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Posts Tagged ‘telecom’

Is this true?

Posted by Clare Curran 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.

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Filed under: #OpenLabourNZ, broadband, comms & IT
15 Comments

Steven Joyce has lied

Posted by Clare Curran on July 27th, 2011

Steven Joyce has lied.

Will it get brushed under the carpet this time and ignored?

I put in a set of written questions to Steven Joyce in late 2009 about his, and his govt’s intentions, re the structural separation of Telecom regarding the ultrafast broadband scheme. In October 2009 he responded.

The questions and answers are here.

This answer is particularly interesting:

15840 (2009). Clare Curran to the Minister for Communications and Information Technology (23 Oct 2009): What correspondence, if any, has he recieved or sent, listed by correspondent and date, about possible structural separation of Telecom

Hon Steven Joyce (Minister for Communications and Information Technology) replied: I have not received or sent any correspondence about possible structural separation of Telecom.

Yet two months earlier, in August 2009, Joyce received a letter from Telecom CEO Paul Reynolds referring to previous meetings with the Minister between himself and Telecom regarding the UFB, referring to Telecom’s potential involvement in the project, referring to constructive discussions and his “understanding that the government has a preference for Telecom to voluntarily offer to structurally separate”

The letter is here

Dr Reynolds sought a further discussion with Steven Joyce on this issue which he described as “extremely significant for us”.

So in August 2009, well before the tender was announced for the UFB, Telecom was raising structural separation with the government, which it understood was the government’s preference.

Meanwhile, Steven Joyce maintained there were no such discussions. He maintained that pretence for two years, right throughout the legislative changes which will preside over the structural separation. He got his spokesperson yesterday to say that Paul Reynolds was incorrect.

Joyce only released the letter this week after consistent pressure from the Dompost. Good on them.

But for how long will he get away with lying? Why are there not more questions being asked?

What else did he cover up? What other discussions were there with telecom about structural separation and how it would work?

The UFB tender process is a fraud and should be investigated.

Lying is not okay by government ministers.

Or is it?

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Filed under: #OpenLabourNZ, broadband
39 Comments

Market confirms Telecom dicked Joyce

Posted by Trevor Mallard on May 26th, 2011

Market cap of Telecom up by 9% or over $400m since Joyce handed them not only the vast majority of the UFB deal but an underwrite which meant that they could not lose on the arrangement.

That $400m is what shareholders think is the NPV of the deal to them. That is their profit discounted back to present day values.

Nice if you can get it.

Joyce = Muldoon Mark II.

CEOs exit package just went up by $30m I reckon.

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Filed under: broadband
7 Comments

Joyce’s backdown all about certainty: to Telecom?

Posted by Clare Curran on May 18th, 2011

Steven Joyce has made his first really big stuff up.

He’s been forced to ditch the central element of his controversial anti-competitive Telco Bill. A 10 year regulatory holiday for the winner bidder of his $1.5 billion broadband scheme. 

He’s had to replace it with what appears to be an even worse stitched together last minute compromise that has been forced on him by the Maori Party.

The compromise allows the Commerce Commission to regulate pricing on fibre, but if the Commission believes prices should go lower at some point, then Steven Joyce says it’s the Government that should wear the risk, not the consumer. And he’s the one who gets to make the decision on whether to regulate.

Why would he ever agree to regulate if it’s going to cost the Crown? And what is the nature of the compensation being promised to the contractor rolling out broadband? He had no answer for this when I asked him in question time today.

This effectively insulates the contractor from any risk and sets a dangerous precedent in terms of the Commerce Commission’s ability to fairly regulate. And if you don’t believe it go and look at NBR’s story this afternoon about Telecom’s shares going up. Certainty for them. Not the Crown. Which represents you the taxpayers. So Telecom’s shareholders get certainty, but the public still doesn’t. Wonder if the Maori Party gets that.

And I wonder what the Maori Party are getting in return for rescuing National’s troubled broadband bill? Interesting that they exercised their muscle. I don’t think they realise just how anti-competitive and flawed the Bill is and how many more problems there are with it.

I’ll blog more about this later.

I also wonder how Craig Foss, the chair of the Finance and Expenditure Select Committee feels about this deal. Pretty pissed off I reckon.

This policy is too important to be rushed through at the last minute via backroom political deals. It should have been dealt with through the select committee process with considered input from the industry, so everyone could examine it and create an enduring policy that works for the industry and consumers.

Instead Joyce looks stupid. His broadband scheme’s flaws are exposed and there’s more coming.

