Telecommunications Amendment Act
On Wednesday appeared as part of the InternetNZ team before the Finance and Expenditure Select Committee regarding the Telecommunications Amendment Act. Our submission is here as a pdf.
As this is a more controversial issue than spam, censorship laws, I thought it could get somewhat more partisan than previous times I have appeared, but I was again really impressed with the session.
There were many really excellent questions from MPs on all sides, showing they understood the issues, and were very focused on how effective various solutions will be. Paul Swain, Shane Jones, Lockwood Smith, Chris Tremain and Maurice Williamson were the main contributors. We talked about the rural issues, the incentives for investment, the network bottleneck and the next generation network.
Despite spending many many hours swotting up for hardball questions, there turned out not to be any. The questions were all designed to get information rather than challenging the need for any change. So I read Bronwyn Howell’s 150 page submission for nothing 
Not just from our session, but also from the others such as Orcon and Ihug, I’m feeling pretty confident about some good improvements to the bill, when it is reported back. MPs were quite shocked to hear that if you move home and your ISP is Xtra then Telecom can have your broadband reconnected the day you move in, while if you are with another ISP you can be without broadband for 1 – 2 weeks. This is a classic example of the problem with vertically integrated monopolies.
One of the points we made to the committee was how the debate over just six months has moved from is the status quo acceptable, through whether or not LLU should happen (it is), also through whether or not Telecom should have some sort of separation (it is) to what sort of separation should there be (accounting, weak operational, strong operational, structural).
Getting the right separation scheme in place is the long term solution, rather than regulation which tries to make incumbents behave better.
September 15th, 2006 at 8:58 pm
Doesn’t a little thing called property rights ring a bell, Farrar? A monopoly is only a problem if a) obscene profits are being made, and b) there are barriers to entry in the market. The only barriers in NZ are ones the goverment have put up themselves (like the RMA, Kiwishare, etc).
Obviously, our submission had a different slant to yours.
September 15th, 2006 at 9:44 pm
I would call charging small business $2,400 a month for a $28 service as an obscene level of profit.
September 16th, 2006 at 9:58 am
An excellent submission, and I am sure Telecom will welcome the use of the words of their Australian subsidiary AAPT’s submissions to bolster InternetNZ’s case.
Congratulations to all who had input into the drafting of this submission – and congrats too to the people that took the trouble to make it, as far as I can see, completely free of typos and grammatical howlers.
My only small point of concern would be if Maurice Willliamson were to find himself, in a future National government, in a position to have any possible influence on the working of telco regulation.
His track record, his well-established views on the subject and his public comments all indicate that he could, and would, do harm to the process.
September 16th, 2006 at 11:34 am
Maurice is one the record as having been sceptical of regulation. However at the SC I didn’t see him defending Telecom or the status quo.
September 16th, 2006 at 1:49 pm
David,
I was there to see the Libertarianz submission, and before that the Roundtable one. Both submissions opposed regulation and Maurice, Lockwood etc were very sympathetic – Maurice illustrated the arguments against by holding and firing an imaginary gun to his head. He wasn’t defending Telecom as such, but property rights and due process.
Also they seemed very interested in our suggestion of removing the Telecom-specific references which effectively make it a bill of attainder. Another suggestion they asked about was a sunset clause (in the Roundtable submission) or a milestone clause (in the Libz submission).
September 16th, 2006 at 4:04 pm
The problem with the Libertarianz view is that it elevates property rights above the national interest, and proposes the concept of the joint-stock company as superior to the elected government of the land.
I think both propositions are wrong.
Our property right in New Zealand is effectively guaranteed by the Crown. My bit of the Bay of Islands, someone else’s suburban quarter-acre. the next man’s strata title on Wakefield Street in Auckland or Courtenay Place in Wellington, are all ours because the Crown creates a legal and social framework that lets us defend that right against all comers.
I hold my land in fee simple from the Crown – but I’m not immune to the Crown’s right of eminent domain, legislated in NZ as the Public Works Act. Our law holds property as important, defensible but not sacred or immutable.
Let’s look at the property owned by Telecom – a mix of real estate and easements that allow them to string their wires across other peoples’ land.
No-one, not even the most devoted Telecom critic, is suggesting that Telecom should have to give up either its real estate or its easements. The company will, at the end of regulation, still own every square metre of ground, every centimetre of wire, that it owns now.
