Red Alert

Posts Tagged ‘amy adams’

Beyond Chorus to the bigger picture #1

Posted by on December 19th, 2013

Who would have thought when John Key made his grand statement during the 2008 election campaign that under a National Government 75% of New Zealanders will get ultrafast broadband in their homes within 10 years; that five years later his flagship scheme would be in such deep water?

The roll-out of broadband fibre is slow. Uptake is slow. Chorus, the company charged with the bulk of the contract, is under intense scrutiny as it claims it can’t do the job it was contracted to do. The regulated price of the existing copper-based broadband is under dispute by Chorus which is demanding the government intervene and overrule the Commerce Commission’s lawful role in regulating that price according to a statutory process.

All the while the government has lurched from one reactive response to another reactive response; threatening to overturn the Commerce Commission’s lawful process, then bringing forward a review which it pretended would be of the whole broadband scheme, only to focus on just the copper price and attempt to manufacture a means to overturn the Commerce Commission.

That review is now under a legal challenge and politically the government has had to back away from its plans to legislate to over-turn the Commerce Commission because it doesn’t have the numbers. Claims the govt had no idea the Commission would regulate the copper price don’t stack up because it was Steven Joyce’s legislation and he oversaw the contract with Chorus. They have no excuse because they should have factored in the impact of a range of price changes. Either they thought they had it all under control or they completely dropped the ball.

In desperation, in September the Prime Minister claimed Chorus would go broke if the copper price dropped. Chorus denied this but became increasingly strident about its need for a bailout.

With no backing for legislation, the government was then forced to get an Ernst & Young opinion on the financial state of Chorus which showed Chorus would NOT go broke. Instead there were a range of things Chorus could and should already have done to manage its finances better.

The E&Y report spells out measures that Chorus could take to save money.

It certainly demonstrated that:
•    Chorus is NOT going broke. The report clearly shows this. Chorus has a cash flow problem and that John Key was wrong in his claim in September that Chorus may go broke if the ComCom decision stood.
•    Chorus can largely fix the problem itself. It can save money by changing its business model. Chorus can and should stop paying its dividend and raise debt, both prudent and acceptable responses. It should have been getting on with doing this already.
•    The contract does not need to be re-negotiated.
However, if Chorus is left unchecked the risks are that it could embark on what is essentially a “work to rule” strategy; slow down internet speeds, take its time to fix faults and increase its prices.

The E & Y report was solid but should be considered  interim. It is certainly not the full picture. It has two major flaws.

  1. There are strong signs E&Y have largely relied on what Chorus say without significant verification even though the Terms of Refernce required them to
  2. They have not taken into account the impact of the final Commission determined prices on both the UCLL (unbundled copper local loop) which is the access price AS WELL as the UBA (the bitstream price which is known as the copper tax). According to our information the impact of both prices could be that the copper price will rebalance to be around what it is today. The issue is the time lag in getting there and the impact on the industry.

See the next post for a breakdown on what this might mean.


Unanswered questions about Chorus

Posted by on December 9th, 2013

Update: You can put any of these questions to Amy Adams tomorrow live between 12.30 and 1.30pm on NBR’s live chat

As the Chorus debacle rolls on and the government’s role in its instability remains under scrutiny, the list of unanswered questions grows longer into how this situation has unfolded.

Questions to the Minister, to her ministry and to Chorus itself which if answered may provide illumination on how this train wreck of a situation  has come to be.

I put some of these questions to MBIE last week in the Commerce Select Committee. The answers were less than satisfactory and in some cases highly questionable. The current Minister Amy Adams, her predecessor and architect of the Chorus contract and the UFB Steven Joyce and even the Prime Minister continue to duck and dive accountability, using diversionary and reactive tactics as they try to come up with ways to keep the UFB on track and save Chorus’s bacon and their own hide.

1. Did MBIE (or it’s consultants or CFH) in 2011 calculate the likely copper price under a cost based pricing principle – if not why not?  Their own legislation created a 3 year moratorium (or regulatory holiday) on changes to copper prices.

  • What was that price or range of prices? Did they share that info with Chorus- why/why not? Did they also do calculations on the impact of averaging and the 2 year price freeze – did they share that info with Chorus – why/why not.
  • What advice went to Cabinet on this? Steven Joyce’s 23011 legislative changes to the Telco Act inserted the requirement for a move to cost-plus pricing of copper giving a three year window. What advice was provided on the impact of this change? Last Thursday MBIE officials told us in the select committee that there was some advice that copper would drop “a little bit”. How was that advice developed? And how much is “a little bit”?
  • What advice was provided to the Minister from Treasury re copper pricing/fibre. Did MBIE seek any advice from Treasury? Did the Minister? Did they offer any?

You would have thought that MBIE would have to have done the numbers on cost based copper – that  the UFB could not have been negotiated without them!  Otherwise why did the govt give a three year moratorium if it wasn’t to offset the impact of cost based copper – why wasn’t it a one year or four year moratorium – there must have been some calculations on which to base such a major decision!

