What if the network is a government monopoly - Telecom to sell Chorus to Crown Fibre Holdings?

Forums › New Zealand Broadband › What if the network is a government monopoly - Telecom to sell Chorus to Crown Fibre Holdings?

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#333794 23-May-2010 22:31

Telekom Malaysia is a private company but yet the line is controlled by government, and the fact also Telekom Malaysia is the sole service provider copper line network, with minority like Maxis for cable (in West Malaysia).

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Ragnor

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#333830 24-May-2010 00:14

I'm no socialist/communist but...

We've seen how a vertically integrated (network, wholesale and retail) privately run regulated monopoly works with Telecom (underinvestment for decades, profits were maximised and went overseas).

We've seen how public/private joint ventures work in the electricity generation/supply/retail industry (artifical scarcity >> high prices).

If a national open access fibre network is a public good that is a natural monopoly that has economic benefits for everyone, why not fund it out of general taxation (like roads).

raytaylor

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#333833 24-May-2010 00:29

That isnt part of the user pays belief that we have in this country.

I personally do not want my taxes being spent on supplying someone else with broadband when they can pay for it themselves.
If we look at the roading model, we pay for our cars to drive on the roads. Unfortunatly with broadband you need to pay two organisations - the local loop company, and an ISP who provide the various services. And those isp's all charge different rates for the services you want.

Im not a big believer in capitalist ways, but im also not a communist.

My comment before about a government owned telecommunications network that was not for profit doesnt mean it should be free - By using sales trends and monkeys with excel, they should be able to predict that there will be X lines leased next year, and therefore we charge Y amount per line so they make an approximate 10% extra above costs for reinvestment. If they make 12% instead, then the year after they set a goal of 8% - or whatever is needed to keep the network up to standard.
But i wouldnt want this government network to compete with the likes of the WISP's who are willing to beam broadband out to the rural users via microwave radio. No point in draining thousands of dollars into fibre to deliver broadband to 10 people who can be served via microwave for less than half the price.

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#333843 24-May-2010 02:10

Personally anything with too much/any government involvement is a bad thing. There is nothing that scares investors away like a government willing to get its nose stuck into every aspect of telco business.

The government owning both Chorus and Orcon would be interesting too.

By the time this 1.5 Billions dollars has been spent / deployed in 10 years I'm sure many people will be using virtual desktops (VMware view / Citrix HDX) hosted out of very well connected data centres making the need for 'high' speed access to the home perhaps less important, and reliable 'medium' speed connectivity more.

Of course I could be totally wrong :)

Byrned

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#333892 24-May-2010 09:55

I think from a business point of view, and not just Telecoms, but all of the players, that this would at the very least provide some certainty.

At the moment there is zero incentive to invest in infrastructure and that is what we sorely need the investment it. Example would be Telecom who have invested massively over the last 2 years in new infrastructure, which I believe was mainly done to stave off further regulation (you could also argue that this was to be anti-competitive i.e. limited further LLU with FTTN).

What company in their right mind would want to invest in infrastructure with a government (past and present) who constantly change the rules.

So yeah, I think this is a positive move considering the current landscape of the NZ telco industry. Yes there has been massive regulation of the industry worldwide in resent history, but we have our own unique circumstances to consider. There's very little point in looking to another country unless they've been through exactly the same changes!

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#333901 24-May-2010 10:13

I like it.. I've been saying for years the the government needs to nationalize Telecom and run it as a sort of "not for profit" with all "profit" being poured back into infrastructure.

Ideally I'd like to see it, and all other national infrastructure type business (Airports, ports, utilities etc) compulsoraily nationalized in the traditional sense (IE "It's ours now, all foreign investors get nothing), but it'll never happen.

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#333945 24-May-2010 11:14

Press release issued today by Telecom New Zealand:

TELECOM FOCUSES ON FIBRE FUTURE
24 May 2010

Telecom has today confirmed that it is fully investigating structural separation in order to participate in the Government’s Ultra Fast Broadband (UFB) initiative.

“Telecom’s strong preference is to align the interests of its equity and debt holders with those of the Government and New Zealanders,” said Paul Reynolds, CEO, Telecom. “The Government’s UFB initiative will fundamentally reshape the structure of the entire telecommunications industry in New Zealand and Telecom is therefore undertaking a thorough assessment of the merits of structural separation.

“In making a thorough assessment of structural separation we need to have a detailed understanding of the regulatory environment, and this warrants detailed discussion and analysis with Government before any decisions regarding its viability can be made,” he said.

“We are conscious that we should all be focussed on how best to create New Zealand’s fibre future.

“However Telecom is required by legislation to deliver significant system and technology projects envisaged for a pre-fibre world. A large proportion of these projects must be deployed this year, so it seems sensible at this time to reassess these projects to avoid significant congestion and waste.

“As a result we have asked the Minister to consider a variation on three components of Telecom’s Undertakings that we believe will no longer be relevant in a fibre future.

“These three amendments will not impact on the service levels experienced by our end user and industry customers, and will not detract from the EOI level playing field. Rather, they reflect how fast the policy and technology environment is evolving in telecommunications.