What is proposed is simply that others should also be able to pay a fair market price to access the equipment, and the data carrying capacity, of the company.
There is no suggestion that those seeking access to the local loop, or the DSLAMs, will not have to pay Telecom a fair price for that right.
There is no diminution or devaluation of Telecom’s legal property. Rather, the regulation being proposed increases the value of Telecom’s physical assets because it creates a working market for their use.
An effective data network is part of our nation’s development infrastructure. As InternetNZ rightly suggested in their submission, nation building is not something that can be left to the unregulated private sector.
We know already that both Maurice Williamson and Lockwood Smith would prefer to see Telecom left alone, to “get on with it”. But the evidence over ten years is that the incumbent telco won’t.
Left alone, they have demonstrated that they will deliver the worst value in the world: charging Kiwi businesses $2400 a month for a limited throttled service worth $28.
Left alone, they have demonstrated that they will impose ludicrously small data caps on Internet use – not because they have to but because they can.
Left alone, they have demonstrated that they will favor their subsidiary ISP above all others, so cheating the market and distorting the outcomes.
Telecom has had ten years to demonstrate its willingness to work with New Zealanders to deliver the services New Zealand needs to be competitive in the world market.
They have used those ten years to overcharge, to rip off the country’s business community, to offer a bicycle track onto the data highway and charge for it as if it were the fast lane.
By their deeds shall ye know them – they’ve had their chance and now they need to be regulated, controlled and compelled to set New Zealand users free of their Telecom-imposed shackles.
That is why I would be deeply worried to see Maurice Williamson or Lockwood Smith involved in IT policy or telco regulation in the next National Government.
They have demonstrated beyond doubt that they would be better employed in some other area – perhaps as back bench MPs looking after their constituents.
September 16th, 2006 at 4:57 pm
“The problem with the Libertarianz view is that it elevates property rights above the national interest, and proposes the concept of the joint-stock company as superior to the elected government of the land.”
That’s not the Libertarianz view, that’s the non communist non fascist view, which of course is why you are opposed to it Phil. You are one of the new breed of leftists, a combination of fascist and communist, and the reason you don’t realise this is because you observe that your views are quite commonly held, and also you could never believe for one moment that such a confusing and hurtful accusation could be true. But it is Phil. Look it up and you’ll see I’m right. What’s happening in this country when such evil ideas can be expressed so guilessly Phil? Is it a sign of rancid political nescience and ignorance of history, or something worse?
September 16th, 2006 at 4:57 pm
Obviously you both think obscene profits are being made. But neither you, Farrar, nor you, Philip, have responded to my point b) about barriers to entry in the market. Telecom does not have a magic monopoly on telecommunications services simply by virtue of existing. They have a monopoly because no-one else has bothered to build a competing service. This is partly because the NZ regulatory environment makes it difficult if not impossible to build a parallel physical cable network. It is not because Telecom threatens other companies who are thinking of making it happen.
That said, it is very difficult to hold the market back, and we have seen competition emerge such as TelstraClear’s competing parallel network in ChCh, Wellington and Auckland, wireless and mobile broadband services in, eg, Auckland and Wellington, and so forth. There is no monopoly in New Zealand. Telecom currently owns one form of physical infrastructure (copper wires), and it is being crucified because, in your words, “nation building is not something that can be left to the unregulated private sector”.
Philip, you use words like ‘market’ and ‘efficiency’ but what you really want is state control of anything you personally don’t like. Why don’t you stop beating around the bush and advocate laws which nationalise every company, small business and private asset, tattoo serial numbers on our arms, and assign us to the most efficient job needed to satisfy your rigid, centrally-planned idea of “nation building”?
September 16th, 2006 at 5:04 pm
Luke – the current law allows Telecom to do pocket pricing which is lower prices just on one road, one suburb etc. So what happens where others lay infrastructure is that Telecom lowers their prices (just in those areas) to a level where no-one much will transfer to the new entrant. The new entrant runs out of money and stops building.
The incumbent has huge market power and within the Commerce Act is seen as a monopoly.
I don’t by the way agree with making the CT refer to access providers and even having time limits. I would prefer to see no regulation and if we get operational separation then the other regulation should be able to be dispensed with.
September 16th, 2006 at 5:11 pm
I would also point out that the “national interest” can’t be used as a justification to breach property rights. Government is instituted (or should be) to protect our rights. Government is the servant of the people, it shouldn’t attack Telecom’s rights for short-term gain to the “national interest”.