2: Did any MBIE officials (including Bruce Parkes) participate in any discussions with Chorus or Mark Ratcliffe relating to the move to cost based pricing? Was the impact on Chorus discussed and what the moratorium and averaging would do in compensation?  Was there a negotiation where these things were agreed.  Was there anything in verbal discussions that could possibly have been construed by Ratcliffe  as the govt or officials saying that they would look after Chorus if the copper price ended up lower than they anticipated?

  • If Bruce Parkes participated in any of these discussions was he conflicted in the sense that he was previously a senior manager in Telecom and colleague of Ratcliffe?
  • Now that Bruce Parkes has shifted out of MBIE into DPMC, what role is he playing advising the government on these matters?

3: Re Amy Adams discussion document which is now the subject of a legal challenge by smaller Telco CallPlus  – where in that discussion document are all or any of the non legislative options that the PM says are there but nobody else can find? Isn’t it the case that the discussion document only proposes options all of which require legislation?

  • Was MBIE directed by the Minister to include only legislative options in the discussion document, if not why did they not include other options as requested by industry and users?
  • Why does the Discussion Document not follow Treasury regulatory principles?
  • Now that legislation to increase copper prices is off the table, will MBIE be recommending to the Minister that the Discussion Document be pulled? (They say no, but I want that in writing from them)
  • Does MBIE acknowledge that the section 157AA review is fundamentally flawed, and will it withdraw the discussion document and conduct a new section 157AA review once the UFB is in place;

4. Re passing on costs of cheaper copper to consumers. Has MBIE advised the Minister on price pass throughs from RSPs, especially in light of both Orcon and Call Plus saying that will pass price cuts on? Is MBIE and the Minister aware that CallPlus and Orcon have both said they will pass on the savings from a fall in copper prices to consumers. Why does she deny this?

  • Has MBIE had direct discussions with RSPs on this?

5. Re the Ernst & Young report?  Will the report released publicly contain the same information as the verbal report provided to the Minister? If not why not? How will the public be able to judge whether it is a rigorous analysis?

6. When Steven Joyce signed off the deal between Chorus and Crown Fibre Holdings for the $1 billion contract for UFB was he aware that no sub contract deals had been signed and therefore no prices agreed to between Chorus and the sub-contractors including Visionstream, Transfield and Downs to rollout UFB.

  • What material impact have those subcontract deals made to Chorus’s financial position and should Crown Fibre Holdings have ensured that information was locked in before the contract was signed?

7. What advice has MBIE provided to the Minister on how the potential renegotiation of the Chorus contract is fair to other ultra-fast broadband contractors who are fulfilling their contractual obligations without the need for corporate welfare?

  • Has MBIE provided the Minister with any advice on legal issues which may arise should the contract with Chorus be further varied to provide Chorus with a better deal than that with the three local fibre companies which are quietly getting on with the job of rolling out UFB.

These are just some of the questions which need answers. Feel free to offer more in comments


What Chorus and the Govt knew #2

Posted by on December 8th, 2013

John Key got caught out last week making misleading statements on the Chorus debacle.

A Goldman Sachs report from November 2011 reveals that at least one financial analyst predicted the wholesale price of copper would fall and provided an estimate for smaller Telcos of $8.47 per month which was significantly less than the final price of $10.92 a month announced by the Commerce Commission.

Today I am making public another analyst report by Macquarie Wealth prepared also in November 2011 which on page 7 clearly outline the risk to Chorus of an expected drop in earnings from UBA .

This is despite John Key and Amy Adams  claiming for weeks that no financial analysts had predicted the extent of the fall in the copper price. They were clearly wrong.

Last Monday Key was reported as saying “No one anticipated the magnitude of the fall.

On 6 November he told me in the House: ‘There were many, many analysts who looked at the situation as a result of the legislation that was brought in, and in fact, at the contract that Chorus signed, and not one analyst actually noted that there was a significant likelihood that there would be such a dramatic decrease in the copper price.’

On the 4 November his own Communications Minister Amy Adams said the commission’s rulings had come as a surprise to everyone involved. ‘No analysts or companies saw that coming, no one priced it in.’

The Goldman Sachs forecast implied that Goldman Sachs’ expectation was for a significant reduction in pricing – certainly lower than the Commerce Commissions determined price.

Chorus’s own first prospectus released in September 2011 (see bottom of  page 10) said there was a risk that the regulator will set prices that do not provide New Chorus with an adequate return on its assets.

For the Government to now claim ‘no-one knew it was going to be that low’ is simply wrong.

John Key’s disastrous handling of this issue has created false expectations for Chorus that he would inappropriately overrule the Commerce Commission, his public comments that there is a chance that Chorus will go broke are all responsible for the deep uncertainty around Chorus and the UFB rollout.

 

Raw data:

Explanation provided to me of impact of the Goldman Sachs analysis November 2011.

On page 4, they estimated it to be $8.47 for the smaller players (the last 2 figures in the LLU column). This is the price on top of the UCLL price, to make the service up to an equivalent EUBA (Enhanced unbundled bitstream) service.  The Commerce Commission ruling is $10.92.

