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More Monopoly Mayhem 3 January 2002 Edition
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Yet another local monopoly player has decided to exercise its right to rort a captive audience.

Yes, Telecom are hiking residential rentals again -- justifying it with claims that we're using the Internet too much.

Of course Net-nincompoop and Deputy Prime Minister Jim Anderton (who once gave his email address as something like www dot anderton at government com dot NZ) and one-time supporter of the "little people", has chimed in behind Telecom by announcing that it was over-use of the Net by a small number who had forced the latest price increases.

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What's going on Jim -- why are you siding against the hard-core Net users of NZ?

But let's look a little more closely at Telecom's "excuses" for hiking those prices again.

It can't be denied that use of the Internet has produced a significant increase in local call minutes racked up by domestic subscribers -- but it's not as if this increase in use has come without some compensatory lift in revenues for Telecom.

They appear to have conveniently omitted to mention that quite a not insignificant percentage of households (especially those with those evil heavy Net users that Anderton so strongly criticises) have added an extra phone line. That's a good extra chunk of cash in Telecom's back pocket every month isn't it?

Readers Say
(updated hourly)
  • line rentals increase... - Alan.
  • The Phone Co... - Robert

    From Last Week...

  • Changes to Sky... - Frustrated
  • Sky Digital Bites... - Andrew
  • More Lies... - Melvin
  • some changes but... - Debs
  • everything about Sky... - Philip
  • Sky volume... - Steve
  • now an ex-Sky customer... - Jamie
  • Have Your Say

    Let us also not forget that Telecom owns the country's largest ISP -- XTRA. It stands to reason therefore that a large amount of the money people are paying for their Net access is also going into Telecom's coffers. And don't forget that most of the other ISPs also end up handing over a pretty penny to Telecom each month for services associated with the provision of internet access.

    To be quite honest, if this massive growth in Internet use hasn't come as a windfall for Telecom then they really ought to re-evaluate their strategies and management abilities.

    However, if they're still adamant that residential Internet use is having a negative impact on their bottom line then there is a very simple solution to this excessive Internet use and its effect on the residential phone network: give us all DSL services at a reasonable price (or in most areas - at any price). Countries such as Singapore and South Korea seem to have sidestepped PSTN congestion using this rather clever tactic -- why can't you?

    And isn't communications equipment getting cheaper every year -- just like computers?

    Surely Telecom's not telling us that our phone lines are wearing out through over-use are they?

    It appears that Telecom would have us believe the provision of domestic phone services is actually costing them $180 million a year -- because the price of residential rentals are too low.

    So tell us Telecom -- why is it that in the limited areas where you actually face competition to your local loop, you're voluntarily charging just $29.95 instead of the $36.34 the rest of us have to pay for each month's line rental?

    Could it be that there's actually more profit to be made by whining about Net users using the PSTN while simultaneously enjoying the additional revenues they generate?

    Of course, if Telecom was really losing $180m a year through operating the local loop and residential rental service they'd sell it off wouldn't they? Let's face it -- even if it's bleeding ink at that rate there'd be plenty of eager buyers.

    What Telecom are failing to mention is that the residential customers and the local loop that feeds them is a very strategic asset -- worth far more to them than the revenue it generates in monthly connection fees. Maybe they are losing money on those residential customers who never make toll calls, don't use any smartphone services and who spend every waking minute on the Net -- but then again, my local supermarket often sells butter, bread and other basic products at below cost because they know they'll make up those losses (and far more) from the spin-off sales that follow.

    Don't lose sight of the fact that, despite its protestations of huge losses on the provision of local loop services, Telecom is still returning a profit measured in hundreds of millions of dollars each year.

    And that's the real reason they're also prepared to silently (without so much as a whimper about how unfair it all is) match Telstra/Saturn's price in those areas where they can provide an alternative service.

    If we had a nationwide competitor to Telecom for residential services then maybe we'd all get a $29/month phone service plus cable/DSL internet. Would Telecom then still be bitching or would they simply consider running the local loop as a loss-leader to be an acceptable part of doing business in this marketplace?

    Let's face it -- Telecom are simply exercising their monopoly -- and in the process they're duping those politicians whose IQ matches their share of the vote.

    If the government had any balls it would force Telecom to open up the local loop. Let other providers offer competing residential services through that loop, and even install DSL gear so that the rest of us could get access to broadband connections.

    Unfortunately those in power are still a decade behind the times it seems. Not only does Anderton think that heavy use of the Net is a bad thing for NZers, but the government appears to believe that 9600bps is quite an acceptable speed for dial-up. Excuse me -- this is the 21st century -- not 1990!

    For a government which supposedly has its roots in supporting the rights of workers and "the man in the street", the present one seems to have sided with the big corporations an awful lot recently (see Guilty Unless Proven Otherwise).

    This latest move from Telecom, combined with the absolutely appalling attitude of Sky TV to its customers must have really brought home to most NZers the dangers of unregulated monopolies.

    (Is it just coincidence that Sky TV and Telecom have gotten into bed together to sell a bundled phone/TV service -- or is it just birds of a feather flocking together I wonder?)

    Come on Government -- the voters of this country are asking -- are you with us or against us? We can't build a fence or cut down a tree without getting official permission -- but Telecom remain free to rob us blind with the overwhelming support of some within government and you've hog-tied TVNZ so that it can't compete with Sky in the area of digital TV.

    Elected representatives you say? Representing who I wonder?

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