Red Alert

Is this true?

Posted by on August 15th, 2011

The process of awarding the ultrafast broadband contract to Telecom has been shrouded in secrecy and dubious process from day one.

I think there’s pretty general agreement about that. The problem has been working out what actually went on.

A letter recently came to light between Telecom CEO Paul Reynolds and Communications Minister Steven Joyce which indicated pretty strongly that the structural separation of Telecom was being discussed way back two years ago before the contract tenders had been announced.

If so, then it would appear that a plan was put in place and an outcome determined before the tenders were put to the public.

If so, that makes a complete mockery of the tender process and the other tendering parties who would be right to feel very aggrieved.

I’ve been told (by a very strong source) that around that time (2009), the Ministry of Economic Development head in charge of broadband Bruce Parkes, used emissaries to go and talk to the Telecom boss and verbally explain that if Telecom agreed to voluntarily separate, there would be “regulatory relief” (and by implication the ultrafast broadband contract would follow).

One of those emissaries has said that when speaking to Reynolds, he/she was told “you’re not the only one they’ve sent to tell us that”.

I’ve also been told, from within Telecom, that the letter written by Reynolds back to Joyce was deliberate, to put it on the record so to speak.

This smells.

I have a request before the Speaker of the House Lockwood Smith referring Steven Joyce to the privileges committee for denying any letters existed on this issue. The letter I’ve referred to above clearly did exist. He has fought to keep it from the public eye since Octover 2009.

I’m waiting for the Speaker’s response.

15 Responses to “Is this true?”

  1. pdm says:

    Clare – can you explain why Labour is so relentless in it’s endeavours to ruin Telecom? There are a lot of New Zealanders who hold Telecom shares as core to their investment portfolios.

    Disclosure: I am not a Telecom Shareholder.

  2. mickysavage says:

    I can recall Reynolds standing next to Key during the 2008 election and endorsing National’s election policy. I thought it then that it was an extraordinary example of a corporate indicating a preference for one party during a campaign.

  3. Gregor W says:

    …if Telecom agreed to voluntarily separate, there would be “regulatory relief” (and by implication the ultrafast broadband contract would follow).

    Organisational Separation was negotiated to avoid Structural Separation and came with a whole lot of regulatory conditions; the ‘Undertakings’.

    These ‘Undertakings’ will be invalidated by the process of Organisational Separation as they are all about arms length trading arrangements between companies within the same group to ensure competition and regulated cost-of-inputs.

    Ergo, if the playing field changes (i.e. Telecom structurally separates into 2 distinct businesses) the same regulation cannot legally apply. Hence ‘relief’ from existing regulation.

    Also, your second assertation is conflated.

    ‘Regulatory relief’ for copper based products (which is what the regulation generally applies to) is totally separate from UFB.

    Copper regulation for the Chorus business is not going away.

    However, the regulations will need to be adjusted as some trading/organisational arrangements become invalidated by the organisational split (hence ‘relief’ as explained above), but one does not necessarily lead to the other.

  4. tracey says:

    pdm, hand on heart answer me this..

    It’s 2007 and a senior Labour Minister has overseen the award of a billion dollar tax payer giveaway to telecom. It turns out the Minister has been less than honest about how it all came about, you would say “why are you so determined to ruin Telecom” or “Damn Labour for their dishonesty and manipulation at the expense of the tax dollar”?

    Gregor, is it ok for a minister to lie, if the outcome is one you agree with? It seems to me integrity and honesty are the thrust of this thread from Clare, especially from a Govt which promised us higher standards of transparency, accountability and honesty than the previous Government!

  5. pdm says:

    tracy – you ask a question which was never going to happen due to Labour’s obsession with breaking up telecom to the financial detriment of shareholders.

    Because of the `thin ice’ that I exist on at Red Alert I will refrain from giving examples which meet your criteria from other areas of Labours 9 years at the helm.

  6. Gregor W says:

    @ Tracey

    If it can be proven that Joyce lied to parliament then he should probably swing for it. I’m sure that will come out as a result of Clare’s request.

    However, other comments by Clare are materially incorrect or sideshows. That is what I am trying to set straight with context provided.

    For instance, your comment calling UFB funding a “tax payer giveaway” is materially incorrect.
    That may be a general perception but it’s not a reality. Unfortunately, Clare and Trevor Mallard continue to use similar rhetoric when they know it isn’t true.

    I have written in other threads on this blog regarding the breakdown but without going into too much detail, it’s a combination of a loan and a payment by connection basis (i.e for premises connected by fibre).

  7. tracey says:

    That’s why it was a rhetorical question to you pdm, because you see everything as Labour bad National good.

    Gregor W of course it is incorrect in its deepest form but not in its shallow form upon which Joyce has chosen to operate his PR on this. We’ll have to agree to disagree that Joyce’s honesty and being held to account is of greater importance to me than the intricacies of the separation (particularly as the deal is done and in stone).

  8. Gregor W says:

    Tracey – I haven’t suggested it is of greater importance.

    I’m merely suggesting that prior to throwing stones, Clare might want to get pertinent facts on the table.

    Otherwise, the UFB conversation becomes a political football, ripe for posturing and toy tossing and detracting from sensible discussion on the relative merits of the proposition or otherwise.

    FYI, structural separation of Telecom is by no means a done deal. It requires ratification from the shareholders. Without that ratification, de-merger cannot proceed.

  9. tracey says:

    I got what you were saying, back up there. Thanks for the info, I have appreciated it. I’ll look out for Joyce’s next Press release to follow the story, then hopefully there’ll be an analysis here and I can find out what’s really happening.

  10. Sean says:

    This smells.

    Absolutely right Clare. Why has Steven Joyce been so blindly determined to hand Telecom the greatest piece of corporate welfare in New Zealand’s history?

    The question has to be answered, why is Steven Joyce acting as a Minister for Telecom?

  11. Adam says:

    Should be mentioned, for reasons of transparency, Bruce Parkes had been head of government relation for Telecom NZ, revolving door into MED with a bunch of other Telecom guys. People have tried to tell me he was scrupulously fair and impartial towards his former employer, maybe even a little tougher. I took that with a large grain of salt.

  12. Aron watson says:

    Telecom and National in the same sentence….like two bad apples in he same cart…go figure

  13. John says:

    So both Key and Joyce are liars.

  14. Gregor W says:

    @ Sean

    I think you’ll find the most egregious example of corporate welfare in NZ was probably the SCF bailout.

    Nothing was produced for that money. UFB will deliver an outcome.