Saturday, September 16, 2006

Cutting Loose from Telecom's shackles

Deregulation or what?

David Farrar writes about his presentation to the Select Committee on telecoms re-regulation. He has, perhaps predictably, drawn a response from supporters of the Libertarianz and ACT claiming that it's a bill of attainder and an attack on property rights. I disagree, and have posted there in these terms to say so:

The problem with the Libertarianz view is that it elevates property rights above the national interest, and proposes the concept of the joint-stock company as superior to the elected government of the land.

I think both propositions are wrong.

Our property right in New Zealand is effectively guaranteed by the Crown. My bit of the Bay of Islands, someone else's suburban quarter-acre. the next man's strata title on Wakefield Street in Auckland or Courtenay Place in Wellington, are all ours because the Crown creates a legal and social framework that grants us that right and empowers us to defend it against all comers.

I hold my land in fee simple from the Crown - but I'm not immune to the Crown's right of eminent domain, legislated in NZ as the Public Works Act. Our law holds property as important, defensible but not sacred or immutable.

Let's look at the property owned by Telecom - a mix of real estate and easements that allow them to string their wires across other peoples' land.

No-one, not even the most devoted Telecom critic, is suggesting that Telecom should have to give up either its real estate or its easements. The company will, at the end of regulation, still own every square metre of ground, every centimetre of wire, that it owns now.

What is proposed is simply that others should also be able to pay a fair market price to access the equipment, and the data carrying capacity, of the company.

There is no suggestion that those seeking access to the local loop, or the DSLAMs, will not have to pay Telecom a fair price for that right.

There is no diminution or devaluation of Telecom's legal property. Rather, the regulation being proposed increases the value of Telecom's physical assets because it creates a working market for their use.

An effective data network is part of our nation's development infrastructure. As InternetNZ rightly suggested in their submission, nation building is not something that can be left to the unregulated private sector.

We know already that both Maurice Williamson and Lockwood Smith would prefer to see Telecom left alone, to "get on with it". But the evidence over ten years is that the incumbent telco won't.

Left alone, they have demonstrated that they will deliver the worst value in the world: charging Kiwi businesses $2400 a month for a limited throttled service worth $28.

Left alone, they have demonstrated that they will impose ludicrously small data caps on Internet use - not because they have to but because they can.

Left alone, they have demonstrated that they will favor their subsidiary ISP above all others, so cheating the market and distorting the outcomes.

Telecom has had ten years to demonstrate its willingness to work with New Zealanders to deliver the services New Zealand needs to be competitive in the world market.

They have used those ten years to overcharge, to rip off the country's business community, to offer a bicycle track onto the data highway and charge for it as if it were the fast lane.

By their deeds shall ye know them - they've had their chance and now they need to be regulated, controlled and compelled to set New Zealand users free of their Telecom-imposed shackles.

That is why I would be deeply worried to see Maurice Williamson or Lockwood Smith involved in IT policy or telco regulation in the next National Government.

They have demonstrated beyond doubt that they would be better employed in some other area - perhaps as back bench MPs looking after their constituents.

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