Provided by NZX
  • SPK3.77


  • Open 3.76 High 3.79 Low 3.75 Bid Price 3.77

    Offer Price 3.78 Value 3626597.09 Volume 964494

Current as of 30/05/17 02:00PM NZST

Deborah Coddington: Nationalising Telecom a more honest move

Hip hoorays resounded at news that Telecom will be forced to unbundle the local loop, and Economic Development Minister David Cunliffe is now said to be a jolly good fellow. But there has been curious - and spurious - justification from supposedly free-market right-wingers for a government-regulated competitive market. New Zealand's largest company, we're told, has "brought this on itself". The implication being that it should have rolled over and allowed competitors to help themselves to assets it legally owned.

The only businesses I've owned have been restaurants. One was sited in a beautiful historic building on the Russell waterfront with magnificent views. Its monopoly location was the envy of many competitors. Should I have been forced to vacate my family from the top floor so the owner of the bistro two streets back could provide his customers with the same benefits my business offered?

Or, to use a more apposite analogy, in 1990 the Government privatised 10 luxury hotels it owned and operated (disastrously), including the Chateau Tongariro. A prime site for winter luxury accommodation, these days no rival company would come within a cooee of building a hotel in that National Park. The former state monopoly is now a private monopoly, so would the Government bow to pressure from consumers wanting cheaper accommodation and force the hotel to rent its rooms to rivals?

Using the "runaway train" argument, if state intervention guarantees competition and lower prices, why doesn't the Government just buy back Telecom's copper wire loop? Indeed, turn Telecom back into the New Zealand Post Office? That, at least, would be a more honest (if that's the word) and transparent nationalisation of private property.

Instead, the Government's taken a leaf out of National Socialism's book - leave the actual ownership in private hands but have the State dictate what private owners can do with their property.

After years of lobbying and legal challenges, Telecom will be forced to allow its competitors to run their own services on its copper wire phone network. A "regulator" will set the rentals Telecom can charge competitors, and Telecom will have to separate phone and internet, wholesale and retail services, and open its books so we can all see the filthy profits made by each different service.

In one week, nearly $2 billion was wiped off the sharemarket, and the Government has no idea where replacement investment might come from.

Telecom in 2001 had the largest capital expenditure programme of any New Zealand company but never had to call on taxpayers to fund it. When this legislation is passed, will Telecom be permitted to call upon taxpayers for future capital expenditure? In the midst of criticisms that only 25 per cent of Telecom's shares were owned in New Zealand, few stopped to think about the benefits of foreign investment in the company, and the saving for taxpayers.

I doubt the rival internet service providers, delighted the Government has listened to their lobbying and ordered Telecom to unbundle, will be happy if they're called on by Telecom for capital.

Already companies like Orcon Internet are calling for an even greater role for Government in making sure unbundling doesn't take "two years trying to fix like they are doing in Australia".

In reality, government regulation will never keep pace with technological developments, but I don't criticise Orcon for its stance. As a business, like Telecom, it must do the best for its shareholders and customers.

So after Telecom, who will be next? Will Sky TV be forced to give competitors access to set-top boxes in which it's invested millions of dollars because the Government has promised to deliver free-to-air digital television?

The problem goes back, in part, to the privatisation of what was a government-owned monopoly. People, with justification, feel aggrieved that the infrastructure they set up is being used to make money for private enterprise. However, I don't hear the leftist commentators grizzling about other taxpayer-funded infrastructure (such as closed schools) being used for private gain in Treaty settlements.

I never thought I'd say it, but I wish the left would be honest, buy back Telecom and go back to waiting six weeks for a phone connection, stockpile 2000 spare desks and chairs, and pay $1 million a week for the privilege.

And don't stop there. Raise taxes to 66 per cent. The State could nationalise the railways and lose $90 million of public money annually; own and operate 10 of the best tourist hotels in the country at a loss of $650,000 a month; own the forest service and plant pines in marginal electorates to supply cheap logs to the private sector.

Maybe that will provoke a squeak from those who claim governments should not interfere in private lives. Sadly, I doubt it.

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter


© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production bpcf05 at 30 May 2017 14:15:49 Processing Time: 464ms