For Chorus, the co-location charge would not apply in this form, and the DSLAM recovery would be on an assumption of 50%-80% capacity rather than 20%.

The backhaul charge of $9 covers backhaul around NZ, and the data charge of $7.80 covers international internet traffic.  Possibly a fraction of the backhaul could be attributed to EUBA to get the data to the handover point.

We think Chorus’s true cost of providing EUBA (on top of the basic UCLL cost) is about $5, so they have a 100%+ mark-up on the determined price.
In any event it would imply that Goldman Sachs’ expectation was for a significant reduction in pricing – certainly lower than the Commerce Commissions determined price.

Pretty hard for the Government to now claim “no-one knew it was going to be that low”

Another take on the Goldman Sachs report

He’s right – the estimate on page 4 does indeed put the UBA cost (broken down here into “co-location and other” and “DSLAM recovery”) at $8.47.

The  UBA is made up of the electronic components and in the Goldman Sachs report that’s broken down into “colo and other” and “DSLAM recovery” and they put it at $8.47 for an ISP that has only 20% market share. If you have more, as Chorus clearly does, then your costs will go down from there.

CallPlus for instance offers this service (UBA in effect) in the market today and told the Commission that it charges its retail ISP customers around the $8 mark for those lines.

If CallPlus can do it at that price and make money then Chorus, with its economies of scale, can do much more. I think xxxx  is being generous when he says Chorus costs are about $5/line. I suspect they’re a lot lower.


John Key’s backtrack and Steven Joyce’s chickens

Posted by on December 2nd, 2013

The government is furiously backtracking on pretty much all the positions it’s taken on the Chorus issue all year.

John Key on TVNZ Breakfast this morning said : “we were never going to use legislation because we knew right from the get go that people wouldn’t vote for that” [2 Dec 2013]

How curious!

On December 11 last year when asked in the House by me whether he would rule out legislation if the Commerce Commission came back with a final decision that his Government did not agree with, his answer was “definitely not!”

An answer both he and Amy Adams, his somewhat damaged looking Minister, has repeated on many occasions both inside and outside the House.

Certainly in February this year, changing the law to over rule the Commerce Commission’s decision on copper pricing was clearly one of the options  in her review of the Telecommunications Act.

I am not sure why you would start a review of the Telecommunications Act 2011  two years earlier than scheduled if you don’t intend to change the legislation in the first place! In fact legislative change was two out of the three (Update: all options require legislative change!) options outlined in her very own review document intended to bypass the Commerce Commission process.

Option 1: the Commerce Commission sets prices by reference to UFB contract

Option 2: the Government sets a new UBA price

Option 3: the Government sets a new UCLL price

Ultimately all three options have the same outcome; setting the copper price very close to the existing fibre price. The second two options involved direct government intervention through legislation. Claiming that they were “never going to use legislation” is a lie. What’s more likely is that they realised there was no support from their minority parties and they would have to create a Plan B. Update: John Key was spinning furiously at his post Cabinet media conference today that the government never planned to legislate and that ‘circumstances change’ . They sure do John,a bit quick for your liking no doubt!

Plan B is the Ernst & Young review of Chorus’s financial state. And no matter what its findings, questions must be asked about the Chorus management’s handling of the copper price issue. And of course the Minister’s handling of it. Amy Adams “Review” is pretty much cactus now.

And NOTE this is not the first time the government has had to reverse its position on a controversial aspect of its ultrafast broadband programme.

Remember when Steven Joyce was forced to back down on giving a 10 year regulatory holiday to the winning bidder of the ultrafast broadband programme? This was the first major back down by Steven Joyce. It looks as if his chickens may be coming home to roost.

The following is an extract from an NBR piece in May 2011

In a surprise move – seemingly instigated by the Maori Party – Communications Minister Steven Joyce has caved to critics, and pulled the 10-year “regulatory forbearance period” from the Telecommunications Amendment Bill, two days after it was reported back to parliament unchanged.

Better known as”10-year regulatory holiday”, the provision exempted Crown fibre contract winners from Commerce Commission scrutiny under the government’s $1.35 billion ultrafast broadband (UFB) project.

Critics claimed the forbearance period would lead to New Zealanders paying higher prices than other countries for broadband.

The Commerce Commission will now be able to regulate pricing below the level agreed in a 10-year Crown fibre company contract with the government. If it does, the government will wear the difference in the form of a Crown fibre company being given longer to pay-off its government co-investment) rather than private investors

One of the real stories in this whole mess is the role played by Joyce. It was his legislation and he oversaw the contract with Chorus.


How independent will Amy Adam’s Chorus probe be?

Posted by on November 13th, 2013

Today Labour said that an international expert should be brought in to conduct the independent assessment of Chorus’ financial position, to   counter ANY hint of undue influence or cronyism.

This Government has a history of using inquiries as whitewashes to provide cover for a course of action already determined, or to hide crucial information which may not reflect well on them.

