Telecom's Cabinetisation Plans

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Reply # 96632 23-Nov-2007 20:50

JonC: Looks to me that a few ISPs were caught with their trousers down here. As far as I'm concerned, as long as ISPs have fair access to the final run of copper (between house and these new-fangled cabinets), then they can go ahead and install their own cabinets and all is fair (is that what they mean by sub-local-loop unbundling???). Let the ISPs invest in their own network and compete with Telecom if they wish - that would be great for broadband in NZ.

That is sub-loop unbundling, and as I learned since this thread started it wasn't included in the Commerce Commission's ULL determination. Whose fault that is - the Commissions or the ISPs - I don't know, because it was included in the Minister's unbundling/separation announcement last year.

JonC:
However, I think the reality of the situation is that NZ is a small company and I really don't think anyone's going to want to make such a huge investment when there's a big gorilla sitting in the corner that will offer serious competition. It comes down to the fact that it's only profitable to make such a huge investment if you're the only player in town and can monolopolise it.

...and you are publicly owned, as Telecom was when most of the investment was made

.

(While Telecom is spending a lot of fibre to the cabinet, it's the last bit between the cabinet and the home that's the really expensive bit.)

Lazoo

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Wannabe Geek

Reply # 96637 23-Nov-2007 21:31

KiwiOverseas66:
Lazoo:

I won't get into a discussion about why libertarianism is a fundamentally flawed and ultimately stupid idea. However I will say this. The government has the money, and is more accountable than any private company. Excluding the government just because it's the government makes about as much sense as bashing telecom just because it is telecom

can't quite see the link myself between the writings of John Stuart Mills, Locke, or any other libertarian philosopher and the NZ Telecommunications industry - but an interesting theory! I presume what you are saying is that the government can't be excluded from the industry entirely because it has a role to play as the voters representative - and ultimately leaving the industry to purely private sector machinations will be bad for people and society in general.

I bring it up because the old buzzword, "government intervention" was brought up.

I agree with you to a point - in that government has a role to play in terms of setting strategy, devising and enforcing laws, etc. These are tools needed to ensure the sector runs efficiently, fairly. Ultimately all companies have the same strategy - to make as much money as possible (if they don't then their a charity, govt department, NGO, whatever - but not a business) - and in terms of social development that makes for a very singular strategy. So yes - government involvement is essential.

Should they run the sector? Not sure about that one. The last time an NZ govt ran telecommunications - it took 4-6 months to get a phone line installed, you had to book to make a phone call overseas at christmas - and all that was done with 25,000 people on the payroll (am I showing my age or what).

Is the government more accountable than a private company, and does it have the money to invest! Ummm - sorry, don't believe it for a second.

Of course the government has the money; last budget it had a $10b surplus. And the opposition will be on the ruling party like a ton of bricks if something goes wrong.

Aside from the fact that consumers vote with their wallets everyday, and shareholders vote every year - joe average gets to vote for their politicians once every three years - and even then I wouldn't say political accountability is high on the priority list for politicians (not just ours - around the world). Secondly - even if the govt put all its surplus into telecommunications it would soon run out - not that it looks like its going to let go of its money any time soon. This is one of the problems for the government - it doesn't work in the industry and really has no idea on a daily/ yearly basis just exactly what it cots to be a modern day telco. Even if it did - I don't believe the government has the money to invest in large scale infrastructure of any kind (rail, road, power) - let alone telecommunications. Private sector need government - but the government needs private sector as well.

Voting with your wallet isn't nearly as effective when all your money goes to telecom in the first place. It really wouldn't cost that much either; I heard a ballpark figure somewhere of $1.5b. Not to mention that companies like Kordia have their own surplus anyway, and local councils might well want to pitch in.

I'm fully with you when you say there needs to be a balance; and there could very well be one. The Public sector is large, has access to large amounts of money and is more accountable than a private company, but it can be inefficient. The private sector is more efficient, however is out to make money so monopolies are a problem. Surely a set up where the public sector owns the fibre,which leases it out equally to the various private companies who run services over it would get the best of both worlds.

cokemaster

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Reply # 96638 23-Nov-2007 21:40

Lazoo: Voting with your wallet isn't nearly as effective when all your money goes to telecom in the first place.

You know, there are these things called alternatives. Like TCL cable, satellite, wireless etc. All doesn't touch Telecoms network. But again, its easier just to troll.

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Lazoo

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Wannabe Geek

Reply # 96641 23-Nov-2007 21:44

If they were truly viable options we wouldn't be having this discussion in the first place

cokemaster

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Reply # 96642 23-Nov-2007 21:52

But they are alternatives nevertheless.

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Lazoo

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Reply # 96645 23-Nov-2007 22:01

In the same way an alternative to Air New Zealand is buying your own private aircraft. I fear the typical "she'll be right" attitude that got us into this mess is exactly the same attitude that'll prevent us from ever getting any better

JonC

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Ultimate Geek

Reply # 96647 23-Nov-2007 22:02

I'm glad I live in Wellington where I have a selection of large multi-national telcos that I can give my money to.

cokemaster

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Reply # 96648 23-Nov-2007 22:04

Lazoo: In the same way an alternative to Air New Zealand is buying your own private aircraft. I fear the typical "she'll be right" attitude that got us into this mess is exactly the same attitude that'll prevent us from ever getting any better

Alternatives to Air New Zealand:
Qantas
Pacific Blue (new player in the game)

There are alternatives. There is choice.

