Editorials 25 February 2010

February 25th, 2010 at 2:29 pm by David Farrar

The Herald editorial is on :

New Zealand’s “light-handed” regulation of markets is sometimes astonishingly tolerant. Never more so than in the long-awaited final report of the Commerce Commission on the amount telephone companies charge for admission to their mobile networks. …

But the commission’s majority view is probably the right one. Regulators have to be fair to suppliers as well as customers and potential competitors. Networks are costly to build and maintain and newcomers that want to sell services into them must expect to pay a fair price. The price must maintain the network owner’s incentive to invest in it.

Clearly, the termination rates in this country were much higher than they needed to be to maintain the investment. and Vodafone have been using them to subsidise their subscribers and protect their equal market shares.

But their latest undertakings will more than halve their charges by 2014 and give a newcomer a fighting chance. Their undertakings can be policed by keeping the regulatory alternative in reserve.

Heavy-handed regulation usually has unintended consequences that are not in the interests of competition or consumers. Persistent shepherding and constant monitoring are best.

So the Herald favours giving the benefit of the doubt to the telcos. As I said previously, a tough decision for Steven Joyce.

The Press focuses on what it calls the XT debacle:

When members of the public dial 111 they have the legitimate expectation that their call will be answered promptly and emergency services quickly dispatched.

But on Monday, when a Christchurch man attempted to alert the police to an attack on a Japanese man outside a suburban mall by four skinhead thugs, who were accompanied by two pitbull dogs, the failure of Telecom’s troubled XT cellphone network prevented him from doing so. …

It is utterly unacceptable that its much-vaunted $574 million XT network, which lured customers to join with claims that it was state-of-the-art technology, could have failed four times in recent months. On one occasion some customers were cut off from XT for three days. …

But it is even more serious that in parts of the country, including Christchurch, a switching process which is supposed to have allowed XT phones to use other networks did not work and, as a result, 111 calls could not be made.

The unavailability of the 111 number could create dangerous situations. It means that crimes, accidents and fires could not be reported to emergency services, unless a landline was within immediate access, and conceivably lives could be put at risk by the problem.

If the faults with the XT network cannot be swiftly resolved, and there is no guarantee that this will occur, the Government will have little choice but to regulate to ensure that 111 calls can get through when networks become unstable.

The failure of 111 calls is the most serious aspect.

The Dom Post also focuses on XT:

If you believe the ads, Telecom’s new XT network provides unmatchable cellphone service in the Mt Victoria Tunnel, on remote farm tracks and in shipping containers floating off the coast of the North Island.

Sadly, its record is not so good in living rooms and city streets. The technical fault that prevented 220,000 Telecom customers from making calls on Monday was the fourth major outage in the past 10 weeks. It is not often that an advertising campaign blows up so spectacularly. …

In the wake of the latest outage, there have been calls for the Government to further regulate the industry.

That isn’t necessary, although ministers would be wise to bear in mind the gap between Telecom’s rhetoric and performance when they consider the phone company’s offer to host the Government’s proposed $1.5 billion ultra-fast broadband network. This is an occasion on which the market is actually working. There are two other mobile network providers in New Zealand – Vodafone and 2degrees – and mobile phone users have options.

The fibre to the home network build is significant. I have never thought Telecom would get to win the tender in all 33 regions, but if they failed to win any region, it might lead to a perception of unfairness. However it is a political reality, that these XT outages makes it less of an issue if Telecom do not get any major aspects of the FTTH rollout.

The ODT editorial is on ministerial credit cards:

Credit cards and politicians go together like oil and water: which is why there will be much gnashing of teeth at the latest folly concerning our Parliamentarians and their inability to follow the most simple of rules relating to expenditure.

The present matter involves ministerial credit cards, a facility granted to MPs of such rank, to give them access to money should they be required to spend it in the course of their official duties. …

In this context, Housing Minister Phil Heatley must have used up about as much rope as Mr Key will lay out to him. …

For his part, Mr Key may need, sooner rather than later, to put away his smiling Mr Reasonable personage and show at least a glimmer of the inner steel that all successful leaders must possess.

Anyone who thinks the PM doesn’t have inner steel, will not enjoy finding out that they are wrong.

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5 Responses to “Editorials 25 February 2010”

  1. expat (4,048 comments) says:

    Giving the benefit of the doubt to Telco’s, yeah, look, I have this bridge, hardly ever used that would be really easy to dismantle and ship, yeah yeah, no problem a receipt, cash is fine…

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  2. sheath (63 comments) says:

    ” I have never thought Telecom would get to win the tender in all 33 regions, but if they failed to win any region, it might lead to a perception of unfairness. However it is a political reality, that these XT outages makes it less of an issue if Telecom do not get any major aspects of the FTTH rollout.”

    Unless Telecom does some major changes they cant win ANY of the regions. They could be a minor shareholder in a bid but then it would not be Telecom. the reason is the fibre company can not have retail presence. Or do you think they will spin off Chorus (with their claims billion dollar cost)

    [DPF: No I do not think they will spin Chorus off. I was assuming that in their bid they have asked to be the fibre provider in a region, even though they will not have voting control]

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  3. ben (2,396 comments) says:

    The Herald misreads the telco situation. The undertakings it got from the mobile companies was only in response to the highly credible threat of regulation – so the Commission got close to what it wanted anyway without all the trouble of actual regulation. The fact that this outcome was achieved without regulation does not make it light handed. In fact it is still expropriation. Ok, mobile sucks in New Zealand, but the government taking from shareholders by force is not the way to fix it.

    In 2004 the Commission undertook not to regulate 3G networks, promising only to limit their attention to 2G. Why should investors put any money into infrastructure at risk of such capricious taking?

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  4. freethinker (680 comments) says:

    Ben the problem is light handed/trust Telecoms has been tried several times already and has not produced benefits for customers – Telecom shareholders should understand this. Time to try the regulatory approach – call it a pilot – reduce termination costs to the lowest comparable country say Puerto Rico also with a 4m population and review after 2 years – if it produces similar usage stats in NZ then its a formula that should/could be applied more generally. Lame ducks (Telecom) should be allowed to die to ensure the survival of the fittest (NZ)

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  5. AndyC (28 comments) says:

    Re the 111 issue. All NZ mobile phones are configured to jump onto any available network if there is a complete failure of the primary network. This has been in place for years. Regardless of which network your phone is registered to they all operate the same way. In the XT outages the SMS and data functions were still functioning so it was not a complete failure and the phones will not jump networks. I agree that you don’t txt for a 111 emergency.
    The requirement to jump for only a partial network failure has never been tested by any network and is not programmed into the phones. There is a meeting of all the Telco network heads in the next week to determine if this is even possible.

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