 Labour will examine closely the detail of this last minute policy change, but we remain opposed to the Bill.

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Filed under: broadband, comms & IT
8 Comments

In the interests of transparency

Posted by Clare Curran on May 10th, 2011

Tomorrow the government’s contentious and anti- competitive broadband bill goes through its last stage in the select committee.

It then gets referred back to the House and will be given priority (by the Govt) to go through its second and final readings before becoming law on 30 June (at the latest).

A decision on who gets the bulk of the $1.35 billion contract to lay out the fibre will no doubt follow quickly once the Bill goes back to the House.

Steven Joyce needs to pass the Bill through all its stages quickly in order to ensure that Telecom can structurally separate in time time for the election so all the contracts can be signed and sewn up. The Bill is all about Telecom, even though the contract outcome has not yet been announced.

It’s been a secretive and difficult process. And somewhat surreal.

From the start, it’s been severely hampered by the rushed and secretive drafting process and a complete disregard for potential compromises. The Government has used the commercial tendering process as an excuse to avoid proper consultation.

Labour gave the government every chance for responsible dialogue on this legislation. Lack of transparency and honesty have been hallmarks.

Labour has done its best to provide the government with opportunities to reach a compromise solution. Broadband should be a bi-partisan policy. It’s core infrastructure. Steven Joyce has never wanted it to be so. He’s also shown complete disregard for the industry. And for the public interest.

Worse, it shows a blindness toward the imapct on consumers. The people who will likely not be able to afford his so-called ultrafast broadband. They may even find that as a result of his scheme that the broadband connections they already have go up in price.

Instead, broadband should be more accessible, cheaper and faster. That’s what this policy should be delivering. But it won’t.

Despite our repeated  attempts to make contact and to provide for extended dialogue to reach some compromise solutions, the government has rejected a bi-partisan dialogue and position.

Labour consistently attempted to ask for more time to discuss the issues in order to achieve this outcome.

The government and Joyce have been intent all the way along to pursue their deadline no matter what.

We have released this correspondence and the chronology of contact in order to demonstrate that we have acted in the country’s interests ahead of petty politics. Make of it what you will.

Tomorrow we release our position on this Bill.

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Filed under: #OpenLabourNZ, broadband, comms & IT
19 Comments

If it smells like a dog…

Posted by Clare Curran on April 23rd, 2011

Pretty disappointed with Vernon Small’s analysis in today’s DomPost of the Mediaworks debacle, where he lets Steven Joyce off the hook and by implication the rest of his government for any dodgy goings on in giving Mediaworks a $43m loan to defer radio licences.

Small neglects to mention that it wasn’t just Joyce involved. What about Key, Brownlee and Coleman’s involvement? That’s quite a lot of Ministers.

It’s my understanding that Joyce may not have been the first point of call from Mediaworks. There certainly were others involved in pushing for that decision against departmental advice. That doesn’t make him any less culpable for his government’s decisions. But the issue isn’t just about Joyce.

It’s about how a government can be so lacking in transparency about how such a deal was entered into.

And whether it should have been entered into at all.

And what it represented.

Instead Small says this:

You might even wonder if the pressure applied to local subsidiaries by the financial requirements of their overseas owners – in this case MediaWorks’ owners Ironbridge – should be ignored for fear it will be used to “game” extra concessions from the Government.

But describing the arrangement in the strong terms the Opposition has adopted goes too far in an effort to make a sow’s ear out of a silk purse.

Suggestions that Mr Joyce, the communications and information technology minister, had some sort of conflict of interest in helping out the Brent Impey-led company (that Mr Joyce established) survives only till you know that Mr Joyce and Mr Impey are . . . errr . . . not close.

I dunno what other terms one could use to describe it. Dodgy and cronyism seem pretty tame to me. And making Steven Joyce into some kind of maligned being is a bit rich. Look at what’s going on in two of his other portfolios.

There’s currently an Auditor General inquiry  into the link between former National Party Minister Pansy Wong’s husband Sammy and the deals being done by Kiwirail and the Chinese rail company that Wong was associated with. It appears that the Govt has backed off sending the major Auckland electric trains contract to China North Rail (decision in the last few days), but there are other major flatdeck wagon deals likely to go their way.

This week we discover that Joyce’s current chief Ministerial adviser on broadband was named as the chief adviser to Telecom during a major anti-competitive deal in the early 2000s. This has resulted in Telecom receiving a record $12 million fine and the adviser, Bruce Parkes, being named in the court judgement. Did Joyce know about this case when Bruce Parkes was employed? Did he care? It appears not.