September 16th, 2006 at 5:21 pm
Yes PE, and of course its a contradiction in terms. Undermining property rights can never be in the “national interest”…
September 16th, 2006 at 7:15 pm
Philip, it’s hard to know where to start on the errors and misconceptions in your post, but from the top:
“The problem with the Libertarianz view is that it elevates property rights above the national interest, and proposes the concept of the joint-stock company as superior to the elected government of the land.”
Property rights are in the national interest, if ‘national interest’ can even be defined. It is generally a term used by fascists and demagogues to justify government action such as bills of attainder.
“I’m not immune to the Crown’s right of eminent domain, legislated in NZ as the Public Works Act.”
The point has been made that Telecom shareholders should be provided compensation as per the Public Works Act, but Cullen has explicitly rejected this, as direct confiscation is much cheaper.
“What is proposed is simply that others should also be able to pay a fair market price to access the equipment, and the data carrying capacity, of the company.”
Have you even read the Bill or the Act? What is proposed is that the Commission will set the price which Telecom is to receive for the forced rental of its assets. A fair market price does have a quite well-defined legal meaning – it is the price that would be agreed by a willing, but not desperate seller and a willing, but not desperate buyer. That can hardly be said to the case here. The only fair price is a price Telecom would agree to in the absence of regulation. Any price below this represents a confiscation even if Telecom retains ownership of some of its assets.
“There is no suggestion that those seeking access to the local loop, or the DSLAMs, will not have to pay Telecom a fair price for that right.”
As above, that is exactly what is being suggested.
“nation building is not something that can be left to the unregulated private sector.”
I would much prefer any private individual or company be doing this than the government, which is required to pander to vested interest groups such as InternetNZ.
“We know already that both Maurice Williamson and Lockwood Smith would prefer to see Telecom left alone, to “get on with it”. But the evidence over ten years is that the incumbent telco won’t.”
When the Telecommunications Act was passed in 2001, NZ was 16th in the OECD broadband penetratiuon rankings. After five years of regulation it has dropped to 22nd. The evidence is that Telecom was getting on with it until regulation started to interfere with its incentives to invest.
“Left alone, they have demonstrated that they will deliver the worst value in the world: charging Kiwi businesses $2400 a month for a limited throttled service worth $28.”
The MED reports at http://www.med.govt.nz/templates/MultipageDocumentPage____12367.aspx#P450_21438 that NZ’s prices are some of the lowest in the world, especially for consumers. Those figures are a bit out of date now as the review comes out each December. Broadband prices have fallen considerably since that report. The $2400 per month service is an obsolete, niche product which was only introduced becuase of specific customer requests many years ago. There is a raft of plans from multiple ISPs which offer much better value than this.
“Left alone, they have demonstrated that they will impose ludicrously small data caps on Internet use – not because they have to but because they can.”
All ISPs in NZ impose data caps because of the cost of internationl bandwidth. This applies even for services based on UBS which is a wholesale service with no bandwidth cap. It also applies to services completely unrelated to Telecom such as TCL cable.
“Left alone, they have demonstrated that they will favor their subsidiary ISP above all others, so cheating the market and distorting the outcomes.”
Telecom doesn’t have a subsidiary ISP. But assuming you are referring to Xtra, they do not receive preferential treatment. See for example page 2 of http://www.telecom.co.nz/binarys/spaug06upd.pdf
“Telecom has had ten years to demonstrate its willingness to work with New Zealanders to deliver the services New Zealand needs to be competitive in the world market.”
“… they need to be regulated, controlled and compelled …”
This is like a wet dream for you isn’t it?
September 16th, 2006 at 7:35 pm
Well, this is the heart of the argument.
It is always disappoimnting when what seemed to be a sensible debate collapses into personal abuse.
Luke, speaking on behalf of at least the Pacific Empire, which seems to be an outcropping of all of two people in the Libertarianz and ACT, says:
“Philip, you use words like ‘market’ and ‘efficiency’ but what you really want is state control of anything you personally don’t like.”
Ignoring the stupidity of telling me what I “really want” when the writer has not the faintest idea,
I don’t recall saying anything about ‘efficiency’. That’s not my concern. Perhaps Luke would like to remind me of that citation?
And where does Luke get off telling me that “what you really want is state control of anything you personally don’t like”. I have never said that, Luke has made it up and I repudiate it.
