KEY POINTS:
Once a monopoly always a monopoly. Recent moves by Telecom show just how difficult it is to legislate that a leopard should change its spots.
No matter what the Government does - slice, dice, unbundle or operationally separate - Telecom always re-assembles and comes back as anti-competitive as
ever.
Its latest effort - "cabinetisation" - proves three things: the notion of Telecom post-Gattung as a kinder, gentler, more co-operative organisation is a delusion; our telecommunications legislation is a woeful joke; and the telecommunications industry persists in coming up with horrible words.
What's happening is a long overdue upgrade of our aging network - a replacing of some of the old copper wires with fibre optic strands which stop, not at exchanges, but at roadside cabinets closer to our homes.
This is, indubitably, a good thing - shorter runs of copper make for faster internet services. But it also has a chilling effect on competition and makes the much vaunted local loop "unbundling" of local exchanges a lame duck before it has hatched.
Why? Because within two years Telecom will have closed most of the exchanges it began opening up in August - thereby stranding competitors' investment and cutting off competing loops at the knees.
Tough. The wires are Telecom's property to do with what it likes. That's business. Only the fittest survive, etc. True enough, if it weren't so wastefully inefficient and so lacking in providing a proper public utility. If Telecom was providing world-class telecommunications at a reasonable cost, few would complain.
But despite it's rhetoric, Telecom has no intention of providing a world-class service because, with no competition, it doesn't have to. Its policy is to protect the monopoly while providing just enough average services to keep customers complacent.
The overall intention of telecommunications regulation is to bring competition into the field, to revitalise an inefficiently used asset (the network) for the long term benefit of users. Rather than duplicate a costly infrastructure, the aim of unbundling is to allow many to provide services on that infrastructure, thereby giving consumers choice.
But it's here that our cumbersome, regulatory environment is falling short of doing the job. The mess our telecommunications commissioner is currently grappling with is known as sub-loop unbundling - the idea being that if the exchanges get shut down, competitors should still get access to lines at the cabinets. But our regulation process grinds so slowly it will be June before Telecom puts forward what it thinks are reasonable terms, and then several months more before the commissioner sets prices.
The problem prospective sub-loop unbundlers face is one of economies of scale. Whereas an alternative operator might have picked up 500 or so customers at a major exchange, it is likely to get only 10 to 20 at a roadside cabinet, and the costs of getting those few make the investment hard to justify.
It's hard not to see a tragi-comedy here.Telecom, after years of dragging its feet, finally invests in its network, but in the process undoes the whole mechanism of unbundling - sending us all back to the darkest days of monopoly control.
What our commissioner lacks is power to immediately intervene in the current crisis - to force Telecom to unbundle exchanges at a much faster pace and to allow competitors to retain their unbundled copper loops after the exchange is closed.
What's missing is regulation that can see anti-competitive outcomes, such as fewer unbundled lines, for what they are - signs of anti-competitive intent.