But it’s interesting that Joyce’s broadband scheme is being accused of the same anti-competitiveness right now.

Re Mediaworks, the essence of Small’s analysis seems to hinge on the fact that Brett Impey from Mediaworks and Joyce are no longer close. That may well be. I reckon I know why. It’s not really the point. Because Joyce’s relationship with Mediaworks goes back a long way.

And TV3 and the mediaworks radio stations wield considerable influence on our news screens and airwaves. And it is election year.

Another interesting thing. Did Broadcasting Minister Jonathan Coleman attend a Mediaworks board meeting a few months ago? Was the future of TVNZ7 discussed? What else was discussed? Would have loved to have been a fly on the wall.

Oh, and then a week ago former Jim Bolger press sec Richard Griffin was made chair of the Radio NZ board. Keep them quiet and compliant will no doubt be his brief.

TVNZ has already been instructed it is no longer a public broadcaster.

So much for independent, vibrant, critical analysis and public broadcasting.

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Filed under: #OpenLabourNZ, broadband, broadcasting, comms & IT, media
21 Comments

Why Key needs to get offshore advice on broadband

Posted by Trevor Mallard on April 21st, 2011

I’ve known Bruce Parkes for years. Straightshooter. Like him. Always knew where he came from. Believed Telecom should use it’s superior market position to slow competitors entry.

But with the High Court judgement quoted below showing how he illegally tilted the playing field in Telecom’s favour he can not be the principal policy advisor on a plan which abolishes regulatory oversight of Telecom’s broadband. It gives them a blank cheque to overcharge much of the country for a decade.

Even before the court decision the sector was revolting. This revelation means that there needs to be a quick expert inquiry into both the decision to favour Telecom and the process that resulted in a very unusual decision.

Because of the vested interests involved the expert(s) will have to come from offshore.

The judgement said interalia:-

The senior Telecom executive named by High Court judge Rodney Hansen in his judgment penalising the telco for historic breaches to Commerce Act, is now a senior civil servant with oversight of the government’s broadband investments.

Bruce Parkes is currently Deputy Secretary at the Ministry of Economic Development for the Energy and Communications Branch. Among his responsibilities, according to his profile on the MED website, are ICT policy and the Ultra Fast Broadband plan. “In conjunction with Crown Fibre Holdings, this group will continue to implement work on the ultra-fast broadband policy, with the immediate aim of settling initial negotiations with potential providers,” reads the profile.
(more…)

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Filed under: commerce, comms & IT, digital, economy, infrastructure, internet, national, policy, rural
10 Comments

Halt broadband decisions Joyce and Key

Posted by Clare Curran on April 20th, 2011

The integrity of the government’s broadband schemes in urban and rural NZ are under question. The chief adviser to Steven Joyce has been named in a court decision yesterday as implicated in advising Telecom on anti-competitive practices which have resulted in a $12 million fine.

I understand this the biggest fine ever to come from a Commerce Commission decision.

This official, Bruce Parkes is the man who has designed, and will oversee, the government’s broadband schemes. Both schemes have come heavily under fire for their potential to be anti-competitive and to not result in good outcomes for consumers.

Labour does not mention officials by name generally. However, this case is different.

The urban scheme contains a 10 year regulatory holiday from Commerce Commission oversight on pricing and other key matters which would drive competition on our newest fibre network.

There have been serious questions raised about the rural scheme, which the government conveniently announced today, handing it to… wait for it Telecom and Vodafone. Creating another monopoly for rural New Zealand and very likely resulting in higher prices for rural New Zealand down the track and less ability for competition to cocur.

Steven Joyce bats away all criticisms as irrelevant. This is however too big for him.

Read here was Computerworld has said. Read here what TVNZ has reported.

Labour has today said the government must call a halt to any decisions on broadband rollout following revelations that the man responsible for designing it is at the centre of anti-competitive findings against Telecom which saw the company fined $12 million in the High Court yesterday.

A cloud now hangs over the government’s broadband scheme. There are serious questions about its integrity with regards to compeitition and regulation.

An independent review must urgently be conducted of both the process and system of the rural broadband initiative (RBI) and the Ultrafast Broadband scheme (UFB).

Labour calls on the Prime Minister John Key and the Minister responsible Steven Joyce to stop broadband decisions right now.

The review should be undertaken by an international expert as the New Zealand industry is too involved and interconnected on these issues.

