Wednesday, March 01, 2006

Unbundling confiscation

The clamouring for Telecom regulation makes me uneasy but it's a call difficult to argue against. Bruce Sheppard, Shareholders Association Chairman, has an opinion piece, "Unbundling is confiscation by another name", in the DomPost this morning. Unfortunately it's not on-line. He charges that the Ministry Of Economic Development are actually working against the national interest in pressuring Telecom to invest more in the face of unbundling. He argues that shareholders will, rather than invest more, look to divest themselves of existing assets.

"Now the big issue. All first-world countries have two common features and if either one of them is taken away they relatively quickly descend into third-world status."

"The first is a functioning democratic process and the second is a robust rule of law that respects personal and property rights."

"Unbundling a private asset in the name of 'national interest' is, in effect, chipping away at the second foundation of any successful economy and in terms of international investment confidence, may do more harm to the national good than the short-term price advantages created for the telecommunications industry through the illusion of competition."


You'd have to say this Labour government has already done plenty of "chipping away" for lesser perceived benefit.

1 comment:

Michael said...

The problem is the Govt sold Telecom completely in 1989 - Telecom owns the copper lines, exchanges, every last bit of wiring. At that time, no one ever thought that Telecommunications would explode via the Internet in just 10 years. (Telecom laid a cable from NZ to the US that turned out to not have the necessary capacity in three years, so had to lay another one with enough capacity to allow voice calls from everyone in North America, NZ and Australia all talking at once.)

About 15 years ago Saturn (now TelstraClear) calculated it could build a profitable new network in urban areas (like it did in Lower Hutt, Wellington, Kapiti and Christchurch) but gave up when it realised it was cheaper to lobby the Government to allow it access to Telecom's existing network. One of the reasons they stopped was the RMA made it to expensive to get approval to build

Local unbundling amounts to a confiscation of Telecom's network - there must be some compensation for it