Battle rages over future of broadband

Lobbyists have used a range of strategies, such as Slingshot founder Annette Presley's protest outside Parliament. Picture / Mark Mitchell

It's the biggest public relations battle in New Zealand this year with millions of dollars of revenue at stake.

On one side is Telecom, which is doing everything it can to hold on to control of its network.

On the other side are its competitors, looking to get a slice of the lucrative broadband pie.

The Government is reviewing telecommunications regulation, with a possible breakup of Telecom's network control - or even the company itself - weighing in the balance.

Both the pro-regulation and anti-regulation camps are fighting to influence the minds of the public and, ultimately, the Government.

Lobby groups from both camps are sending out press statements, numerous studies about the state of broadband and staging publicity stunts to get their arguments heard.

The latest stunt was by Annette Presley, chief executive of internet provider Slingshot, who handed out loaves of bread at Parliament on Thursday.

"Telecom are feeding us crumbs," she told the assembled reporters, and won some press coverage the next day as a result.

Groups such as the Telecommunications Users Association and Internet NZ have called for Telecom to be broken up and for its network to be unbundled to rivals.

Other lobby groups, such as Business New Zealand and the Business Roundtable, favour letting the markets sort themselves out and thus leaving Telecom alone.

Sometimes, it seems, the line between an independent lobby group and one of the market participants can get blurred.

Wellington's Dominion Post newspaper ran an opinion piece late last month by Business Roundtable Rob McLeod arguing against network unbundling.

But the paper failed to disclose that McLeod is also a Telecom director.

Public relations executives declined to be interviewed for this piece.

But media analysts agree that from a PR perspective at least, Telecom is looking like the loser.

"For a long time they've done a really good job on spin, but now that this issue has become something that is water-cooler talk, they seem to have lost the plot," said media commentator and business writer Deborah Hill Cone.

The turning point came after Telecom announced last month that it had failed to meet broadband customers targets. The media let fly some "hard-hitting" stories and propelled the issue up from the tech pages and into the mainstream.

"They should have known that was going to happen and they should have had a plan," Hill Cone said.

Media and technology commentator Russell Brown said that, of the two sides, it was Telecom's allies who had fared poorly.

"If the anti-regulation camp wants to be taken seriously, they really have to look at the quality of their arguments," he said.

Brown pointed to the media's "demolition" of a Business NZ survey, which claimed broadband prices here were among the best in the world, as an example of the lobby group not having its facts right. "The public has a more sophisticated understanding of this than they're often given credit for."

Jim Tully, head of the political science and communications school at Canterbury University, said Telecom came from a natural disadvantage.

Before it was privatised, Telecom was a benign, Government-owned provider of low-cost utilities.

But once it was privatised, its mandate changed to earning profit and providing dividends for shareholders, making it the big, bad corporation in many people's eyes.

"Telecom really began in an environment where it was always going to be difficult to win a PR battle."

Its current woes were exacerbating that legacy, Tully said.

But Brown said Telecom's present PR problems went beyond standard anti-corporation sentiment.

A recent Campbell Live episode, in which host John Campbell asked Telecom chief executive Theresa Gattung questions sent in by readers, was a good example.

"To some extent it's gotten past the rather banal 'Telecom is evil' thing," Brown said. "They were asking about things like contention rates ... the fact that people are sending in relatively sophisticated questions suggests that's the case."

Hill Cone adds: "Even if you don't understand what unbundling means, you do understand that we've got crap broadband."

Pro-regulation camp

Tuanz

The Telecommunications Users Association is a lobby group focused on raising NZ's international standing in information and communications technologies. Formed in 1986.

Public head: Ernie Newman, chief executive since 1999.

Members: More than 500 companies, many of them large businesses such as banks, educational institutions and Government agencies. No 2 and 3 telcos TelstraClear and CallPlus are members but not Telecom.

Funding: Membership fees ranging from $250 to $3250 a year and income from events and seminars.

Position: ISPs should be granted unconstrained wholesale broadband speeds on Telecom's local loop, which should also be unbundled to allow them full access. Telecom's wholesale unit should be separated from its retail business.

Ispanz

The Internet Service Providers Association is an alliance of ISPs focused on lobbying the Government for better access to Telecom's local loop network. Formed last July.

Public head: David Diprose, elected president in September.

Members: Twenty-five ISPs, including No 2, 3 and 4 - TelstraClear, ihug and Callplus, respectively - but not Telecom.

Funding: Members' contributions.

Position: The key aim is unbundling the local loop so members can install their own equipment into Telecom's exchanges, controlling the pricing and speeds of their own products.

Internet New Zealand

Manages domain name registration and advocates and promotes open access and use of the internet. Formed in 1994.

Public head: Colin Jackson, elected president last July.

Members: About 200 individuals and 34 corporate members including TelstraClear, CallPlus and ihug but not Telecom.

Funding: Membership fees ranging from $50 for individuals to $1000 for corporates. Internet NZ also generates income from domain name registration.

Position: Internet NZ urges a combination of unconstrained access and unbundling for ISPs as well as structural separation of Telecom.

Anti-regulation camp

Business Roundtable

Comprised mainly of chief executives of major firms to lobby policies reflecting business interests. Formed in 1986.

Public head: Rob McLeod, elected chairman in 2002. Also chairman of Ernst & Young NZ and a director of Telecom.

Members: More than 50 executives of companies ranging from banks and finance, to energy and car makers.

Funding: Membership subscriptions from $20,000 to $40,000 a year.

Position: NZ has benefited from a competitive private telco industry with light-handed regulation and should stay that way. Current regulations such as the Kiwi Share and the Telecommunications Service Obligations are impeding broadband uptake and perhaps should go.

Business New Zealand

Advocacy group for enterprise and the promotion of business interests in New Zealand and abroad. Formed in 2001.

Public head: Phil O'Reilly, chief executive since 2004.

Members: Made up of four regional organisations - the Employers and Manufacturing Association northern and central, the Canterbury Chamber of Commerce and the Otago-Southland Employers' Association. Also more than 60 industry groups from tourism to fashion to health care.

Funding: Through various membership fees from its four regional organisations, plus funding from industry associations.

Position: Telecom's recently announced broadband prices are amongst the lowest in the OECD, and its property rights should therefore not be interfered with by instituting unbundling.

Federated Farmers

Rural sector advocacy group made up of farmers nationwide. Formed in 1945, but traces roots back to 1902.

Public head: Charlie Pedersen, president since last year.

Members: More than 18,000 farmers and rural families.

Funding: Membership fees ranging from $193.50 to $429.50.

Position: Telecom alone provides services and spends money on rural areas. Competition and regulation such as unbundling would make it difficult for the company to continue that spending.