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Filed under: broadband, comms & IT
17 Comments

The Great Broadband Sell-off

Posted by David Cunliffe on March 18th, 2011

Yesterday’s FEC hearings on the Telco Amendment Bill were remarkable.

By the end of the day it was starkly obvious that the Bill hands a gold-plated license-to-kill to Telecom under the guise of ‘structural separation’.  No-one, not even Govt members, could deny that.

Don’t take my word for it: check out the Commerce Commission submission, or (bipartisan) Internet New Zealand’s, or Vector’s, or TelstraClear’s – all here.

The Bill seeks to lock in a “regulatory holiday” by preventing the Commerce Commission from exercising its current oversight for 10 YEARS.  NO other country in the world has done that, and it would be illegal in Europe. It may be in breach of NZ’s WTO obligations here.

Despite that Telecom had the gall to ask for longer! And to weaken the purpose clause of the Telco Act to boot! Have they lost their PR mind? Do they want to channel the ghost of abuses past?

Fair trading “equivalence of inputs” rules between the network owner (Telecom) and wholesale competitors would be watered down so much as to be unenforceable.  Arms-length trading rules currently in Telecom’s Operational Separation Undertakings become “optional”.

And so on.  It’s so patently obvious it is not even worth repeating all the examples.

No wonder Steven Joyce wanted the hearings over in indecent haste.

The result of this great leap backwards to the 1990’s will be much higher prices and less choice for consumers for a decade.  YOU will pay for this sleazy deal.

So WHY has the National Government done this?

Roger Douglas summed it up – it is a “legislative subsidy”: National is ‘selling the law”.

In plain speaking, National in the last election over-promised ultra-fast broadband to 75% of Kiwis for $1.5 billion.  But rather than being a clean subsidy there were massive strings attached, requiring a commercial return through the hopelessly conflicted Crown Fibre Holdings.    The numbers just did not add up.

Hence no rollout for 2½ years, and Steven Joyce is worried about his reputation.

But instead of fronting the problem honestly and getting the whole industry to be part of the solution while building a vibrant competitive market, National has done a side-deal with the incumbent telco that leaves everyone else worse off and the market beggared beyond belief.

That will set back innovation, chill investment and deliver less broadband at higher prices than necessary for a decade to come.

As if Kiwis aren’t facing enough price rises without paying too much for their broadband as well.

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Filed under: Cost of Living, Investment, Uncategorized, broadband, business, comms & IT, digital, economic, economy, finance, infrastructure, internet
12 Comments

Telco Hearings Set for Stoush

Posted by David Cunliffe on March 15th, 2011

Clare Curran did a great post on Steven Joyce’s abuse of the parliamentary process with the Telecommuniations Amendment Bill. 

The FEC is meeting Wednesday and potentially Thursday this week to try to ram through all the submissions in one week!  

Paul Brislen, CEO of the Telecommunications Users Assocaiation, was rigthly outraged.

Clare and I put out this release today.  We believe this Bill will take the telecommunications industry back to the bad old days of the 1990s, when market dominance was the norm and the consumer got screwed.

The government’s proposed 10-year regulatory holiday is a complete crock.  The Commerce Commission would be prevented from doing its job of ensuring fair access for competitors, while ensuring investment works in the long term interests of end users. 

Those gains were hard won in the last decade.  The industry does not need a leap backwards.

The design of the proposed structural separation of Telecom is uncertain and implies real risks.

The weak, vague and ill-defined form of “equivalence” in the Bill provides little reassurance to retail competitors and consumers.

Crown Fibre holdings is deeply conflicted as both market player and front line regulator.

Ironically, this could all chill investment in a market NZ desperately needs as it seeks to become a hig-value, knowledge economy.

That doesn’t mean Telecom should not be allowed to structurally separate.  Done properly, that could be a win-win.

But it does mean the legislative processs should be careful and thorough, as billions of dollars of taxpayers funds and private equity are at stake. 

Why is the government so determined to ram the Bill through and pto try to stifle legitimate parliamentary scrutiny?

Could it be that their $1.5 billion with a commercial rate of return is insufficient to stimulate the broadband rollout the government promised in its slogans – and that the only way to square the circle is for the poor, dumb consumer to pay too much for a decade to come?

Could it be that after dithering for two and a half years, Steven Joyce is just plain desperate to make something – anything happen, even at the cost of serious damage to the industry’s future?

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Filed under: Uncategorized, broadband, business, comms & IT, economic, economy, finance, infrastructure
6 Comments

Who will actually benefit from broadband Steven Joyce?

