June 19, 2006
OPINION://No easy answers, not even easy questions
On the way back from London Zoo today with the family to my parents’ house, I was pondering the nature of the journey. Most of the “express” route between London Waterloo and Staines grinds laboriously through the city and suburbs. (Yes, there’s a place called Staines. It’s where I was born. Stop tittering down the back of the class, please.)
Staines station. Old track, new train.
Between Feltham and Staines the track is pretty straight and there are some large gaps in the contiguous concrete of the metropolis. Yet the train doesn’t break 70mph lest terrible things happen to the physical being of those trapped inside. The fastest timetabled journey has actually got longer in my lifetime. Much like the journey between Edinburgh and Glasgow, I suspect that it has also got slower since the days of steam. (No, I’m not making this up. Fastest train between the two main Scottish cities was about 2 minutes quicker a century ago, according to a Edinburgh Evening News story I read recently.)
Naturally, I’m going to start drawing parallels between the infrastructure and services on the train track and those of telecom. But my aim isn’t to try to provide a metaphor that neatly maps across, but rather to show some of the effects of economic and political incentives.
For a good while, the whole system was nationalised. The London bit was separately run and operated as Network Southeast. There was relatively little investment in capacity of track or trains. Punctuality was poor. They still practiced price discrimination (e.g. peak and off peak) as well as offering a Network Card which you could pay a modest sum for and get a 1/3 discount from off-peak fares.
Those demanding high quality invest in private transport (exiting the system) or buffer the unreliability with time.
The telco equivalent would be a vertical muni net which also included services like TV, phone, corporate VPN access, etc. The network suffers high congestion and jitter.
The next part of the story was that the track and trains were separated into different private companies with complex contractual agreements between them. The heavily subsidised track was floated on the stock market. The train services were franchised out, again with complex contracts and a variety of subsidies. The lawyers made a killing. The employees carried on running strikes much like in the days of nationalisation. Fares rose fast. Investment in the track infrastructure wilted. Service improvements were marginal. Marketing of the rail system went backwards as nobody had an incentive to cooperate with anyone else beyond the barest contractual obligations.
Worst of all, Railtrack plc changed the approach to inspection and replacement of rails to minimise cost. Result? Lots of dead passengers smeared along the fastest express line. A political pain threshold was crossed.
Now, I told you that we weren’t going to map all this back to telecom. So we won’t, apart from noting that changes between public and private ownership alone don’t necessarily create the results you desire; neither does structural separation.
In a controversial (i.e. just technically legal) move, the government effectively backrupted the private track company. Now we have a nationalised track company with private train operators. Investment is picking up, as are taxes. Punctuality seems to be improving a little. Rolling stock is also being renewed.
Still, there are problems. Because of the franchise process, train operators tend to have views of the future where time ends with the next “sudden death” tendering process.
So, what incentives would make my journey faster than it was for the Victorians?
One solution would be to increase the amount of “layer 0” access and rights of way to enable scheduling of non-stop services that don’t have to wait behind stopping services. Telecom conduits are expensive. Railway ones that aren’t bequeathed by our long-dead ancestors are verging on the impossible: the Channel Tunnel link spent a decade marooned in the courts. To some degree (in caricature) this is the “throw more capacity at it” argument for telecom. Fine if you’ve already got a fibre from A to B, bad luck if not.
We could change the pricing structure so that competing operators of fast trains could charge a premium price. But that would create its own problems. Much like the network neutrality debate, there would be political outcry. A limited choice of train operators on a finite network capacity would mean users of Operator A may have a smaller choice of trains without buying the “roaming” option onto Operator B. Would consumer welfare really be enhaced?
We could tax the bejeezus out of the public and splurge it on infrastructure. The Japanese tried it and wasted most of the money on white elephants. The UK government is doing the first bit, and spending it all on wages for existing and new public servants. I don’t trust a politician to spend my money any better than I can.
The only alternative I can think of is, as usual, new (untested, novel, risky) ways of aligning customer and owner interests. Perhaps buying a season ticket also comes with a 10-year non-transferable debenture or junior class of stock. The crankiness of your imagination is the limit.
The take-aways? We want to create incentives to built abundant infrastructure, support freedom of speech or movement, and simultaneously make sure a socially acceptable and fiscally sensible pricing structure exists. Anyone proffering simple solutions almost certainly has got it wrong. Tackling piece parts of the problem (errr, “Network Neutrality” anyone?) doesn’t work. And if you’re a taxpayer, hold on to your wallet as tight as you can.
Posted by Martin Geddes at 11:22 PMTrackBack URL for this entry:
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As someone who lived in Japan, I suggest that the best way to ensure good train service is to tax gasoline and charge huge tolls for roads. In such a market, trains can comfortably charge 2 to 10 times what they charge in the rest of the world, pay drivers great salaries, and provide white glove, punctual service.
The Japanese train companies, however, are diversified into hotels and department stores. . . so moving at right angles to your post, perhaps Tesco should buy BT?
Posted by: at June 22, 2006 06:21 PM