We say the inquiry into Chorus’ position must be led by a fully independent international expert based on recommendations from regulators, the OECD and even the European Union. It’s my understanding that Amy Adams is not consulting on the terms of reference for this inquiry. This does NOT bode well.

The terms of reference for this assessment must include examination of the terms under which Chorus was created in the demerger of Telecom and any undertakings, formal or informal, which were given to Chorus at that time. They should be fully transparent and the assessment must be conducted with the utmost integrity in order to gain credibility and support.

The inquiry should determine whether there is evidence that the Government, MBIE or Crown Fibre Holdings misled the Chorus negotiators or gave them some indication or guarantee that the Government would hold copper prices on the original retail minus basis.

And given Chorus knew about the copper price drop as is evidenced in their first prospectus, what estimate did they include in the contract price?What estimates did MBIE do? Did Chorus know about these estimates? Did the Commerce Commission get asked?

Demerger debt should be investigated. As should Chorus’s income and expenditure estimates at the time of demerger.

What was the estimated average connection cost that Chorus factored into its UFB tender bid? And what has been the actual connection cost to date?

What indications or guarantees were given to shareholders by Chorus?

The Government’s contractual terms with Chorus to deliver ultrafast broadband have never been made public. Given that it’s taxpayers’ money at stake, it’s time they were.

Taxpayers need to know that due diligence was undertaken by MBIE and Crown Fibre Holdings on behalf of Steven Joyce and the rest of the government before the UFB contract was awarded to Chorus. Labour raised many issues and concerns at the time. Now’s the time for some sunlight.


Amy Adams goes into spin mode

Posted by on November 13th, 2013

Yesterday, after I provided hard evidence that both Chorus and the Government were well aware that the Commerce Commission had a well-signalled process for reviewing the copper broadband price after a three moratorium, despite both protesting they didn’t know, Amy Adams’ office went into spin mode.

After NBR published a piece based on my Red Alert post exposing the government and Chorus’s misinformation, her office emailed  NBR with supposed evidence that I had argued during the passage of the 2011 Telco Bill that copper services would go up. Yes I did. But Adams got the context wrong. My comments (and those of David Cunliffe and David Parker) related to the mandatory averaging of copper prices in Steven Joyce’s Bill. Many submitters argued (as we did) against this, saying it would disadvantage urban users.

I’ve attached the link to Hansard for the whole debate. If you can be bothered go and read the debate. It is interesting and parts of it will come back to haunt Steven Joyce and his government.

I’ve attached Labour’s full minority report on the legislation (from page 20) which includes a section titled mandatory averaging on copper pricing (page 25).

Labour’s comments about the impact of the averaging component of the legislation on copper prices had nothing to do with the Commerce Commission legal process contained in the bill to review price of copper broadband after a three year moratorium.

Probably best to get the facts right before you attack me Amy.

 


What Chorus and the Govt knew

Posted by on November 11th, 2013

The debacle surrounding the government’s flagship ultrafast broadband programme and the roll out by Chorus rumbles on. The government’s heavy-handed response to a well-signalled decision by the Commerce Commission to review and drop the price of copper broadband has resulted in a year of uncertainty for the telco industry and turmoil for the future of the fibre scheme.

Both the government and Chorus have insisted they had no idea that the Commerce Commission would decide that copper prices should fall following a review based on international benchmarking on a cost-plus basis, despite this being what the legislation written by former Minister Steven Joyce told them to do (Section 78 page 100).

In this post I have provided two pieces of evidence that both the government and Chorus knew very well back in 2011 what would happen with copper prices, even if they didn’t know what the end price determination would be. The disingenuity of both players around this is staggering and has led to speculation that there was some kind of backroom guarantee to Chorus from the government via the Ministry that “she’ll be right”.

Clearly “she’s not right”. And the only place the finger can be pointed is back to Steven Joyce, the original architect of the legislation which demerged Telecom to create Chorus, which was then handed the UFB contract on a plate. It was Joyce’s legislation and his contract. And as should be clear below, both the government and Chorus knew what the deal was with copper pricing.

The spin

On Tuesday 5 November, the day the Commerce Commission announced its final decision on copper broadband prices, Amy Adams was reported in the New Zealand Herald as saying:

Communications Minister Amy Adams said the commission’s rulings had come as a surprise to everyone involved.

No analysts or companies saw that coming, no one priced it in. When we entered into the UFB contracts this was pored over by all the players and people with a very high level of understanding if anyone was going to foresee it, it would have come up then and it certainly didn’t and frankly no one’s on record as predicting a drop on this scale.

Certainly there was some small drop expected and everyone was very aware of that.”

On 6 November I asked John Key in parliament:

Clare Curran: Why is he, his former Minister Steven Joyce, and his current Minister for Communications and Information Technology, Amy Adams, so surprised at the Commerce Commission’s decision to drop the copper price given that Steven Joyce’s 2011 telecommunications company legislation clearly stated that there would be a 3-year moratorium before the move to a cost-plus model for wholesale copper pricing, which the Commerce Commission is now implementing, and that Chorus’ first prospectus clearly stated this as a risk, as did the regulatory impact statement for the Government’s only 2011 law?