Posted by Clare Curran on November 30th, 2010

Ultrafast broadband is supposed to benefit New Zealanders. Yes?

In his biggest 2008  pre-election pledge, John Key promised that for $1,5 billion, 75% of NZers would get ultrafast broadband in their workplaces, schools and homes. Steven Joyce was tasked with delivering it.

But is it going to happen? And will Kiwis be able to afford it?

Consider this:

  • More than two years since the election there are no decisions made and no fibre in the ground.
  • The govt was forced to admit last year it could not deliver broadband to homes, rather to streets. We don’t know how much it will cost consumers to connect, though  industry analysts have estimated up to $2000 per household
  • The discussions and negotiations on the $1.5 billion ( ultrafast broadband scheme have been conducted behind closed doors with the veil of commercial sensitivity used to prevent public scrutiny and discussion by the industry.
  • Steven Joyce shifted the goalposts on the UFB tender mid year with little public discussion.
  • The shortlisted bidders for the UFB excluded a major bidder (Vodafone/Axia) with little explanation.
  • The role of Telecom has dogged the broadband debate from day one. The government has allowed a parallel situation to develop where Telecom is using its agreement to structurally separate as a negotiating tool (some would say a weapon).
  • The government has said that the only way Telecom can participate in the UFB process is to structurally separate into legally separate companies.
  • Late last week the government introduced the Telecommunications Amendment Bill to the House. It will enshrine in law a 10 year holiday from price regulation for whoever wins the urban broadband contract.
  • The Commerce Commission will be prevented from playing a watchdog role on broadband fibre prices
  • The government says it will introduce an amendment to the new Bill at the select committee to accommodate required changes to Telecom structurally separating (if it decides to do so)
  • If Telecom decides to structurally separate, the government could give it a major tax break.
  • The Commerce Commission has expressed concern that Telecom’s structural separation proposal will ultimately benefit investors rather than the end-users of its products
  • A major bid in for rural broadband, covering 25% of NZ could result in a commercial monopoly by Vodafone and Telecom. Despite claiming it encourages competition, this could create a price fixing regime for rural NZ which would no doubt push into urban NZ.
  • There are serious perceptions of conflict of interest on the board of Crown Fibre Holdings; the company established to roll out ultrafast broadband. The government and CFH are ignoring these claims and stonewalling concerns.

There are many other issues which I could list here.

All in all, does it sound to you as if the people of New Zealand and the affordability of broadband is the core consideration here? I don’t think so.

The average cost  for the ordinary Kiwi of a fixed telephone line, broadband and mobile connection all amount to more than $150 month. That’s a lot. For many people, it’s much more. Not taking into account their Sky connection. NZers pay significantly more than the average consumer in the OECD.

Will ultrafast broadband be more expensive on top of these costs? If so, will people pay more? Should they? Can they afford more?

Is it important that they can afford it? Isn’t this why the government has committed so much public money towards this new network?

Isn’t this what the real debate should be about?

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Filed under: broadband, comms & IT
72 Comments

What is Steven Joyce doing with broadband?

Posted by Clare Curran on August 27th, 2010

Does he think we’re all stupid?

First he changed the goalposts on the urban fibre tender without much explanation and no public discussion.

Now he’s changed the goalposts on rural fibre, requiring national, instead of region by region rural broadband proposals.

Despite the brave face put on by the Regional Fibre Group, which represents a collection of electricity lines companies this is a virtual death warrant to regional competition and suggests that the ground is being laid for Telecom to win both the urban and rural broadband  schemes.

The only national company with that sort of capacity is Telecom.

Since I put out a media release on this yesterday afternoon I’ve had a lot of feedback. All (except one) from people who are frightened of the implications for existing regional fibre projects.

I’ve been asked does the Minister not see that the Government will harm a number of the providers who have, through their own investments, already begun delivering fibre optic based services to their regional communities?

Operators like Northpower in Whangarei, Unison in Hawkes Bay, Network Tasman in Nelson, Marlborough Tasman and Ashburton Electricity.

How will a ‘national’ approach achieve anything other than a slowing down of services in areas that had already taken the initiative.

I think there is a general acceptance acrosss the industry that the process being run by Steven Joyce shows an extraordinary lack of transparency, confused governance and uncertainty around both the rural and urban broadband schemes and about how taxpayers money will be spent.

But people wont speak out publicly becasue if they do they are afraid they’ll be penalised.

Labour wouldn’t run the process like this.

