KEY POINTS:
While in Chile at the start of the year, I looked for somewhere to send the holiday postcards.
There weren't any street mailboxes in Santiago and I eventually found a post office where I waited in line to buy stamps while people went through elaborate bureaucratic rigmaroles to send off parcels and official-looking envelopes.
It gave me cause for thought: either Chileans aren't letter-writing people, or they got out of the habit during the years of military dictatorship, for fear of their mail being opened by the authorities.
Now imagine a situation where your networked digital activities, either email, internet browsing or use of online activities, are scrutinised and ranked by your services provider.
It may make you that bit more wary of certain activities if you know it's going to lead to the service provider clipping the ticket according to its perception of the value to you.
But it's where the telephone companies want to go as they fight the damage to their old business model done by the rise of the stupid network.
That's the description of the internet applied a decade ago, not unfavourably, by former AT&T engineer David Isenberg, who was in New Zealand this month to advise the Telecommunications Users' Association (TUANZ) how New Zealand could achieve internet leadership.
I asked him what had changed since he was here two years ago.
"The big thing I didn't predict, and I see as huge danger to the stupid network, is the emergence of deep packet inspection and other forms of traffic classification and the telephone companies' attempts to build consortiums around UMS (unified messaging), IPsphere and basically trying to, if not put the toothpaste back in the tube then build a new tube around the toothpaste," Isenberg says.
"They want to get back into the value chain and now they are pushing the technical and protocol initiatives to do it.
"I see it as a huge danger. It threatens to make barriers in the middle of the network, barriers to innovation. So if a new application comes along without a revenue stream but it [needs] the latest, newest, fastest internet, it does need to make some kind of deal with the telephone companies.
"That threatens the old idea of two guys in a garage trying something out, or three guys in Estonia inventing Skype. It will make it harder for disruptive innovation to occur."
And despite the telephone companies' insistence they know what their customers want and can deliver it better than Google or Yahoo or some other provider on the edge of the stupid network, Isenberg says the customers are saying something different.
"The mobile space is starting to look interesting. There are reports that a third of iphones are unlocked, which is amazing given they are taking them out of the Apple upgrade stream so they don't get bricked, and they forced Apple to release its developer toolkit," he says.
"Then there is [open source phone project] Openmoko, which cuts the carrier out of the direct value chain."
His answer on how to achieve internet leadership is fibre - lots of it, especially to the home.
And that will mean not letting the telephone companies frame the debate, as they have so far, in their self-interest.
The challenges the telephone companies face were spelled out the previous day by research firm IDC.
At its annual Directions business briefing in Auckland, Eric Owen, IDC's vice-president for telecommunications for Europe, the Middle East and Africa, said the compound annual growth rate for European telecommunications companies over the next five years would be zero.
Revenue from fixed-line voice will decline sharply, with the traffic increasingly moving to internet protocol and mobile.
Sharp competition means mobile services will be less profitable, despite a big rise in traffic.
Companies will be looking to get more revenue per user by investing in new services and applications.
The question Isenberg asks is are those services wanted by the customer or are they like advertising on phones, which still hasn't taken off.
Phone companies are increasingly buying IT service firms, like Telecom's purchase of Gen-i, so they can keep hold of their customers' telecommunications spending as it moves to digital networks.
One sign of the shift is the move away from proprietary hardware, which has traditionally been used for telephone systems, to standard computer equipment.
IDC predicts spending in the telecommunications industry on blade servers to double this year, from US$275 million ($356.61 million) to US$550 million, rising steadily to US$2.4 billion in 2011.
IDC's Rosalie Nelson says Telecom has almost 60 per cent of this country's $6 billion telecommunications market, but it's fighting declining revenues.
While it has 80 per cent of fixed-line voice revenue, its share of mobile subscribers was down to 47.8 per cent in December, and its average revenue per user was half that of Vodafone.
She says its transformation strategy of defending core revenues and reducing costs while attempting to grow new wave revenues from mobile, broadband and IT services, was standard stuff for a market incumbent.
But the increases in new wave revenues aren't keeping pace with the decline in traditional revenue.
IDC is picking total fixed line revenues across the New Zealand market will fall 21 per cent by 2012, from $1.68 billion to $1.32 billion.
