Dialogue: A shoddy case of phone tapping

Giving a Maori consortium rights to existing phone networks is Government-sponsored theft, writes MAURICE WILLIAMSON*

In 1990 a United States-based phone company successfully bid for one of the GSM cellular blocks of spectrum being auctioned by the Labour Government.

Over the next seven years that company, Bell South, spent hundreds of millions of dollars of its own money building a cellphone network across New Zealand.

In 1998 Bell South sold its business, including the network, to British-based Vodafone for $750 million.

In the past three years Vodafone has spent about $750 million extending and improving the network.

Its total investment is now around $1.5 billion. Vodafone competed with Telecom head-on and now boasts around one million cellular phone customers.

Vodafone invested all this money in New Zealand secure in the knowledge that the network it bought from Bell South was now its property. Vodafone certainly had no reason to believe that property could ever be stolen by a Government via legislation.

That was until last year, when the Government auctioned more blocks of electromagnetic spectrum. Some of these blocks were suitable for running GSM phone systems. All bidders had to abide by the same rules, with one exception.

Even though by the Government's own admission there was no treaty obligation for it to do so, it decided that one block of the spectrum was to be made available for Maori, and at a discounted price.

The major buyer of that frequency was Northelia/Econet, a Zimbabwe-based company with operations in Nigeria, Botswana, and Lesotho. Econet had formed a joint venture with Maori interests and intended starting its own GSM cellular phone network.

So far so good. But what the Econet/Maori consortium doesn't want to do is cover all the remote and rural areas of New Zealand. That's very expensive. It simply wants to build its own network in the major urban centres and use someone else's network where it can't afford to build its own. Again, so far so good.

One would expect that the consortium would approach a company, such as Vodafone, that did have extensive coverage, and try to negotiate a commercial access right to the much-needed spectrum. Indeed, Vodafone has made it clear that it would be more than happy to negotiate such commercial arrangements.

But the Econet/Maori consortium has friends in high places, friends such as the Maori members of the Labour caucus. Despite a cabinet decision last December, and a commitment to the industry before the last auction that it would not regulate mandatory access to networks, the Government has now reversed that decision under huge political pressure from its Maori members of Parliament.

The Government this week intends to introduce changes to the Telecommunications Bill now before Parliament to grant players, such as Econet, mandatory access to Vodafone's network.

The best analogy I can give is that of a small farmer finding he doesn't have enough grass to feed his stock, approaching the Government for help, and the Government then giving him rights to graze his animals on a neighbour's privately owned paddocks.

But what about property rights? Surely if you own a farm you have the right to decide if others can graze on it?

You may very well choose to allow others access to your property, but would you believe that a Government would force you to do so against your will by legislation?

For urban dwellers a better analogy may be that of when the kids have grown up and gone flatting. A couple of spare bedrooms have become available in the family home. How would you feel if the Government legislated to give Winz mandatory access rights to use your vacant bedrooms for the homeless? You might find a couple of unemployed or a solo mum or two legally ensconced in your back bedrooms.

The analogies may seem far-fetched, but I invite to you think again about Vodafone's position.

It bought and paid for its network itself. It didn't receive any help or assistance from the Government. To expropriate Vodafone's property by legislation is an outrage that New Zealand will live to regret.

The other measure in the bill will force existing cell site owners to allow other companies to put their transmitters on the original companies' towers.

Examples of this parasitic behaviour exist in the animal kingdom. The cuckoo is known for laying its eggs in the nests of other bird species rather than building its own. The cuckoo will throw any remaining birds or eggs from the nest, leaving it as the sole bird receiving food from the nesting mother.

I would have thought civilised society would frown on such behaviour.

Not the Labour Government.

While the Government talks about the knowledge economy, foreign investors (especially those from the high-tech sector) will be watching us closely.

If this legislation goes ahead it will tell them that New Zealand is no longer a place to invest safely. What's even worse is that the danger is not coming from shonky investors or political instability but the legitimately elected Government.

Even Australia, which resorted to extensive regulation in telecommunications, has not ventured down this path.

Nor have Britain or Ireland.

New Zealand businesses should feel a cold shudder down their spines. Who knows whose business might next be coveted by a Zimbabwean/Maori consortium which might again persuade the Maori MPs they should have a slice of the action. Not by negotiation, but by Government fiat.

Maybe Sky City Casino should offer some of its blackjack tables and roulette wheels? Air New Zealand should make available some of its first class seats and why can't Foodtown share some of its retail floor space with a competitor who can't afford to build a new supermarket? Some very nice suites are going in the Hyatt. Why should Hyatt have sole right to their use?

It is nothing short of legalised theft. Maoridom will, along with us all, be the long-term losers. Foreign investors will be spooked by this sort of behaviour and the subsequent drying up of investors' money will have a hugely detrimental effect on our prosperity.

Business groups such as the Employers and Manufacturers Association and Business New Zealand should be making it clear to the Government that this is not acceptable. It's not too late. The legislation is not yet passed.

So much for a Government that's committed to a knowledge economy.

* Maurice Williamson was Minister of Communications from 1990 until 1999