Now, get back on topic.

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nzbnw

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Reply # 96649 23-Nov-2007 22:31

TinyTim:
...and you are publicly owned, as Telecom was when most of the investment was made .

Yes and the Government of the day sold it for what they beleived was a fair price...

To me LLU is all about property rights. The Government should put up or shut up. It is simply unfair to set the rules after the asset sale. The New Zealand Government should not be able to have it both ways.

nzbnw

JonC

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Ultimate Geek

Reply # 96650 23-Nov-2007 22:40

LLU is about the government trying to induce some competition into the market. There are anti-monopoly laws in most countries and they are there to try to prevent a dominant player from exploiting its customers. In this case Telecom have a monopoly on wired telecom connections into people's homes.

nzbnw, what is your opinion on anti-monopoly laws? Do you think monopolies should be free to do what they want? Or are you arguing that Telecom is not a monopoly?

nzbnw

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Reply # 96652 23-Nov-2007 22:52

My opinion is that Telecom was sold by the Government of the day, and now the Government wants to shift the goal post. Secondly there is the issue of property rights, and the right to exclude. I never said I don't believe in competition, just how we go about enforcing or encouraging that is up for debate. However LLU is here, and I can live with that, but sub loop unbundling is a new can of worms to say the least.

nzbnw

JonC

425 posts

Ultimate Geek

Reply # 96653 23-Nov-2007 23:04

I see your point. Question is, how do you break Telecom's monopoly without infringing their property rights and not discouraging them from investing further in their network? Tough problem.

KiwiOverseas66

173 posts

Master Geek

Reply # 96669 24-Nov-2007 01:30

cokemaster:

I've got the answer for why we always compare the OECD rating for broadband only:

Lies, damned lies, and statistics*

* Does not apply if you've got a vested interest in misinformation and Telecomunications.

amen brother! ;-)

TinyTim:

There is some theory that says if we raise our broadband ranking it will help raise our GDP ranking.

Sorry Tim - no disrespect to your comments but if it were that easy we could forget about dairy products, wine and meat exports, tourism, overseas students, lord of the rings, advertising on geekzone ;-p, petrol prices, and all the other numerous activities that generate revenue. At the end of the day we as a country generate a higher GDP by generating revenue, and broadband is a tool to assist that - not substitute it (and I'm pretty sure we don't intend exporting broadband....but if they do then SEND SOME OVER HERE...please)!

They're just surveys. (Which normally only consider its member countries so we shouldn't be worse than 30th.)
It's the MED/Minister of Telecommunications that write the policy. There are loads of stuff on their website discussing all this stuff.

Yeah I know - I was just taking a dig at our follow the heard mentality - as if our worth as a country is dictated by an OECD stat. Besides which - OECD stats in this area only measure copper and fibre to the net - it doesn't measure wireless, 3G, etc - so is not a measure of a countries connectivity nor the amount of commerce done on line. As cokemaster said - its the latest international pissing contest.

JonC:

However,
I think the reality of the situation is that NZ is a small company and
I really don't think anyone's going to want to make such a huge
investment when there's a big gorilla sitting in the corner that will
offer serious competition. It comes down to the fact that it's only
profitable to make such a huge investment if you're the only player in
town and can monolopolise it.

...and you are publicly owned, as Telecom was when most of the investment was made .

(While Telecom is spending a lot of fibre to the cabinet, it's the last bit between the cabinet and the home that's the really expensive bit.)

Actually Telecom is one of the smallest telcos in the world. Telstra is 5 times bigger, Voda is the biggest of its kind in the world, don't even ask about Singtel, BT, AT&T. IMHO the reason major telco's don't invest in NZ is that its small, mature market with a low per capita GDP ;-) and their are bigger markets to aim for...like our transtasman cousins for a start. Goodness - even here in India the half dozen mobile providers sign up 8 million new customers a month....8 MILLION! If you were a telco with a spare billion or two to invest where would you go?

As for the investment made by the govt when it owned Telecom - as saidpreviously - when it was state run it took 4-6 months to get a phone line connected, you had to book to make a call at Xmas, and it employed 25,000 people! Public money built the local loop - but the backhaul, southern cross, juniper core, CDMA/ EVDO network, etc - bears no resemblance to the company that got sold.

Lazoo:

I bring it up because the old buzzword, "government intervention" was brought up. Of course the government has the money; last budget it had a $10b surplus. And the opposition will be on the ruling party like a ton of bricks if something goes wrong.

Ahh...got ya, but of course it can't spend the entire surplus on just one sector , and just one piece of infrastructure (if it decides to
spend it at all) - it has to spread it around on things like - oh....health, education, roading (HA). The education vote last year
alone was 3 billion.

