Chris Barton: Cunliffe could be the minister who slew the giant

Can Cunliffe cut the mustard? So many before have failed, you have to wonder whether this Minister of Communications will do any better.

The trouble started with Richard Prebble who orchestrated the sale of Telecom to foreigners without thinking about the damage he would create.

Even though he wrote a book called I've Been Thinking, he'll be remembered as the minister who didn't think and sold us down the drain. Then there was Maurice Williamson - the champion of light-handed regulation which was a euphemism for "I'm Telecom's friend". He'll be remembered as the minister who loved monopoly.

Next was the well meaning but ineffectual Paul Swain - the minister who promised so much, delivered so little and dropped a bundle. Under his watch we got a quagmire of unworkable legislation (the Telecommunications Act), a referee without a whistle (the telecommunications commissioner) and a farce (the "Unbundling the Local Loop" ministerial inquiry). Swain will be remembered as the minister who couldn't.

And so the baton is passed to David Cunliffe. On the face of it, the man has all the credentials - a Fulbright scholar, a diplomat in the Ministry of Foreign Affairs and Trade, a business economist and strategy consultant with the Boston Consulting Group. And apparently, he has a healthy ego. Lately he's been making threatening noises about getting tough with Telecom. But we've heard such talk from politicians before and already Cunliffe's words leave plenty of room for a backdoor escape.

In the past Cunliffe has always taken the path of least resistance. I remember asking him when he was chair of the select committee considering the telecommunications bill why he rejected "component wholesaling" - a clause that would have forced Telecom to wholesale all the bits of its network allowing "new entrant" competitors to put together innovative packages for customers. He said it was a close call: that the committee was advised that component wholesaling would drop prices and stimulate innovation in value-added services, but that it may be difficult to implement in practice. Yes, David, everything is difficult in telecommunications - especially as you struggle to put right now what you didn't then.

Cunliffe was similarly timid about local loop unbundling - the removal of Telecom's monopoly on home lines. He showed his floppiness early, asking both Clear and Tuanz "what would be a fallback position" if the designation of local loop unbundling "was too rich a fodder" to be considered by the committee.

The encouraging aspect of Cunliffe's recent comments about improving the Telecommunications Act is that at last we have a minster looking at the market from a consumer's point of view. But it's disappointing that he wants a benchmarking study first to tell us what we already know - broadband here sucks. It's even more disappointing he's yet to be convinced there is market failure in telecommunications in New Zealand.

Cunliffe seems very wedded to the underlying purpose of the act - to promote competition in telecommunications services for the long-term benefit of consumers. The problem here is the phrase "long-term" which Telecom has been able to use as stick to beat back regulation - arguing that any inroads into its monopoly control will threaten investment. Cunliffe seems to understand this argument for what it is - a crock. He has pointed out that there's evidence to show increased regulation often has the opposite effect - forcing lazy incumbent telcos to invest more to protect their position.

The other problem with the act which Cunliffe shows no signs of addressing is the way voice and data services are treated separately. Anyone who is using Skype to make international calls via the net for next to nothing knows voice is just a another form of data. And that the costs to deliver it are measured in fractions of cents per minute. But rather then let consumers enjoy the benefits of this, our Telecommunications Act sanctions Telecom forcing residential users to buy both a phone and a data (internet) service when they could be financially much better off getting voice and data via just one internet connection. There is only one party getting long term benefit from this - Telecom.

So will David live up to the legacy of his first name and be a champion of the people to bravely fell the Telecom Goliath? Or will he tinker and fiddle while Telecom continues to deprive its customers? The signs point to the latter. In a recent interview he said he was aware "there is a lot of impatience in the sector" but that he was not going to rush any decisions.

The future is yours David. Do you want to be remembered as another who couldn't cut it, or as the minister who slew the giant?