Telco revival needed to boost the economy

New Zealanders generally rely on slow copper for web access. Photo / Kenny Rodger

Forget tax cuts. Fixing telecommunications infrastructure would put money in people's pockets and generate long-lasting economic stimulus, without knocking a gaping hole in the Government's books.

Real high-speed internet at realistic prices and mobile phone regimes that allow New Zealanders to make calls without a meter ticking in their head are the sort of boosts individuals and businesses will notice.

Two decades of folly and "market" solutions which are anything but have crushed innovation and left New Zealanders with high phone bills and mediocre service. Fed up with the antics of the telephone companies, internet New Zealand has urged the Government to instead work with electricity lines companies to realise its promise of an accelerated roll-out of fibre.

That would fit in with the principles of National's broadband policy articulated by John Key: no undue advantage to existing providers, open-access architecture, avoidance of duplication, accessible to all, and a future focus on public private partnerships.

It might also end the reliance New Zealand has on copper to reach the internet, something that has kept Telecom's share price high and allowed it to delay upgrading its network until recently. Almost 90 per cent of broadband connections are through DSL, with cable and fixed wireless splitting the balance.

Removing the need for a home line to connect to the internet would also speed the shift from fixed to mobile phones, if the right price signals are given.

The Commerce Commission's most recent monitoring report for the September quarter found the mobile plans it benchmarked had not changed in price over the preceding 15 months, and continued to rank in the bottom quartile of the 30 OECD countries surveyed.

All but two of the fixed line residential bundles were over the OECD average, and three of the Telecom packages were pegged at 27 out of 30 in the OECD list.

Going by experience, the change in Government could give the big phone companies a financially valuable breathing space. Only in the last of its three terms did Labour put some heat on with the 2006 Telecommunications Amendment Act. The actions of telecommunications commissioner Ross Patterson spurred a billion dollars of investment in networks by Telecom, Vodafone and New Zealand Communications.

The latter company had been running up and down the sideline for seven years barracking for rule changes which would let it get into the game without immediately losing its shirt. That impetus is fragile.

After Dr Patterson took indefinite leave for health reasons in September, the commission started another inquiry into whether it should regulate mobile termination access services, setting a rate for the amount companies charge each other for calls to their subscribers.