Rural users price of progress

So Telecom tells us it is "subsidising 380,000 mainly rural and small town customers to the tune of $167 million a year".

So Telecom tells us it is “subsidising 380,000 mainly rural and small town customers to the tune of $167 million a year”. This figure includes $1.4 million for running emergency call centres, $7.5 million for directory services, as well as the cost of carrying all those poor unfortunates who don’t live within spitting distance of the three main centres.

Excuse me while I sob into my latté.

Telecom is trying to have it both ways and that just won’t fly. Only columnists are allowed that privilege. Telecom is saying “look at all these great unwashed — they want the Internet as well and it’ll cost us $500 million to give it to them; that’s unfair”, while at the same time telling us we can’t unbundle the local loop because it owns it.

The local loop is an item of fundamental importance to the country’s wellbeing but something that Telecom has not spent as much on as it should in the last decade and through it makes a serious amount of money each year. Of course, I’m guessing the incumbent telco makes money off the local loop because despite being told a year ago by the government to reveal its costs and profits for both the Kiwi Share Obligation (KSO) and the local loop, Telecom has chosen not to bother telling us what the loop earns. So we’re only getting half the story.

In fact, reading chief executive Theresa Gattung’s letter at the start of the Telecom press release, you would think nothing was missing at all. Telecom has been quoted as saying it can’t tell us how much it earns through its ownership of the local loop because it’s such a complex issue that it will take months to work it all out.

This is a ridiculous statement — that a company the size of Telecom can't, with a year’s notice, provide the relevant documentation. Even if we’d asked it to count all the uses of the word “dynamic” in every single Telecom press release issued this year I’m sure it could have sorted it out by now. More likely the accountants can’t actually count that high.

You can’t own the local loop, which was bought with the proviso that you maintain certain levels of commitment to the rural sector, then complain that the rural sector is costing you money. Of course it is — it’s sparsely populated, the land is rugged and lacking in handy, tall buildings on which to hang delicate telecommunications gear. To offer a quality voice service, let alone high-speed data connections, to such a region is difficult and costly.

But that’s the price you pay for the local loop. If you don’t want to bother with rural users, just say and we’ll find someone else who will. Because rural users are a vital part of New Zealand’s economy. Cutting them off from all the advantages and potential the Internet brings is not only bad for them, but for New Zealand as a whole. Telecom bought it, it knew the cost involved, it has to pay the piper. In this instance, the piper is the local user, not the offshore investors — they’ve been paid quite enough in excessive dividends, thank you. It's long past time to invest in the infrastructure, and I don’t mean only in those places where it suits Telecom. Cellular networks and ISDN lines are all well and good but when rural users can’t even get a decent enough phone line to connect at 14.4Kbit/s, something needs fixing. Incumbent telcos have been trying this one on around the world for years now. In the UK British Telecom was told to stop complaining and get on with upgrading the exchanges or its competitors would be allowed to. Maybe our new commissioner will be allowed to tell Telecom the same thing here.

Everyone I know pays around $40 a month for the wires in the ground running into their homes. Businesses pay a lot more. That money should be going towards the upkeep of the lines, not, as it has been, straight into the shareholders' pockets.

The minister for telecommunications Paul Swain is "concerned" by Telecom's lack of reporting and is considering his options — which could include "conviction and the imposition of a fine". The temptation must be to leave the issue for the new commissioner to deal with. This is a bad idea as we need to know just what Telecom wants to hide from us and we need to know now.

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