Rt Hon JOHN KEY: Firstly, I think it is very fair to say that no one back in 2011 actually predicted that there would be such a dramatic fall in copper prices. In fact, my understanding is that the member believed that copper prices would go up, not actually go down. So that fall has certainly caught the market by surprise. There were many, many analysts who looked at the situation as a result of the legislation that was brought in, and, in fact, at the contract that Chorus signed, and not one analyst actually noted that there was a significant likelihood that there would be such a dramatic decrease in the copper price.

 

The reality

1. Chorus’ first prospectus released on 13 September 2011 contained several paragraphs under a section on page 204  headed Regulatory and Government risks. It said:

Future regulated copper and fibre prices

The prices New Chorus can charge for most of its copper-based network products and services will be regulated for the foreseeable future, and the prices for most of its fibre-based products and services are subject to a contractual agreement with CFH until 31 December 2019, and are likely to be regulated thereafter.

The framework for setting the prices of New Chorus’ regulated copper-based products and services is described in section 3.6.6. There is a risk that the regulator will set prices that do not provide New Chorus with an adequate return on its assets.

In addition, if the prices that the regulator sets for copper-based products and services are significantly below the prices for comparable fibre-based services, fibre uptake may be negatively affected (see section 9.2.1).

In the event of disagreements with the regulator over pricing, considerable resources and management attention may be diverted to dealing with disputes with the regulator.

2. A regulatory impact statement prepared for the 2011 Telco legislation drafted by Steven Joyce’s Ministry titled: Regulatory issues resulting if Telecom becomes a partner in the Ultrafast Broadband initiative stated the following:

48. The following set of criteria was applied to determine which areas require specific transitional measures, or can be implemented immediately on separation day:

a) allowing access seekers to recover sunk investments in UCLL;

b) ensuring Service Tel is economically viable and competitive during the transitional period;

c) ensuring that Chorus is economically viable during the transitional period and has time to adjust to cost-based USA;

d) giving the Commission time to implement the cost-based USA pricing principles; and

e) providing the industry with stability during a time of considerable structural change.

49. A constraint in terms of analysis is that the industry has not yet been consulted on some of the detail of the proposed transitional measures. MED seeks views on this matter at the Select Committee stage.

50. The three key aspects of the transitional measures are:

a) the currently determined price and non-price terms for the USA service will be frozen, and the USA competition test put into abeyance, for 3 years from separation day (although the Commission will be able to conduct clarifications under section 58 of the Act);

b) ServiceTel will be restricted from purchasing Chorus’s unbundled copper local loop network service until three years from separation day, and the requirement to average the UCLL service geographically will not take effect until 3 years from separation day; and

c) the determined price for naked UBA will be averaged on separation day.

Freezing UBA terms

51. The key transitional provision proposal is to freeze the UBA regulated service for a period of 3 years from separation day, with the intention of allowing a transition to cost-based UBA retail services where they are more economically viable. A 3 year period for the transitional provisions was chosen on a qualitative basis based on the estimated replacement period for exchange equipment (DSLAMs) deployed by access seekers. A more detailed analysis of likely depreciation values was not carried out

52. Consultation noted that “freezing UBA prices for an interim period” could be included as a transitional measure, but the length of time of the price freeze was not the subject of consultation.

Delay in averaging UCLL price

53. The delay in averaging UCLL will disadvantage ServiceTel which, for the period of 3 years, will be required to buy a stand-alone voice input service priced at the UCLL price, including the higher price in rural areas. However, MED considers that this delay is essential to protect access seekers who have invested in UCLL and their customers during the transitional period. ServiceTel will be protected itself by the averaging of naked UBA on separation day.

The following is an extract from the transcript at  a Commerce Commission conference to consult with the industry on the draft copper price in June 2013. The Commerce Commissioner is referring to the extent of the Government’s and Chorus’ fore knowledge of the price review.

COMMISSIONER DUIGNAN: Yes, just that the one source for the indication of the purpose of the three year freeze is the regulatory impact statement which was released, I haven’t actually got the date here, but it’s the one described relating to the cabinet paper described, or with the title “Regulatory Issues Resulting If Telecom Becomes A Partner In The Ultrafast Broadband Initiative”.
Para 48 of that paper says, “The following set of criterias was applied to determine which areas required specific transitional measures, or can be implemented immediately on separation date”.
Has a list: (a) is allowing access seekers to recover sunk investments in UCLL; (b) is ensuring service teller’s economically viable and competitive during the transitional period; (c) is ensuring that Chorus is economically viable during the transition period and has time to adjust to cost based UBA, and other documents are more explicit about the adjustment.
So, that’s the source, para 48 of that document.
I note the reference “time to adjust to cost-based UBA” implies that some adverse economic effect was clearly expected as a result of this adjustment.