And then Luke goes really loony:
“Why don’t you stop beating around the bush and advocate laws which nationalise every company, small business and private asset, tattoo serial numbers on our arms, and assign us to the most efficient job needed to satisfy your rigid, centrally-planned idea of “nation building”?”
Writing such offensive nonsense reveals Luke’s lack of undertanding of what a totalitarian state is. I wonder if Luke has ever looked at the world outside his sordid student flat in calm, peaceful Wellington? How dare he call me a nazi with his pathetic accusation about tattooing serial numbers on peoples’ arms? Has Luke ever visited Auschwitz and Dachau. Has he ever rread anything about the Nazis? has he ever visited a totalitarian state? Has Luke ever witnessed the horrors of dictatorship, of fascism and communism?
The answer, of course, is no. Luke is pig-ignorant of the world and the horrors it holds, and he should learn what his big words mean before he spits them at people that really do know the meaning of totaliarianism and repression.
I have lived as a taxpaying resident in four countries outside the peace and quiet of New Zealand.
I have observed and reported at first hand totalitarian regimes in East Germany, Poland, Russia, Ukraine, Iran, Mao Zedong’s China, Bulgaria, Sudan, Tanzania, Kenya, Nigeria, Ho Chi Minh’s Vietnam, Zimbabwe, South Africa and more.
Luke has not. He doesn’t know how silly he is being when he launches such insults. He just reveals himself for the ignorant fool that he is.
It’s a shame we can’t debate telco regulation without being spammed by these idiots.
Now can we get back to the topic?
September 16th, 2006 at 8:26 pm
I thought I was being quite reasonable in holding back and NOT directly labelling you a communist fascist, but obviously you picked up on my SUBTLE IMPLICATION.
I will refrain from implying you are a fascist communist when you refrain from saying silly things like “There is no diminution or devaluation of Telecom’s legal property.” when clearly the market thinks that Telecom being regulated devalues Telecom by approximately 3 billion dollars.
Nazism and communism starts with a nanny state attitude. It starts with people suggesting that national interest is more important than individual and company rights, and that our property is held in trust by its ‘real owners’, the government, as if we are small childen, allowed to have our toys only as long as we are good boys and girls and don’t try to charge too much for broadband services …
September 16th, 2006 at 10:53 pm
Oh dear. Luke has spat his dummy, and the mad people are really out tonight.
Luke says:
> “I thought I was being quite reasonable in holding
> back and NOT directly labelling you a communist
> fascist, but obviously you picked up on my SUBTLE
> IMPLICATION.”
We have a different view of subtlety, inclkuding my understanding that you cvannothave such a thing as a “communist fascist”. Luke does not know what a communist, or a fascist, actually believes. In his deep ignorance, he can claim that anyone that disagrees with him is either, or both of these undesirable things, even though he has not the faintest notion of what they are.
Now if Luke wouold stop name-calling and address the issues.
Luke said:
> I will refrain from implying you are a fascist
> communist when you refrain from saying silly things
> like “There is no diminution or devaluation of
> Telecom’s legal property.” when clearly the market
> thinks that Telecom being regulated devalues
> Telecom by approximately 3 billion dollars.
Name calling seems all Luke can do.
Markets rise, markets fall. That is the way markets work. Luke seems to be one of those people that imagines that markets only rise. Does he, perhaps, have some shonky shares he would like to sell?
Telecom pumped the market in the belief that government would not regulate them. They were wrong, and the market gave them a spanking. So tough.
And then Luke wrote:
> Nazism and communism starts with a nanny state
> attitude. It starts with people suggesting that
> national interest is more important than individual
> and company rights, and that our property is held in#
> trust by its ‘real owners’, the government, as if we
> are small childen, allowed to have our toys only as
> long as we are good boys and girls and don’t try to#
> charge too much for broadband services …
“Nanny State” is a catchphrase, devoid of real meaning but pleasing to the loony fringe.
I do believe that the national interest is “more important than individual and company rights”. Luke seems to imagine that decisions about our nation should be taken in foreign boardrooms rather than in the elected parliament of our country. That is real fascism., The corporatestate supreme.
I reject that contemptible view. We stopped being a colony 99 years ago.,
Would you seriously wish it to be different? Do you really think that Telecom’s excessive profits are more important than the economic prosperity of New Zealand?
Arre you seriously arguing that charging thousnads of dollars for a $28 value service is more important than our national prosperity?
