Opinion: Telecom, a great ad for socialism

The last time we needed massive investment in essential infrastructure was during the great railway building days

It’s been a real media flurry for this new editor in his first two weeks on the job. What with the launch of Vista and ongoing dissatisfaction with broadband services, there have been “independent commentator” duties to perform for both television and radio.

Campbell Live recently did a spot on broadband that you can only describe as scathing in its coverage of both New Zealand’s position and Telecom’s performance to-date.

It seems, where broadband is concerned, New Zealanders are living on promises. Well, most New Zealanders are. When Jenny Gibbs publicly complained, those promises were instantly, magically, fulfilled.

A second segment on the Campbell show put some hard questions to the Communications Minister, David Cunliffe. The main line of questioning was whether the government should do more to boost New Zealand’s broadband performance.

It’s a thought that bugged me for a while and then flowered in my head as I was driving home from a harrowing game of tennis last week.

What New Zealand needs is massive investment in essential infrastructure. But we are a small country and such investment is, inevitably, expensive and risky. The main company charged with delivering this has to keep its shareholders happy, so there are limits on how much it can invest while still keeping its share price up. It also has to protect its profit margins.

So what do we do?

Well, the last time we needed such essential infrastructure was during the great railway building days of a century or more ago — and it was the government that did the building.

Now, I’m no socialist, but you have to say what Telecom has delivered so far in terms of broadband isn’t a good advertisement for the free market.

Cunliffe, in answer to Campbell, said the market was working and new solutions would arrive this year. We’ve all heard that before. And will those solutions be out of date by the time they get here?

It seems to me the free market has not worked in this case and in some other cases, too (think electricity) where essential and expensive investment is required. The commercial imperative is to maximise profits. With many CEOs now focusing on short-term goals, such as share price, profitability and a big golden handshake, infrastructure investment is not the priority it should be.

Now, before you all start shouting me down, I do remember how long it took to get a telephone installed back in the 1970s. Government generally is not very good at delivering goods and services — that is where the private sector excels.

But if we look at the really big picture (I hesitate to say “Think Big”), ADSL investment remains a bit of a stop-gap. Fibre is what we should aspire to.

Cunliffe noted some achievements in this area, delivered through government programmes. But, to really drive fibre into New Zealand, and to promote real competition in the delivery of services, the government still has a role to play.

It is doing some good things in promoting infrastructure competition. The government has also built or supported the building of three high-profile networks: for research, for health and for government itself.

What about one for the people and for small business? Even the threat of such a move may force Telecom to revisit its investment priorities.

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