Numerous industry participants have commented on the knowledge of both Chorus and the government that this review of the copper prices was coming and that there would be a material impact. To say otherwise is just nonsense. Fortunately, I think this message has got through. The big question now is what will the government do next and how will it dig itself out of the hole Steven Joyce, the great “Mr Fixit” has created.

 


RMA Reforms: The Chainsaw Massacre Part II

Posted by on December 9th, 2012

A curious thing happened last week. The government introduced to Parliament the first of two pieces of legislation to “reform” the Resource Management Act. That isn’t itself curious, what is, is that the Minister responsible, Amy Adams has not even put out a media release about the Bill.

Hard to fathom why, but if it is because she is ashamed, then she has every right to be. While there is innocuous and even possibly useful changes in the Bill, it gives a number of signals of the government’s on-going desire to centralise power away from communities, reduce public input and tip the scales away from sustainable development. You can read more about Labour’s concerns here. and here.

Nothing exemplifies National’s approach better than the proposal to change the rules around what Councils can do to protect trees. This might not sound like a huge issue, but it has a lot of history, and National is buying a fight that is as wrong as it is silly.

Essentially what the Bill proposes is that a tree protection rule in a council plan can only apply to a particular tree that is specifically identified in the plan, or a grove of trees that are located on the same or adjacent allotments. The effect of this is that Councils will not be able to protect species or types of trees. The inverse of course is that if a specific tree is not protected then it could be felled. Whatever a bureaucratic nightmare will ensue.

The history here is that the government tried to make similar changes in their 2009 RMA reforms. The good people of Waitakere took a case to the Environment Court that created a definition of “groups of trees” that saw blanket protection possible for bush clad areas. Greg Presland has a good description of the situation and a link to the Environment Court judgement, here.

The law change proposed this last week is directly aimed at overturning the Court decision. But more than that it is a further attempt (alongside the Local Government Act and other aspects of this Bill) to take away from communities the right to make decisions about how they wish their communities to look and feel. And for no good reason at all.

I am sure this will re-ignite the debate about the protection of trees, especially in West Auckland. From Labour’s point of view we will strongly oppose this provision. Trees are a vital part of our environment, in rural and urban settings. Moreover we have to call time on a government that is systematically reducing the power of communities to decide their own future.


Asking the questions

Posted by on June 18th, 2012

You might remember a couple of months ago there was a flurry of public scrutiny on the National Government’s stonewalling on what it knew about the Chinese company Huawei’s involvement in the roll-out of ultra-fast broadband.

The Australian Govt had blocked Huawei from bidding for contracts to supply services to its massive ultrafast broadband scheme claiming issues of national security. In contrast, the NZ Govt turned a blind eye to Huawei’s involvement here. And refused to comment. Much.

Then a few weeks’ ago, Economic Development Minister Steven Joyce announced a whole of govt deal to save money on mobile phone costs across multiple departments. It included the involvement of 2 Degrees, NZ’s reputable third mobile phone provider, but which has equipment and services provided by Huawei.

Meanwhile, in the US Senate last week, questions continued to be raised about Huawei. Please explain letters have been written to Huawei’s CEO and Chair.

I think it’s valid to continue to ask the questions of the New Zealand Govt. Here’s what I asked Amy Adams (the current ICT Minister) in parliament last week:

Clare Curran: Is she aware of concerns raised by members of the United States House of Representatives Intelligence Committee this week regarding the possible national security threat posed by the potential expansion of Huawei into the US telecommunications infrastructure; if so, has she received any reports about the national security implications of the all-of-Government mobile phone procurement contract recently signed by Steven Joyce, which includes services provided by Huawei?

Hon AMY ADAMS: As that member is well aware, we do not comment on matters of national security, but I can assure her that we take network security very seriously.

Clare Curran: I seek leave to table an article published on 13 June in Computerworld , titled “US lawmakers quiz ZTE, Huawei over spying concerns”.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Clare Curran: I seek leave to table a media release by representatives from the US intelligence committee about concerns about the investigation of Huawei and ZTE.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Clare Curran: I seek leave to table the correspondence between the US House of Representatives select committee on intelligence, and the chairman and senior vice-president of Huawei Technologies.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

  • Document, by leave, laid on the Table of the House.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. You would have heard the Minister’s answer. She said: “we do not comment on issues of national security”. However, the very point that the member is asking about is that given Steven Joyce has signed a document that says it is not a matter of national security, why, then, can the Minister not answer the question? Mr Joyce and National have assured us that Huawei’s involvement is not a matter of national security. Therefore, why can the Minister not answer the question she has been asked?

(more…)


Amy Adams scorecard… part 2

Posted by on May 21st, 2012

It’s been almost six months since the election and Amy Adams being appointed Communications and IT Minister following on from Steven Joyce.

Yesterday I posted on Adams’ activities since being made Minister. Opening ultrafast broadband (UFB) cabinets around the country has been a major activity. It hasn’t yet translated into people connecting to broadband. This is likely to become a serious risk for the government next year when the rubber meets the road on just how many people are connected to fibre.

