Muddling pleases nobody

There's such a lot happening in the telco world at the moment it's an effort to keep up.

There’s such a lot happening in the telco world at the moment it’s an effort to keep up.

The Southern Cross cable goes “live” in November; the government will respond to the telecommunications inquiry report before Christmas; the 2GHz spectrum auction is rattling along, with the major players paying around $20 million a pop for 3G spectrum slots as I write; the Toll-free Number Administration Services (TNAS) consortium has taken its first shaky steps towards providing number portability for 0800 and 0508 customers; Telecom is trialing JetStream Lite aimed at home users; and Clear is offering free international calls to Ztalk customers. And that’s just off the top of my head.

All in all it’s a vibrant time in a dynamic marketplace. So do we really need a regulator to keep it all flowing smoothly? What difference would a regulator have made to any of these announcements?

Probably not a lot on the surface. The Southern Cross Cable would still be going live, the auction would still be happening and Telecom would still be trialling JetStream Lite. The only real change would be the timing — these things would all have happened much faster, I believe. Not only would Telecom be trialling a home DSL package, but so would its competition. Instead of it taking a couple of years to roll out DSL-capable exchanges around the country, Telecom would have been pushed into doing it so much earlier. The TNAS people wouldn’t just be building a platform for toll-free number portability - it would be integrating it with the new system for all numbers; something we’re still years away from having under the current regime. I would expect the auction would also be much livelier, with a few more players eager to make money and give it a go in the New Zealand telecommunications market.

But it’s looking increasingly as if the report will be knocked back by government. The hints dropped by Michael Cullen about not being heavy-handed in its regulation would imply the commissioner’s office will never see the light of day. In an effort to calm the waves on the NZSE 40 and be seen to be pro-business, the government runs the risk of depressing the most vibrant market in the country by playing politics.

This whole business with the NZSE 40 is a red herring anyway. Telecom makes up a huge percentage of the stock exchange and if Telecom dips, so does the overall index. That makes investors "jumpy", as they say in the business news, and that’s apparently a bad thing. Putting aside the question of whether a government should even be bothered by the comings and goings of an entire index of businesses let alone the machinations of just one company, aren’t all the telecommunication companies around the globe taking a hit at the moment anyway? Should we be trying to shield Telecom just because its share price has dropped over the past two years?

Telecom’s share decline is not a recent event, despite what the spin doctors will tell you. That says to me its share price has less to do with the inquiry report and more to do with the market realising telecommunications isn’t the cash cow it has been in the past. This is a good thing — a market buoyed up by unrealistic expectations is going to burst, just as the dotcom stocks did earlier this year. That’s fine when it’s something as inconsequential as a bunch of bandwagon-jumpers who just want to make a fast buck at our expense, but when it’s the nation’s telecommunications infrastructure, that’s something else entirely. I read somewhere that Jack Matthews at Telstra Saturn said “If it’s so important to them [government] why don’t they just nationalise it instead?” Quite right, Jack. This half-hearted muddling is doing nobody any favours — either you’re in the market or you’re out, but you can’t say one thing and do the opposite. That doesn’t help anyone.

Christmas, and government’s decision on what to do with the report, can’t come soon enough.

Send email to Computerworld journalist, Paul Brislen.

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