The stakes are high right now for Communications Minister Steven Joyce. And for NZ’s largest telco, Telecom, who are believed to be considering structural separation.
The government and Telecom were engaged in a Mexican stand off all through 2009 over whether or not Telecom could access to the govt’s $1.5 billion for ultrafast broadband. The Govt signalled they wanted the telco to continue down the separation path. Telecom pushed back and did nothing.
Now it looks as though they will do something. The big question is, if they stucturally separate, will all Telecom jobs stay in NZ?
This Friday, 29 January, is the deadline for bids to participate in the govt’s $1.5 billion ultrafast broadband project (UFB).
This is the biggest $ commitment made by this govt. More than a year after the election they haven’t delivered much. The commitment was to deliver UFB to 75% of homes in 6 years. Then it became 10 years, and not to their homes, but to the streets they live in.
And not one km of fibre has yet been laid. It’s unlikely any will be laid until at least the end of this year. Despite there being a number of ready to roll projects under the previous Labour Govt’s Broadband Investment Fund (BIF) which Joyce axed in one of his first decisions. Industry and public criticism of the govt and Joyce has been muted because there’s a lot of money at stake and everyone wants a piece of it.
The outcome of the govt’s allocation of $$ to broadband will shape our future highway. For better or worse. This industry is essential to our future economy.
The highway we build must take us through the next major phase of our economic development, ensure equitable access to high quality broadband across our country in urban and rural NZ, to communities, business, schools, our health service and drive innovation in our energy sector.
It should energise our ICT sector and broaden it out beyond telecommunications. This is major infrastructure.
Instead, we have continued uncertainty, a Mexican standoff with one of NZ’s biggest companies and resulting instability which could push Telecom to do something radical, which they might consider to be in their interests, but which are ultimately not in New Zealand’s. And where is the Government?
Back in October, I posted on the choices facing the govt and Joyce. Titled: A fork in the road, the choices haven’t changed, though the attitude of the biggest player may have.
The choice is between a Telecom-led rollout (unitary authority) and a regional approach with involvement by electricity lines companies and a range of other bodies including local govt. The decision taken could herald a significant fork in the road for this government overall.
Telecom is in the frame to potentially be part of the urban and rural rollout only if they agree to undergo further structural separation. Up until now they’ve shown no signs of doing that and have even said firmly it’s off the table.
Lately, I think that’s changed. That structural separation is indeed a possibility. Because they know in order to be relevant they must be part of the future.
But at what cost? To Telecom, and to the nation? Especially if they decide to structurally separate anyway even if they don’t win the broadband bid and take a large slab of their business offshore. Telecom may not be a kiwi company, but they are kiwi jobs.
Labour was mindful that while change was required to bring more competition into the market place, it didn’t want to destroy Telecom. At all. Not sure where this Government’s at on this.
Steven Joyce holds his cards close to his chest. His reputation as an inscrutable player is a high stakes game. The stand off with Telecom is understood to be pushing them to consider big changes.
Has he considered that those changes might not be in the nation’s interest? And is he and his government talking with our biggest telco?
Seems like there’s something here but I don’t quite get it. What’s the ‘guts’ of the issue? Telecom doing over workers again?
The real story is that there is no money available, election promise or not.
The delays are just to wriggle out of a big promise citing changed circumstances
The big election bribe has come home to bite them! Just like it did for the phony tax cuts.
Notice the same policy process with the dance of seven veils for the various new tax proposals.
Salome would be proud of her pupils English and Joyce
And just think, if Labour hadn’t started selling Telecom in the 1980s we wouldn’t have to be paying out a thing. Telecoms’ profits would have had fibre to the cabinet by now in most of the country and be starting on fibre to the house. Instead we’re having to bribe private profiteers to do what should already have been done.
When are you going to face the basic fact that privatisation of a natural monopoly doesn’t work?
It’s good that you’re back Joyce on this. I agree that Telecom is appalling. Good to see LAbour and National cooperating. Other Labour MPs should try this approach. Shouldn’t all be about attaking all the time.
having said that, I’m not as confident as you that Joyce will sort it.
brent – i’m not sure that’s what Clare was saying – I think she was saying Joyce is working with telecom to outsource the jobs
didnt Telecom offer to sell its network to the Labour government back in ‘06?
Am I seeing something everyone else appears to be missing given the comments?
The heart of it is this: Is Steven Joyce working in the interests of New Zealanders?
From previous blog entries, he doesn’t seem to consider the functional separation of Telecom to be an issue at all. While the separation was put on the table to better serve New Zealanders.
Telecom might just go down that road but then, is it for the good of us or is it for the likelihood of getting a serious cut of that 2 billion? If not Telecom, then who? Are we like the Ministry of Health dealing with MS? Do we not have an alternative?
Add to that the probability that jobs will be shifted off-shore (go India with your bad American accented telephone operators!) if such a separation were to happen and there’s a whole can of worms here.
Remember, Telecom is not our friend. Telecom is friend only to their shareholders. If there’s no profit in it, they won’t do it. Look at the stranglehold they’ve had on high speed Internet. You need to ask yourself, Do we want to be in Telecom’s fist forever?
The way I see it, if Telecom go down that road it’s for the good of Telecom. The good of Telecom doesn’t necessarily have anything to do with the $1.5 billion but getting rid of a network that can no longer be milked for the revenue stream as they’ve done for the last 2 decades and now actually requires maintenance and replacement. Getting rid of it would probably be in their favour. I really wouldn’t be surprised to see Telecom structurally separate and then sell the network back to the present government for a few billion $$$.
@Draco this is the public monopoly Telecom that had a very poor record of service and innovation – who needs fibre?
As a private corporation, the fact is there is fibre all over the place as of now, just not the last mile. The competition (in areas where it exists) hasn’t seen fit to roll out FTTH either. We can get up to 40 Mbps where I sit, but it’s still copper cable on HFC, although Telstra will roll out fibre to you if you’re prepared to pay lots of $$$$.
Telecom, as a private corporation, spent ten years taking out a lot of the fibre that had been put in during the 1980s (specifically, FttC) and replacing it with copper. As I’ve said before, go take a look into Telecoms ICMS database covering those years and you will see that.
There was a major technological shift in the 1980s – digital exchanges were put in, cabling went from lead and steel sheathed to plastic and cable jointing went from twisting the wires together to having hand held machines do it. Basically, all the “service” improvements that have happened in Telecom are the result of technological changes that were happening, and were mostly done, by the time of the sale in 1990. Privatisation has done nothing to improve things – if anything, it’s made things worse.
All the innovation was done by companies such as Nokia and Motorola. Telecom just put it in place.
Labour didn’t care at all about Telecom or their share price or anything when they forced through LLU with its regulatory regime for Telecom. What’s happened since, ranging from the end of the school bonus points scheme, through to the Visionstream contracting out, is all direct outcome from that policy, and the intent of the policy was to pander to the EPMU and other unions who have consistently attacked Telecom for years.