KEY POINTS:
When trust-busters in the United States were struggling to break up the monopolist AT&T's Bell Systems during the 1950s the oft-heard rallying cry was "Ma Bell has you by the calls".
Fast-forward to New Zealand today and a similar sentiment would no doubt resonate with the many New
Zealand internet service providers and rival telcos who feel it is time the dominant player was broken up in the interests of freer competition.
The sentiment also resonates with a host of New Zealanders who find internet speeds for Telecom broadband are unbelievably slow, are fed-up with wonky Xtra mail services, are discouraged by the waiting times to get new broadband connections, know that the copper loop network is not up to demand, are sick of hearing about pressure on exchange connections - the list goes on and on.
The disaffection is being blamed on Telecom's endemic arrogance - the type that was brilliantly displayed when it hustled itself into action to ensure arts patron Jenny Gibbs, a resident of Auckland's Paritai Drive and the former wife of one of Telecom's original shareholders, Alan Gibbs, got a connection after she publicised her plight in the Herald.
Other would-be customers - with less public cachet - were left to wait.
But surely the Government - which wants to ensure a robust telecommunications platform to underpin New Zealand's digital future - must be getting deeply concerned over the competence of the dominant telco to deliver on that aim, given its tendency to shelter behind a "can't do" attitude.
The Government has taken the legislative cudgels to Telecom forcing it to split into three operational units: wholesale, retail and network, and to open up its local residential networks to competitors through a process known as local loop unbundling (a process that is is still being negotiated with the Government).
Consumers have seen little benefit so far from the split.
The telco still applies a cost-plus mentality - where it can - rather than the competitive approach that is essential in a first world economy.
And it seems unwilling to take up the massive investment necessary to bring its own network up to capacity to fit current and future demands.
Industry players such as Rod Drury, who is promoting Government investment in a rival fibre-optic cable broadband network, argue that the whole process would be speeded up by creating a level playing field which could not be dominated by Telecom.
But if the Government took an old-fashioned trust-buster approach and also ensured the breakup of the dominant telco by forcing it to sell off the copper loop network to a separate consortium, or a club of telcos and internet service providers, greater competitive efficiencies would be introduced.
Telecom's chief financial officer Marko Bogoievski has said the company is under strain as it tries to balance the demands for new wholesale and retail services.
Under Telecom's current separation model its shareholders interests would still predominate.
Bogoievski has said Telecom could only invest where it saw returns and such future investment - particularly in broadband - was "highly dependent on pricing signals, access to content, success of Telecom retail and the physical demands of operational separation".
Citigroup argues Telecom would be worth more as two separate companies. Telecom is potentially worth $5.42 a share ... based on a structural separation model (the shares closed last night at $4.55).
"In our view, this [gap] is wide enough to warrant board and management consideration," Citigroup said.
But the Citigroup analysis appears not to take full account of the fact that Telecom's network infrastructure has been allowed to run down.
Arguably, what the Government has to face up to is the possibility that Telecom has not invested enough in the national copper loop network - much like the national rail network - to keep pace with market demands.
That cost of bringing the network up to speed will be significant.
Reports suggest Bogoievski believes it would cost $8 billion above existing infrastructure investment budgets to deliver broadband speeds of 20 megabits a second to all customers.
Currently only 30 per cent of customers will have access to these speeds by 2011.
But the basic point is that Telecom regards costs in the hundreds of millions as "do-able" but $3 billion or so "less so."
This game-playing exercise could backfire.
If the big numbers cannot be met by Telecom - or Telecom decides it does not want to meet such costs - then the argument over the network's valuation takes on a totally different meaning.
It is unlikely that the Government would seek to nationalise the network.
But if Telecom continues to argue it is too complex and expensive to produce the broadband environment the Government and industry players believe necessary - then a shift in ownership to players that can recapitalise the network is likely to reach the table.
And at that point Citigroup's figures become a mirage.
The concept would not be alien to some of Telecom's original US shareholders: Ameritech and Bell Atlantic.
Those two "Baby Bells" were in on the start of New Zealand's so-called telecoms revolution when they were brought on board as cornerstone shareholders to provide expertise and technical know-how when the state-owned company was privatised in 1990.
But 16 years on since privatisation it is clear the company is as moribund in current terms as the telco was in the days when it was transformed from a Government department into a state-owned enterprise.
It has been run for the shareholders - not the customers.
Now we are all paying the price.