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Filed under: broadband, comms & IT
12 Comments

Rural broadband decision today could signal govt approach on Telecom

Posted by Clare Curran on August 26th, 2010

I understand that the Government is about to make an announcement on rural broadband.

The decision will indicate its approach generally. And perhaps how it intends to deal with Telecom.

Background from MED website  here

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Filed under: broadband, comms & IT
6 Comments

Has the Government chilled the whole telecommunications market?

Posted by Clare Curran on August 19th, 2010

Just been sent this. From Computerworld. It shows the effect of delay and uncertainty, confusion and secrecy. It’s affecting our economy now.

FX Networks has posted a reduced profit for the March 31 2010 year. This, says managing director Murray Jurgeleit, is largely due to a pause in buying by dark fibre customers because of lack of clarity in government plans for ultra fast broadband, as well as the rural broadband initiative.

Steven Joyce needs to show some of his cards and let there be a public discussion and debate about what happens to Telecom rather than letting its negotiating tactics dominate the decision around a vital piece of  national infrastructure.

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Filed under: broadband, economy
6 Comments

What a load of rubbish

Posted by Clare Curran on August 9th, 2010

The DomPost today reported that Steven Joyce has said he is unable to release a Cabinet paper that sanctioned the Government’s $1.35 billion ultrafast broadband investment initiative as some of the information it contains may be misconstrued to indicate bias on the part of the Government.

What a load of rubbish. The law states quite clearly  here and here the grounds on which a Cabinet paper can be with-held. Being misconstrued by journalists, the public (or the Opposition) isn’t one of them.

The DomPost article said:

It is understood the Cabinet paper includes some information provided by Telecom about the viability of the flagship government initiative.

The Dominion Post requested the paper in September. The Office of the Ombudsmen is investigating whether to order its release.

Labour is also seeking this information. We say it’s a lame excuse from Joyce and ask what he’s trying to with-hold? Who does he think will misconstrue it? And shouldn’t a Cabinet paper be robust enough to withstand public scrutiny?

More evidence of the lack of transparency from this government, particularly around the $1.5 billion broadband scheme.  It’s tax payers’ money Steven.

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Filed under: #OpenLabourNZ, broadband
14 Comments

Broadband too important to muck around with

Posted by Clare Curran on August 3rd, 2010

Let’s see how much of this you agree with this.

New Zealand needs high quality ultrafast broadband. In principle, the goal of delivering this to New Zealand businesses, schools, hospitals and homes is the right goal.

Delivering high quality UFB is a core infrastructure priority for governments throughout the world and is in line with the US, Australia, Europe and many Asian countries. New Zealand is not leading, we are following many other countries in delievring on this goal.  It is likely to take (at least) 5-10 years to deliver.

Delivering high quality UFB is a complex undertaking to get good outcomes for our country. It requires transition for existing players. Including Telecom. But transition is about the whole industry not just Telecom and it’s a great pity that what happens with the UFB project and how it will be delivered, seems to be all about Telecom.

There is a view that Telecom is currently the most vulnerable telco in the world. I’m not sure about that, but it is important that Telecom can survive the next 3-5 years and make the transition. But it shouldn’t be able to demand the terms.

The next ten years are unknown territory for telecommunciations in New Zealand. The industry is poised to change forever and to become about fibre rather than copper.

Transition will likely require some changes to existing legislation, in particular the Telecommunications Act 2006.

Crown Fibre Holdings, the body charged with making a decision on the UFB contract, is an infrastructure company. It has no ability to determine a vision, no policies and no strategic element.

Telecom’s statement yesterday wanting to ‘integrate the UFB (overseen by CFH and a ‘co-investment’) with the Rural Broadband Initiative (a grant scheme being driven by the MED) and funded by the new look Telecommunications Service Obligations (overseen by the Commerce Commission) shows what a confusing regulatory alphabet soup the Government’s cornerstone broadband policy is becoming.

We need clear orchestration of all the elements in this process. It’s complex and it needs flexibility and transparency. It’s taxpayer’s money. That’s why it’s time to change the governance process.

And that’s why today I called for Telecommunications Commissioner Ross Patterson to be given an independent oversight role in the government’s ultrafast broadband (UFB) scheme.

Communications Minister Steven Joyce should now consider changing the governance process for the UFB decision and to involve the independent Commerce Commission ensure public confidence in the process. At the very least Steven Joyce should remove himself from decisions about Telecom’s requests for variations to its operational separation agreement with the government.

Dr Patterson has sufficient credibility and experience within the industry to bring independent oversight and objectivity into the process and to be mindful of New Zealand’s long term interests in developing our future in broadband.

