Note: This column represents the opinions
of the writer and as such, is not purported as fact|
Telecom has long been bitching about the cost it has to carry in order to
meet its Kiwi Share obligations of providing free local calling and limiting
price rises for residential rentals.
If the company is to be believed, the onerous provisions of the Kiwi Share
are costing it a huge $180 million per year.
Well in their wisdom(?), the government has decided that all local telcos
should be forced to share the cost of the Kiwi Share's obligations by way
of a new device called the Telecommunications Service Obligation (TSO) that
has been added to the Telecommunications Act.
Sounds fair doesn't it? But fair for who?
Telecom's competitors claim that they will have to pass on the extra
unexpected costs they will now face -- so prices will have to rise.
Of course Telecom themselves aren't complaining -- after all, it means they'll
end up with a whole lot more cash in their coffers for no extra work. This
will undoubtedly mean that residential consumers can expect to see a reduction
in Telecom's monthly rental as a result, right?
Are you crazy? Telecom is extremely unlikely to pass on the benefits of this
extra windfall, it will probably go straight into the company's already bulging
So let's get this straight:
Back in the early 1990s when it was privatised, Telecom agreed to commit to
the obligations of the Kiwi share in the full knowledge that its sale signaled
the opening of the market to competition. It's no stretch of the imagination
to see that the KS was the price that Telecom had to pay to retain a monopoly
on the copper which makes up the residential telephone network.
Now, because new technology and that competition has arrived, Telecom is
crying like a spoilt little brat because they're left carrying the KS can while
the newcomers have no similar obligations.
Can anyone else see the obvious, commonsense solution here?
Instead of legislating so as to force Telecom's competitors to subsidise its
operations, why not just say to Telecom and the KS burden: "if you can't
stand the heat then get out of the kitchen."
If Telecom finds the KS obligation simply too much of a fiscal burden then why
aren't we giving them just one option: surrender ownership/monopoly of the
local loop in return for the removal of the KS obligations.
If Telecom are being honest about their motives for whining then this would
solve their problems right? No more $180m per year KS-related expenses.
Telecom's competitors would also be pleased -- they'd then be in a position
to gain full and equal access to the last mile of copper thus allowing the
introduction of alternative DSL services, etc.
Most of all, consumers would be pleased. The huge increase in competition for
the provision of domestic phone and internet services would likely see
prices drop and service offerings improve immensely.
Did the government take the chance call Telecom's bluff? Hell no! It simply
said "don't worry, we'll force your competitors to help you out."
I bet there are thousands of other businesses who'd just love the government
to legislate in the same manner to help them out by picking their competitors'
Hands up all those who remember the way the last government "fixed" the
electricity marketplace and the results that we've had to put up with since...
Well get ready, the current government have just done something very similar with the
telephone system. Not only can we expect higher prices but we've also missed
a golden opportunity to really open up the marketplace to competition.
So now Telecom still has ownership of the local loop *and* all the other
Telcos have to subsidise it!
Just who's sleeping with who to broker this type of deal?
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