Chris Barton: Dang, Telecom keeps calling the shots

COMMENT

Telecom fought the law and ... Telecom won. Against the odds, truth, justice and the American way, they showed 'em just who has the fastest guns in the West.

Yes siree, bob, they showed them newcomers that they can get the hell out of our town.

If this sounds a bit country and western, Telecommunications Commissioner Douglas Webb started it. Apparently he has a "burr under the saddle" and his lasso at the ready.

"We'll be riding close herd on this," he said after hearing that Communications Minister Paul Swain had accepted his recommendation to give Telecom free reign, as it were.

Welcome to the surreal world of telecommunications regulation. Here, even though the law's prime purpose is "to promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand", competition is not allowed. Here the lawman dithers, changes his mind under pressure and then reverts to John Wayne-speak to justify himself.

Here, despite rhetoric and laws saying otherwise, successive Governments befriend Telecom - majority-owned offshore - and support its monopoly control.

That's probably easy enough to understand under a National government which, despite favouring the free market and open competition, somehow always comes down on the side of big business rather than consumers.

The fat-cat monopoly is National's traditional friend, but under the present Labour Government many telecommunications users thought it would be different.

The Telecommunications Act 2001, replacing more than a decade of "light-handed regulation" during which Telecom called all the shots, would bring a truly level playing field and there would be a referee (Webb) to sort out disputes.

The reality is more of the same. Telecom keeps its monopoly and keeps calling the shots. Labour is just National in disguise.

Which is why I say you have to admire Telecom. Doesn't matter who is in power because when it comes to telecommunications lore, Telecom is the boss.

At issue is its control of the copper wires that feed our homes. Dealing with that monopoly involves something in competition law known as the "essential facilities doctrine".

That's where you have an infrastructure or resource that cannot be reasonably duplicated, and competitors are either shut out from accessing it or forced to pay exorbitant access fees.

It can be anything from railway bridges to local electricity transmission networks, sports stadiums, multi-day ski pass schemes - or, of course, a telecommunications network.

The basic argument is that New Zealand's geography and small population mean that only one national phone network for residential customers is economically viable.

But when such a network is run by a monopoly there's little need or incentive to bring prices down and to offer new services. When the choice to the consumer is Telecom or Telecom it's okay to be inefficient.

To get maximum efficiency out of that network and to benefit consumers, most Governments add regulations that require the monopoly to rent bits of the network to competitors, who use the basic infrastructure to provide competing services. Consumers get choice and prices come down.

Naturally Telecom doesn't want this to happen. It wants to introduce new services in its own time and keep prices high so it can maximise profits.

It's the dream of all businesses: own the market and the world's your oyster. Winner takes all.

Obviously wrong. But not to our lawman, who agrees with Telecom and says "hands off the wires" - except for some token access at sub-broadband speeds and specifically disallowing voice usage.

Hard to fathom because, as Webb knows, if he broke the monopoly and allowed real competition on the wire, consumers would soon be paying about $30 instead of $40 a month for a phone line.

Plus, additional services such as call waiting and voice mail (now $8 a month) would be thrown in for free. And un-metered broadband access would be $40 a month instead of $70.

But maybe Webb, like the hapless consumer, has no choice because it's Telecom, not he who is in control.

To which one can only quote the Duke's immortal line (as Davy Crockett in The Alamo): "There's right and there's wrong. You got to do one or the other. You do the one and you're living. You do the other and you may be walking around, but you're dead as a beaver hat."

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