Enthusiastic PR launches are one thing. But when it comes to addressing the serious competition issues which will impact on the uptake of the UFB by consumers, arguably one of the biggest issues in her portfolio, Adams has taken curiously contradictory views.

Back in February, at a Commerce Commission-organised conference , an issues paper on demand for faster broadband, entitled “Content and Willingness to Pay.” said bundled pay TV services had been a key factor in speeding fast broadband uptake overseas.

Much of the conference focussed on the role played by  Sky TV which has made its MySky (and pending TVNZ joint venture) igloo boxes fibre-capable. But, as as has been reported, with its satellite business bringing in fat profits, there’s little motivation for it to provide content-over-fiber – at a price that would get households jumping to upgrade from copper. In the meantime, it was argued by many, Sky’s deals with internet service providers were a barrier to allowing other content providers fair access to the New Zealand consumer.

At that time Adams brushed aside concerns and  poured cold water on the prospect of regulation mimicking her predecessor Steven Joyce and saying:

While I will be closely monitoring issues that might limit uptake or the effective implementation of faster broadband, I expect industry to show leadership in resolving such issues.

Where that does not occur, I’m more than prepared to step in, but I’m also aware that regulation can be a blunt tool. It is my view that in most cases, industry-driven solutions are better for industry and customers, and are more enduring. One such example is content.

… I will signal now that I’m cautious about reaching for regulation as a solution at this stage when it is still too early, in my view, to anticipate how the competitive content market will look in a UFB environment.

There have also been calls for a single regulator for broadcasting and telecommunications to deal with issues of this kind, but I’m equally sceptical about the benefits of shaking up the regulatory structure to deal with an issue that has yet to form into a clear shape and which the markets may yet solve. The Prime Minister has used the expression of it being a solution in search of a problem and I share that view.

Last week the Commerce Commission gave the green light for Sky and TVNZ to progress the Igloo joint venture,  which has been described as Sky Light. But it also interestingly announced a surprise investigation into Sky TV’s content partnerships with internet service providers.

Cuirously Adams had this to say on Twitter:

ComCom inquiring into Sky’s control of content market. Always my view that was within their jurisdiction so good to see will be looked at.

I wasn’t the only one to scratch my head over this statement. Not only did it contradict her earlier statements which were that it was no business of the regulator to look into the content market. But she delivered the view on Twitter with no other accompanying statement. Changed her tune?

Tom Pullar Strecker writes in the DomPost about this today. It could be that the government has finally woken up to the fact it has been on the wrong side of this issue. It could be that Adams doesn’t understand the implications of what she said. Seems a bit confused at best.

It’s more likely she’s under instructions from Steven Joyce to change her tune because he sees the writing on the wall for regulatory change.


Amy Adams scorecard… part 1

Posted by on May 20th, 2012

It’s been almost six months since the election and Amy Adams being appointed Communications and IT Minister following on from Steven Joyce.

One of the first things she did in her portfolio was to refuse to release much of the Briefing to the Incoming Minister from her department, MED. The industry, the public and the opposition were refused access to the whole of her proposed actions and workplan for the first six months of this year. I took a complaint to the Ombudsman which, because of their enormous workload, has taken sometime to process.

I am hopeful we’ll soon get to see some of that workplan. In the meantime, here’s an appraisal.

Since 10 February 2012,  Amy Adams has issued 15 releases announcing the ultrafast broadband is coming to this region or that region; there will be exciting new broadband services in rural NZ, etc etc…

However, when I asked the Ministry before the Commerce Select Committee recently  just how many schools had been actually connected to ultrafast broadband, the answer was” around 34″. Amy Adams doesn’t seem to have been up to much except travelling around the country announcing that ultrafast broadband is coming.

When you look a little closer, it’s going to be quite a while before most places see anything change. Her announcements are merely PR exercises to make it appear that Steven Joyce’s great broadband scheme is on track. The big test will be how many people actually connect because they can a) afford it and b) it’s worth their while to make the change due to interesting new content and services.

Many schools I speak to are deeply sceptical because of the cost involved in making the transition which is largely being foisted onto their operating budgets and the resourcing of teachers and students through ICT training and access to digital devices.

In the last six months, Adams has made just three other announcements. One around spectrum, one on Mediaworks and one on the 111 service. It’s a bit underwhelming. So far, she appears to be the Minister for opening UFB cabinets.


Huawei. Australia takes action. New Zealand says no issue here. Why?

Posted by on March 30th, 2012

This morning it has been revealed in the Australia/NZ tech publication Comms Day that:

The Australian Government has begun secret talks with carriers on proposals to enhance the security of Australia’s telecom infrastructure which would, in part, mandate a penalty-backed requirement on operators to secure their networks against external threats and require risk assessments of key infrastructure upgrades, modifications and procurement decisions.

CommsDay also understands that the government is highly concerned by the offshore dissemination of Australian citizens’ private data and calling information for use by customer service centres in locations such as India, Sri Lanka and the Philippines. This could lead to a requirement for all data to be housed onshore. The recent discussions likely explain the timing of the revelation last Saturday that Huawei Technologies would be barred from supplying the National Broadband Network.