Otherwise there is likely to be a cloud over the broadband decision. Whatever the outcome, how can the public have confidence that Telecom is not somehow holding our country to ransom with its bid to secure as much value for its shareholders as possible in securing the broadband contract?

“New Zealand’s interests are paramount, not the Telecom shareholders and the government should recognise this.

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Filed under: #OpenLabourNZ, broadband, economy, infrastructure
20 Comments

Ernie and me

Posted by Clare Curran on July 28th, 2010

Yesterday Labour expressed major concerns about the Government’s ultrafast broadband project; that two measures underway could derail the goal of affordable and accessible broadband services for New Zealanders.

First, that an operational separation variation request by Telecom NZ could mean to the end of operational separation.

This was a major achievement for New Zealand and has resulted in real competition in the telco sector.

Second, the revelation that the Local Fibre Companies, the private public partnerships set up to manage the $1.5 billion broadband project, will enjoy a 10 year regulatory holiday locking out the Commerce Commission from reviewing prices for fibre available to New Zealand consumers.

Labour has serious concerns that together, the two changes would in essence entrench unscrupulous monopolistic behaviour and keep the Commerce Commission out of the fibre industry for ten years.

Internet NZ has expressed similar concerns. TUANZ, which represents many of the big players in the broadband and telco sector has also expressed some concerns.

I made a mistake by intimating that TUANZ had similar concerns to InternetNZ’s fears that the operational separation variation request by Telecom NZ may amount to the end of operational separation.

I apologise to Ernie Newman, TUANZ CEO, for that. But, I would be very surprised if TUANZ did not share Labour’s and InternetNZ’s concerns. I look forward to talking further with Ernie about it. Will happily supply the muffins.

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Cat amongst pigeons

Posted by Clare Curran on July 11th, 2010

John Key’s suggestion on Q&A today that the Chinese might come and bid for the Government’s big $1.5 billion ultrafast broadband contract is a bit out of left field.

Leaving aside the fact that there’s a tender process already underway, the government has recently widened the scope of the tender, pushed out the likely dates for a decision to be made and now, it looks as if John Key has decided to enter the fray and get the Chinese interested in bidding.

That would certainly put the cat amongst the pigeons in terms of the role Telecom would be likely to play.

Maybe John Key is looking for a circuit breaker! Or maybe, just as he did a few weeks ago, he’s decided to interfere in his Communications Minister’s portfolio area by unilaterally changing the terms of a big announcement. In mid-June John Key virtually announced a later start (by at least two years) to switching on digital delivery of television which will result in a major set-back for the broadcasting and telco industries and for NZ communities.

I wonder what Steven Joyce thinks today about the propsect of a big Chinese company entering the bidding process (at a very late stage) on UFB.

Here’s what John Key said in his interview with Guyon Espiner in Shanghai last Friday night (played today on TVNZ):

GUYON         Are there specific projects that have been looked at, I mean I’ve seen commentators talk about projects like Transmission Gully in Wellington.  I mean is that a realistic thing that the Chinese might come and do something like that?

JOHN  They might do, and at the end of the day from New Zealand’s perspective I mean we’re looking for value for money.  So let’s take ultrafast broadband, they’ve got a lot of expertise in that area, Huawei is a big player, they’re bigger round the world, they’ve got a huge partnership in the United Kingdom for instance.  No one’s saying they would be the final selected partner in New Zealand but they’ve certainly got the capacity if they wanted to, to come in and look at doing something like that.  So you know from New Zealand’s point of view the bottom line is, can we get investment, can we get ultimately value for money?

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New Zealand, not vested interests paramount on broadband

Posted by Clare Curran on July 5th, 2010

We don’t appear to be getting much closer to a workable solution on how to roll out ultrafast broadband to the nation.

Every person I speak to, every event I go to, is consumed with doubts, questions and concerns.

The biggest issue is what role Telecom, or a split of part of Telecom, will play in the rollout.

Because there’s a closed tender process underway there is no ability for a public discussion led by our government to be had on this issue.

Telecom is trying to work out how to structurally separate and qualify to get a large piece of the action on the UFB rollout. They don’t want to go down this track without some certainty as to how it will radically change the company.

The government wont give them certainty because there is a tender process underway.

The conundrum, as was pointed out succinctly last week on an InternetNZ blog post is this:

…there is a chicken-and-egg problem on the separation front. Telecom as a vertically integrated firm can’t participate directly in the UFB. But Telecom probably can’t make the economics of separation work unless it has some kind of assurance that its separated network business will be a lead player in the UFB.