If you are, and it seems from your ill-thought-out post that you are, then you are hostile to our country, hostile to our national well-being, and not a person worth debating, because you are a demonstrable fool.
For the record:
I do not believe that any company trading in New Zealand is more important than New Zealand.
I do not believe that Luke understands the meaning of words like “communist” and “fascist”. I do not believe that Luke has the slightest idea of what communist and fascist societies are really like, and that Luke’s use of such labels merely serves to mark him as a fool.
I am reluctant to impose any longer on David Farrar’s hospitality to continue a battle of wits with an opponent so obviously unarmed.
If it matters to Luke, he may proclain himself the winner at the bus stop.
I won’t wasteOh dear. Luke has spat his dummy, and the mad people are really out tonight.
Luke says:
> “I thought I was being quite reasonable in holding
> back and NOT directly labelling you a communist
> fascist, but obviously you picked up on my SUBTLE
> IMPLICATION.”
We have a different view of subtlety, inclkuding my understanding that you cvannothave such a thing as a “communist fascist”. Luke does not know what a communist, or a fascist, actually believes. In his deep ignorance, he can claim that anyone that disagrees with him is either, or both of these undesirable things, even though he has not the faintest notion of what they are.
Now if Luke wouold stop name-calling and address the issues.
Luke said:
> I will refrain from implying you are a fascist
> communist when you refrain from saying silly things
> like “There is no diminution or devaluation of
> Telecom’s legal property.” when clearly the market
> thinks that Telecom being regulated devalues
> Telecom by approximately 3 billion dollars.
Name calling seems all Luke can do.
Markets rise, markets fall. That is the way markets work. Luke seems to be one of those people that imagines that markets only rise. Does he, perhaps, have some shonky shares he would like to sell?
Telecom pumped the market in the belief that government would not regulate them. They were wrong, and the market gave them a spanking. So tough.
And then Luke wrote:
> Nazism and communism starts with a nanny state
> attitude. It starts with people suggesting that
> national interest is more important than individual
> and company rights, and that our property is held in#
> trust by its ‘real owners’, the government, as if we
> are small childen, allowed to have our toys only as
> long as we are good boys and girls and don’t try to#
> charge too much for broadband services …
“Nanny State” is a catchphrase, devoid of real meaning but pleasing to the loony fringe.
I do believe that the national interest is “more important than individual and company rights”. Luke seems to imagine that decisions about our nation should be taken in foreign boardrooms rather than in the elected parliament of our country. That is real fascism., The corporatestate supreme.
I reject that contemptible view. We stopped being a colony 99 years ago.,
Would you seriously wish it to be different? Do you really think that Telecom’s excessive profits are more important than the economic prosperity of New Zealand?
Arre you seriously arguing that charging thousnads of dollars for a $28 value service is more important than our national prosperity?
If you are, and it seems from your ill-thought-out post that you are, then you are hostile to our country, hostile to our national well-being, and not a person worth debating, because you are a demonstrable fool.
For the record:
I do not believe that any company trading in New Zealand is more important than New Zealand.
I do not believe that Luke understands the meaning of words like “communist” and “fascist”. I do not believe that Luke has the slightest idea of what communist and fascist societies are really like, and that Luke’s use of such labels merely serves to mark him as a fool.
I am reluctant to impose any longer on David Farrar’s hospitality to continue a battle of wits with an opponent so obviously unarmed.
If it matters to Luke, he may proclain himself the winner at the bus stop.
I won’t waste< amy more timne with him, because he has already lost.
September 17th, 2006 at 9:26 am
Phil, once you start using phrases like “in the national interest” as justification for your political actions, you cross the line, open the door, you burst the damn on the principle, and because you’re so mush brained, and your head is so full of communist fascist shit that you don’t even know is communist fascist shit, you’ve got no idea what sort of precedent you’re setting and that’s why you collectivists are such dangerous people.
Throughout history, whenever there has been the most atrocious crimes carried out against citizens, its been collectivists working for the perceived “national interest” that have been the perpertrators.
Its fascist even to promote such an idea as the “national interest”, and its communist to show such scant regard for the principle of private property. Come back when you’ve learnt to think speak and behave like an educated civilised human being Phil, rather than what you sound like now, and thats the kind of simple minded jack booted group think anti individual thug that from Stalin and Mussolini and Adolf to Castro, has slavishly and enthusiastically supported every big government crime in history..