Telecom tail wags government dog

I always knew that Telecom strenuously lobbied the government to get its views across on any decision that would affect the telco. However, mere lobbying couldn't explain why Telecommunications Commissioner Douglas Webb in 2003 inexplicably went back on a draft determination to unbundle the local loop and recommended the pseudo-wholesale bitstream service instead.

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- Telecom tail wags government dog

- The end of the year is nigh

Totally logical really

In 2000, the Japanese government called upon the services of Shingo Mama, a six-foot cross-dressing popstar for a communications campaign; the country now is the third biggest broadband market in the world. There is fast and cheap ADSL, and even fibre-to-the-premises. New Zealand meanwhile is bumping along at the bottom of the broadband stakes. Coincidence? I think not. Shingo Mama and his Sports Music Assemble Peoples know the strong and effective way forward!

- Shingo Mama no oha rock!

- Wikipedia: Shingo Katori

Telecom tail wags government dog

I always knew that Telecom strenuously lobbied the government to get its views across on any decision that would affect the telco. However, mere lobbying couldn’t explain why Telecommunications Commissioner Douglas Webb in 2003 inexplicably went back on a draft determination to unbundle the local loop and recommended the pseudo-wholesale bitstream service instead.

At that stage there was no suggestion that Telecom actually dictated policy to the government but thanks to the Dominion Post obtaining correspondence under the Official Information Act, there is now a strong hint that telecommunications regulation in New Zealand is set out by Telecom and not the government.

The letter in question is from Telecom’s chief executive Theresa Gattung to “Dear Paul” (Swain, who was the communications minister in 2004); it dispenses with official courtesies and gets straight to the point.

“Paul, can I be frank,” Gattung wrote and told him that sending the Commission’s recommendation back for another think would be a lost opportunity for New Zealand. The lost opportunity Gattung talks about is a scenario in which the telco ceases to invest and because local loop unbundling has been mandated, the New Zealand stock market is in freefall thanks to a 30 (thirty) cent drop in Telecom’s share price.

Gattung then added a bit of underhand bowling by saying the drop in value of Telecom’s shares would hit the government’s superannuation fund too, and all that money would be transferred to the Australians via TelstraClear. She could’ve made that point stronger by mentioning that the ACC also has many millions invested in Telecom shares, so it’s not just the super fund that’s being held to ransom here.

Also, if Paul were to do as he proposed and return the Commission’s recommendation, it would take until 2007 at the earliest before there was bitstream service available. Now that would really make NZ look bad in the OECD figures, wouldn’t it?

Instead, Gattung instructed the government to follow a “strong and effective way forward” which was to go along with Commission’s recommendation for UBS.

Being a smarter cookie than her correspondent and Douglas Webb, Gattung realised that there had to be a measure to show that said way forward actually led somewhere. So, Telecom came up with the target of 250,000 residential customers before the end of 2005 and Gatting declared total commitment to reaching that number.

The fudging of the wholesale target – one-third of the 250,000 – was reinforced by Gattung, who most likely knew early on that Telecom would never reach that figure. As in the February 2004 letter to the Commission from Bruce Parkes at Telecom, it was now a third of the projected growth “in broadband” that would come from resellers of the telco’s DSL service. Not a very firm undertaking that, unlike the number of residential customers.

Paul and the government did as they were told by Gattung even though the share market price fall threat was a bluff that would’ve been pretty easy to see through. TelstraClear still isn’t reselling UBS, and its application for a regulated bitstream service has been thrown into legal quagmire by Telecom. New Zealand is still at the bottom of the OECD for broadband uptake, but Telecom shares aren’t doing too badly so I guess there’s some positive outcome from the government’s regulatory efforts.

It would be good to see Paul Swain’s reply to Gattung’s letter. Surely he had a Tui Moment over the share price nonsense and wrote back to Gattung, stating the government’s independent position in regulatory matters?

I would also like to know if the present minister of communications, David Cunliffe, has received a similar “Theresagram”. Cunliffe promised action if Telecom missed the one-third wholesale target. Instead, Cunliffe has been stretching deadlines and backing down on the promised action. Why is that?

The whole mess is embarrassing and cynical and makes New Zealand look like a banana republic as Ernie from TUANZ says. Cunliffe might as well disband the telco commissioner’s office and give some of the money to Gattung instead, if she’s writing the decisions. That would be far more honest.

- Telecom used scare tactics

- Telecom's threat a hollow one

The end of the year is nigh

Yep. Down tools everybody, because get out some more time is upon us.

Merry Christmas, Happy New Year and Generally Have A Good’Un.

See you next year and thank you all for this one.

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