Here’s some other views being put out there:

New Zealand needs fibre and we need it soon. We cannot wait much longer to have a comprehensive plan. It’s been almost two years and the government is in a quandary.

That’s not good for NZ, nor for the industry.

It’s not in New Zealand’s interests for Telecom to be run into the ground and excluded from the biggest network build for the next generation (or more).

But it’s not in NZ’s interests for Telecom to be in a position to bully the government or the country into it participating in a way that’s about its own vested interests. New Zealand’s interests are paramount.

There’s all kinds of speculation about what discussions have been occurring with Telecom over the last 19 months.

Tom Puller-Strecker in today’s DomPost is attempting to get to the bottom of this. As usual Joyce is keeping all his cards close to his chest. Does he have something to hide?

There are concerns that the level of private investment available for UFB is not enough to make it work. The government has shifted the goalposts on its tender to allow local fibre companies to provide Layer 2 services as well as Layer 1 on the fibre network.

Layer 1 is the fibre cable in the ground or strung over poles, while Layer 2 lets the supplier add the electronics at both ends of the fibre and means retail providers can use it immediately and supply products to end users.

Essentially this is changing the terms of the tender. The industry seems to welcome it as a sensible move. But there’s a number of issues that lie behind the recasting of the tender which raise more questions.

The small amount of public discussion that is occurring indicates that the debate is shifting to a question of whether $1.5 billion is going to be enough to deliver on the government’s objectives (taking into account the 1:1 private investment). How will reshaping the tender affect this? It doesn’t appear clear to the bidders.

Questions about the role of the Commerce Commission and their ability or otherwise to regulate these networks in the public interest.

And if, as Joyce has said, the government hasn’t ruled out taking an equity stake in Chorus, what would that company look like? And could we end up with an unregulated monopoly that is largely privately owned? Who’s interests will that serve?

Internet NZ’s two concerns are very valid.

They warn against:

  • making policy deals or regulatory deals behind closed doors
  • changes to the current tender process that undermine the efforts people have gone to in making bids

What’s in the way is the closed tender process and the inability for frank public discussion to occur. What does the government think? What does Steven Joyce want?

Whatever happens, we must make this about New Zealand’s interests. And we must make sure that there is an open access network and that real competition can occur.

Telecom needs to state its intentions to the nation. But the government needs to be more upfront. This is public money. And it’s the nation’s network.

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Naming the elephants #1

Posted by Clare Curran on June 29th, 2010

Right now it feels as though there’s a few elephants in the room that need to be named.

Today’s is Telecom and the relationship it has to the Govt’s $1.5 million  $1.5 billion ultrafast broadband rollout.

There’s currently a tender process underway for the big contract with Govt to do the rollout. That process has a nominal deadline of 30 June for the initial partner selection process and contracts to be completed by Crown Fibre Holdings, the Govt entity set up to manage the UFB process.

Despite the Minister saying he was confident that the timetable remained on track, it’s hard to see how. Because concurrently we have the extraordinary situation of Telecom deciding whether to separate its business in order to qualify as a UFB  bidder. It’s obvious to everyone that they desperately want to and need to be in the running. And that the Govt expects them to be in.

Meanwhile the Govt is pretending that it’s oblivious to Telecom’s very public twisting and turning. Until last Thursday, when Steven Joyce came before the Commerce Select Committee and acknowledged that the Government has not ruled out taking an equity stake in Telecom’s network arm, Chorus.

Joyce has this uncanny ability to make extraordinary statements sound ho hum. But it wasn’t ho hum. For the first time he said the Govt would be prepared to invest in Chorus in new fibre infrastructure. The DomPost reported on this exchange last Friday. Update: There have been several stories today on the liklihood of delays.

I said after the select committee that I believed the tendering process was now in question and could have been undermined. I’m saying that again.

This is public money. Crown Fibre Holdings are trying to manage a tendering process under very difficult circumstances. But the public has no idea what’s going on.

The process is approaching a farce. It’s being called a farce privately by commentators and other bidders.

It’s clear that Telecom’s involvement in UFB is nto a matter of  if, but how. And it’s time to call it what it is. Steven Joyce can’t get away with pretending that the Govt has no interest in what Telecom is doing re structural separation. Perhaps it’s time to call a halt to the bidding process until Telecom works out what it’s going to do.

Getting ultrafast broadband right is in the national interest. Let’s not have a situation where there’s a major cloud over the decision on who got the contract to lay it out.

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