: Telstra claim there will be ‘no service disruption.’ OK, I want more details on that. If it means that they will guarantee that consumers will be connnected to the Internet 24/7 with no outages and with massive financial penalties on Telstra should a disruption occur then, at last, now we are talking. But if not, then might some readers of this ad be mislead and deceived by that claim?

With ads like this, it appears that Telstra thinks that Australians and its own shareholders might have no brains.

The RAC is lobbying for an elimination of the fuel tax and its replacement with a GPS-enabled per kilometer charge.

The plan, backed by motoring groups, would work in a similar way to the way in which people are charged by phone companies depending on when they make a call, over what distance and how long it lasts.

Motorists would be rewarded for driving at off-peak times or in cars that used less petrol. Instead of the various taxes imposed on fuel, people would be charged on either their use of roads or on carbon emissions.

As I have written recently (here and here), pricing car use based on distance (implicitly in the fuel tax) but also time of day would be a step-up. (Harry Clarke has also been pushing in this direction). I would go further and price it based on actual congestion (what is a ‘peak’ time on an uncrowded highway?) and I would also use the eTag style system to manage the information in that. Nonetheless, it is great to see motorist’s groups driving policy in the right direction. (There is also an implicit call here to get rid of percentage-based taxation, whereby govt revenues rise with oil price rises, and replace it with a fixed charge which potentially avoids some dead-weight losses).

This clip speaks for itself:

Although this phone salesperson is also alright.

One of the big supposed applications of high speed broadband is ‘eHealth.’ Usually, what is envisaged is a surgeon in Sydney operating on a critically injured patient at some outback station.

My prediction is that eHealth will be most critical for the most routine and mundane of medical issues rather than the most specialised and exceptional. Consider the following scenario: your child has a sore ear at say 6pm at night. Panadol and other pain treatments have not been doing much good. Without broadband, you would have to take said child (and perhaps other children as well if there is not adult around) and go to the doctors. At that time, you are out of hours, and so the waiting time is much longer. If you are lucky, you are back home by 8pm with some anti-biotics (if the ear is infected) and perhaps some re-assurance (if it is not too bad).

With broadband, you might do something different. You login and email your complaint to a GP online. They then ask you to take the child’s temperature and also to send them a picture of the inside of the ear using this device. The GP then diagnoses the illness, emails a prescription the the pharmacist. Then you might have to leave the house for 15 minutes to pick antibiotics up or you can have another adult do it. All done by 6:30 with minimal disruption to you and the GP. And what is more, at no time in this story did we need high-speed broadband to get all of this.

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