Why dont they spend some of their 40% of GDP on doing it themselves. The reason it is unprofitable is because they (being the rural community) as always expect a free ride.

The government needs to be a part of the solution otherwise broadband service/quality comms would never get out to the 400,000-odd kiwis that live in Rural areas yet somehow contribute around 40% of NZ’s GDP.

Having worked for a certain very large Comm’s company in New Zealand for many years, I know just how unprofitable it was to that company to maintain or improve servicing to rural heartland areas and they would not have done so had they not been obligated.

The government is their to ensure that rural NZ does get a fair deal – not so the farmers wives can browse online shopping (thats hugely sexist, sorry), but to ensure that the biggest part of our economy retains every possible competitive advantage possible.

Well done Steven J on a good plan of action.

The first failure has been the price cap. The cost of telecommunications has dropped massively over two decades. But guess what happens if you have a law that says Telecom can increase line rentals by no more than the rate of inflation. Well not only do they not drop prices, almost every year without fail they increase line rentals by the rate of inflation. A price cap becomes a price target.

That’s wrong. The only thing that would drive down line rentals is technological competition (e.g. voice-over-IP via cable, mobile etc). The local loop is, in most cases, a permanent natural monopoly. If Telecom have set line rental increases in line with the Kiwishares, then it’s a safe bet that had there been no KiwiShare, prices would have increased faster. You can’t get around the monopoly of the local loop, hence why most countries (and belatedly NZ) have forced this off the encumbent Telco to prevent them stifling competition on the services which come across it.

Some people above have said the government should get the hell out and let business do it’s thing. Problem is Telecom was a monopoly. The best type of business, for a business. If it was allowed a free run in 1987 it would have done everything in its power to shut out competition. And it would have worked. E.g. Vodafone: Can we please route our calls to your network? Telecom: Piss off. Build your own landline system.

I’m not saying that KiwiShare is a good thing now, but it served a purpose at one time. I think one of the biggest failings is that it’s creators didn’t foresee the internet. ‘Free’ dial-up access probably did NZ more harm in the long run as it stunted the growth of broadband.

Someone above mentioned having a wireless system. Have you seen how Woosh is doing?

The government should have forced Telecom to unbundle 15 years ago. We got there in the end though.

Fail to see why we need to keep subserdising the farmers, we do that enough in regards to environmental polution and now the carbon thing.

Of course, there’s maintenance but you either maintain the network or you don’t. We used to have free local calls, don’t see why it should suddenly become such an expensive proposition now — mind you, I’ve got no idea about how much we pay now on average to how much we used to pay in relative proportion of income. I feel like I spend too much on basic communication these days… (anyone got some stats?)

Without any ability to charge based on usage, Telecom had to include all costs in the line rental fee (so, as DPF describes, they charged as much as they could for it).

So, in addition to the general fact the economic customers subsidize uneconomic ones from an infrastructure perspective we have also had light users subsidizing heavy ones. As a city dwelling, light user I was paying an inflated line rental to cover the costs associated with both rural line costs and usage by anyone who natters on the phone all day because ‘it’s free’.

Only in recent years has there been an escape route: ditching the landline and going ‘mobile only’. All the same, we need to allow Telecom to charge for both local and long-distance calls so that usage faces price signals and the line rental reflects only infrastructure cost.

It not only kept competitors from offering services to rural NZ, it made them fund Telecom for its so called “uneconomic” customers

Indeed. And Telecom can ‘manufacture’ so-called uneconomic customers by transferring cost from profitable areas to unprofitable ones. This was an accounting slight-of-hand only. Eg Hawera district really never had 100+ lines maintenance staff and a raft of infrastructure engineers but basing their employment there allowed that district to become “uneconomic”.

Buying property in rural areas is considerably cheaper than in cities, and the country people will almost certainly have a much bigger house and property. Those savings could be used to pay for their own telecommunications.

But if the subsidy continues… I’d like to see rural properties taxed so that city properties can be subsidised so that a house in central Auckland will be no more expensive than one in Dannevirke or Eketahuna.

What I think would be best (in view of what century we are living in) would be to phase out unnecessary phone lines altogether, have the national broadband entirely wireless.

A wireless internet system along with use of cheap cellular telephones is what a ‘First World’ country would do and if the State stopped sticking its beak into the Telecommunications industry this is what would eventuate.

Instead the State wants a broadband network running off telephone lines (oh so last century) because the people making these decisions are ignorant about these matters and just assume that makes sense when it doesn’t.

‘Landlines’ quickly becoming about as relevant as typewriters and I fully expect about the year 2020, after billions of dollars in expenditure, the penny will drop and everyone realise what a cockup the whole thing was and they will have to start over (spending further billions of other people’s money)

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