It really wouldn't cost that much either; I heard a ballpark figure somewhere of $1.5b. Not to mention that
companies like Kordia have their own surplus anyway, and local councils might well want to pitch in.

yeah - that was additional captial cost spread over five years - doesn't include operating costs, support, labour, etc - in short it
pays for the kit but none of the other stuff needed to run it, repair it, or replace it.

I'm fully with you when you say there needs to be a balance; and there could very well be one. ThePublic sector is large, has access to large amounts of money and is more accountable than a private company, but it can be inefficient. The
private sector is more efficient, however is out to make money so monopolies are a problem. Surely a set up where the public sector owns the fibre,which leases it out equally to the various private companies who run services over it would get the best of both worlds.

Having been a public sector budget manager, and a private sector commercial manager - I can't agree with you Lazoo. I'm not saying the government is dishonest or anything - but voters only get to approve policy once every three years. In between that time its up to the various depts as to how they spend the money and voters have no say in that. Even if spending is audited - its to ensure it was spent properly against policy outputs - not to question whether it should have been spent at all. One check over three years is not much in the way of accountability.

To me the ideal is for Govt to set the goals, and private sector provide the funding and run it. Govt strategy will ensure there is
more to it than just profit, but private sector operation means it will be commercial viable and wont need a committe to get done. I for one would like to see more cooperation between Telecom and the government so that they both spend less money on lawyers and spend more money on infrastructure - but I can't see it happening because I don't think the government thinks it is possible to produce public benefits from a process that is run for profit.

Wob

310 posts

Ultimate Geek

NBN Co

Reply # 96679 24-Nov-2007 09:49

KiwiOverseas66:
As for the investment made by the govt when it owned Telecom - as saidpreviously - when it was state run it took 4-6 months to get a phone line connected, you had to book to make a call at Xmas, and it employed 25,000 people! Public money built the local loop - but the backhaul, southern cross, juniper core, CDMA/ EVDO network, etc - bears no resemblance to the company that got sold.

I agree, Telecom have changed physically, but it is the change in customer focus that is most significant. I was part of the "Putting People First" programme that Telecom put all it's emloyees through not long after privatisation (as did the likes of British Airways), and the emphasis on customer service has been something that has stayed with me and served me well in all my roles since.

Imagine my surprise when I returned to NZ in 2002 to find that Telecom's main business driver was to keep it's shareholders happy - what happened to the customers? It seems like all the commercial decisions Telecom have made over the past 10 years (certainly the Terressa Gatting era) have been orientated to increse the returns for the shareholders, and as for the customers: "It's not like they can go anywhere else!!"

Engineering services for example. By contracting out everything Telecom can set the prospective service providers against each other and nail them down so hard that the only way the successful providers can make any money is to slaughter the level of customer service they offer. Why contract out? Cut engineering costs, keep the shareholders happy, stuff the customers.
"But the other telcos contract out their engineering services" I hear you say, and it is true. TCL and Vodafone certianly do (lucky for me too, that's what I do), but they both retain a core of skilled engineers and technicians. Do Telecom still have anyone technical working for them?
IMHO Telecom have destroyed the telecommunications industry in NZ, certainly from the "coal face" perspective.

Whoa!! is that the topic off on the horizon!

Perhaps if Telecom had treated it's so called partners in the LLU process with a bit more customer focus we wouldn't have this fuss over the cabnetisation plan. Paul Brislen makes some very good points about Telecom's lack of consultation. Are Telecom really serious about LLU and working with the industry for it's betterment? I have my doubts.

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antigrav

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Master Geek
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Reply # 96762 25-Nov-2007 00:12

I am sorry if this has been said already but I'm still reading the 1st page.

I am sickened by the level of Telecom donkey kissing I am again seeing.

The argument that I have read already too many times (and I'm only half way down the first page) is that 'Telecom had this planned for half a decade, they shouldn't be suprised'.

That is a rediclious statment, the fact that it was said so long ago is why it was ignored, Telecom has always promised the earth and never ever come through so many times on so many promises, indeed at the time they never said it would take this long.
(You could argue that Telecom always does the most despicable thing possible at any moment and hence should have seen it coming but I think they honestly believed Telecom had changed)

More recently Telecom said 'If you seperate us we will not invest in any new network'.

So claiming that they should have sat on their hands is wrong and moreso wrong since Telecom were claiming to have 'got it' and they are going to play in a constructive mutually beneficial way now, well in no way can making a mockery of the determination and the investments ISP have out in can this be claimed to be 'good faith'.

In the end I am glad this is happening, the LLU was going to be far too slow with only a handful of exchanges unbundled a year, it was utterly crazy so since they can do this far more complex job at 16 times the rate when it is in their interest not to stall.
So since further intervention to increase the number of exchanges opened up was needed yet clearly not going to happen any time soon at least now it's a different demand for regulation.

My only hope is that this new CEO and the structure under seperation will encourage the different parts of Telecom to sell their services to any customer not just the parent, but that sounds like pretty optomistic thinking when Telecom kept this very quiet and is launching it in the new exchanges.

Of course too many here defend Telecoms right to F over the country, the public, their customers (Xtra's satisfaction rating), the competition/wholesale customers, government in the name of the all mighty (short term) dollar.

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