In recent weeks, representatives of major Australian operators were called to a confidential roundtable meeting with government officials from the Departments of Attorney-General and Broadband, Communications and Digital Economy to discuss the proposed measures. These include a notification process of infrastructure purchase decisions and upgrade or modifications to networks which may have national security implications. Infrastructure builds would potentially be subject to scrutiny or what is termed “risk assessment” under the arrangements with a key focus on details regarding suppliers. Existing infrastructure may also be subject to the reporting process.

The Prime Minister, the ICT Minister Amy Adams and her predecessor Steven Joyce are directly accountable for the actions and inaction of New Zealand to respond to warnings and advice from our security agencies.

The security and integrity of our telecommunications and new broadband infrastructure is a matter of utmost national importance. Cyber security is the new frontier and all countries take it extremely seriously. Despite the lip service paid to it by our government, it appears they have ignored advice and this may have the potential to undermine and compromise our infrastructure.

There are questions to be answered. John Key and Amy Adams must answer whether they received advice comparable to the advice given to Australia, when they received that advice and what actions they have taken since. Steven Joyce is also accountable in his former role as ICT Minister.

I am not party to the advice. But as the Opposition spokesperson for Communications and IT I am raising what I think are valid questions. Why has our approach to this issue been so markedly different to Australia’s? Surely alarm bells must be ringing in the government. What are they doing about it?

Yesterday I would have asked this question in the House to the Acting Prime Minister had Winston Peters not chosen to withdraw his question given John Key was not present.

Does he agree with The Australian newspaper’s Foreign editor Greg Sheridan who said today that if David Irvine, the head of ASIO, Australia’s intelligence service, and who is a former Australian ambassador to China,  had authorised a judgement to be cautious on Huawei, then it was certainly sound. And if so, did he receive the same advice and why hasn’t he acted on it?

It’s worth reading Greg Sheridan’s piece.

Paul Maley’s piece in The Australian is also worth reading . He revealed yesterday that:

BRITAIN’S intelligence services were forced to erect a costly, resource-intensive auditing structure to ensure Huawei did not steal secrets after the Chinese telco was allowed to take part in a British broadband project.

Given that New Zealand defence analyst Paul Buchanan has made some very strong statements in recent days about the importance of these issues the Prime Minister needs to answer this:

When did he become aware of what defence analyst Paul Buchanan has described as the “collective view of the security community”  in the US, Britain and Australia that Huawei is almost certainly a front for Chinese intelligence services, and  what actions has he taken as a result of hearing this view?

Today, Australian PM Julia Gillard is reported as sticking up for Australia’s national interest. I wonder what ours is doing?

“I’ve stood up for Australia’s interest. I know the opposition is standing up for the interests of a Chinese company,” she said while in Sydney for an announcement on the NBN.

“We’ve made the decision in the national interest. Any suggestions this is in breach of our trade obligations is simply untrue.

“We’ve got a strong, robust relationship with China. We are deeply engaged at every level, we have a strong economic relationship, we have increasing ties at every level — diplomatic ties, multilateral ties, and you will continue to see our relationship with China strengthen and grow.”


Fingers in her ears

Posted by on March 29th, 2012

Is Amy Adams just doing what she’s told or does she have her fingers stuck firmly in her ears?

Perhaps she just genuinely doesn’t want to know the reasons for Australia refusing to allow Huawei to tender for its massive broadband supply contract because that would give her a massive headache and require her to do something about it.

The new ICT Minister  had this to say today:

The Minister responsible for overseeing the roll-out of ultra-fast broadband in New Zealand says it would not be appropriate for her to ask Australian authorities why they banned a Chinese company from working on an Australian project due to security fears, despite that company having won contracts to install broadband infrastructure here.

Read the rest here and watch how she says the same thing over and over again.


Unusual praise – if talent counted Amy Adams would be in Cabinet

Posted by on December 29th, 2010

Not often that I praise National MPs but it  will be election year soon and colleagues mightn’t appreciate it then.

Amy Adams was on the Fairfax Media top 25 in their best and worst  lawmakers list, at 24.  Well behind Grant Robertson, at 5,  but still great place for a  first term MP.

Still wasn’t going to post because these lists happen regularly and this one is really just pop analysis with a tendency to repeat comments from tiddly PM,  but then one of the Nat cheerleaders on their pet Kiwiblog said :-

By the way, who is that obscure, almost anonymous politician, named Amy Adams? Never seen her.

Well Amy Adams isn’t a drama queen like several of her colleagues but is one of the brightest, almost cetainly the hardest working Nat backbench MP.  She prepares well,  has good attention to detail and showed a real heart with a speech when she came back from the Canterbury earthquake.

And I think if the National Cabinet was talent based she would be in it by now.

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Whose going into Cabinet? II

Posted by on February 28th, 2010

Seems to be firming up on Nathan Guy.

Some discussion of Amy Adams getting the out of Cabinet role. Key getting worried about performance of most of the women ministers.