“In these three areas Telecom, industry participants and New Zealand consumers face significant costs and risks of disruption that were not foreseeable at the time the commitments were made. They also lock Telecom, the industry and the Government into some choices which should be considered as part of the UFB initiative and the potential structural separation of Telecom,” he said.

The proposed changes are to:

- Suspend the forced bulk migration of existing broadband customers onto a new copper-based broadband service. We will, however, continue to supply this new broadband service to all new customers;

- Remove the requirement for Telecom to migrate 17,000 customers onto a new VoIP over copper service by the end of this year; and

- Remove the requirement for Telecom to build a new set of wholesale systems that are not consistent with the industry structure implied by UFB.

Telecom’s fibre-to-the-node programme is not impacted by the variation requests.

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#333968 24-May-2010 11:54

scuwp: The Government have killed Telecom.

Now, now. I think Telecom had a hand in that as well.

Seriously, though. I'm very much in favour of public ownership of valuable and necessary infrastructure for the country. I don't like monopolies, but one exists. I would rather see public ownership of a monopoly than private ownership.

shiroshadows

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#333979 24-May-2010 12:19

If it will potentially bring prices on BroadBand plans down
Then I'm 100% for it

Dulouz

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#333983 24-May-2010 12:25

The Govt over many generations built Telecom to the company it was before it was sold. Without the Govt NZ would not have the Telecommunications infrastructure that we currently have.

Since the sale of Telecom the importance of Telecommunications to the nations economy has only increased.

The nature of NZ (i.e. a widely dispersed and small population) makes in generally uneconomical for any private player motivated by shareholders interest to make the investment required.

NZ needs this investment and the Govt is the only willing player willing to stand up and put the money up. The benefits of this program to NZ will be enormous.

Telecom had their chance and they blew it. To be fair though, the odds were stacked against them.

Amanon

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#333990 24-May-2010 12:36

- Suspend the forced bulk migration of existing broadband customers onto a new copper-based broadband service. We will, however, continue to supply this new broadband service to all new customers;

- Remove the requirement for Telecom to migrate 17,000 customers onto a new VoIP over copper service by the end of this year; and

- Remove the requirement for Telecom to build a new set of wholesale systems that are not consistent with the industry structure implied by UFB.

Telecom?s fibre-to-the-node programme is not impacted by the variation requests.

So does that means that ASAMs remain in service and current customers on them remain there? As the FTTN program is not effected does this mean that current customers on ADSL1 and on an exchange will remain there with no upgrade path (presumably unless they requrest) to ADSL2+

Sounds like some of the poor old NEAX's will live for another few years (or months yet).

Which wholesale products are effected, EUBA I presume.

Anyone care to comment.

Cyril

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#334000 24-May-2010 12:48

A big concern imo is that structural separation will bring across too much of Telecom's bloated costs structure and bureaucracy (marketing, management etc) and put a steel floor on how low pricing can go.

Cymro

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#334019 24-May-2010 13:16

cyril7:
- Suspend the forced bulk migration of existing broadband customers onto a new copper-based broadband service. We will, however, continue to supply this new broadband service to all new customers;

- Remove the requirement for Telecom to migrate 17,000 customers onto a new VoIP over copper service by the end of this year; and

- Remove the requirement for Telecom to build a new set of wholesale systems that are not consistent with the industry structure implied by UFB.

Telecom?s fibre-to-the-node programme is not impacted by the variation requests.

So does that means that ASAMs remain in service and current customers on them remain there? As the FTTN program is not effected does this mean that current customers on ADSL1 and on an exchange will remain there with no upgrade path (presumably unless they requrest) to ADSL2+

Sounds like some of the poor old NEAX's will live for another few years (or months yet).

Which wholesale products are effected, EUBA I presume.

Anyone care to comment.

Cyril

They refer to some of the Regulatory Undertakings agreed with the last government

First one refers to moving pre-2010 Telecom Retail customers on Telecom's old DSL product (FIPD) onto one of the new UBA products, no benefit to the customer at all but the normal risks any migration incurs.

Second one was a bit pointless, force Telecom to launch a VoIP product and attract 17k customers to it, surely thats commercial and not something to be regulated?

Third one is around FMO Wholesale Fulfil systems, from memory a complete rebuild and new B2B gateways to support UBA as well as Sub-loop stuff, all redundant in a UFB world.

NonprayingMantis

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#334022 24-May-2010 13:19

Ragnor: A big concern imo is that structural separation will bring across too much of Telecom's bloated costs structure and bureaucracy (marketing, management etc) and put a steel floor on how low pricing can go.

a lot of that shouldbe avoided because Telecom already have operational separation - meaning each part (Retail, Wholesale, Chorus, Geni etc) has their own "marketing, mangement etc"

Zeon

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#334177 24-May-2010 19:01

GBristow:
scuwp: The Government have killed Telecom.

Now, now. I think Telecom had a hand in that as well.

Seriously, though. I'm very much in favour of public ownership of valuable and necessary infrastructure for the country. I don't like monopolies, but one exists. I would rather see public ownership of a monopoly than private ownership.

Whether its owned by the government or by private investors, a monopoly is at the end of the day a monopoly and will produce the same result: the shareholder (either the government or private investor) getting the returns. Sure, if we wanted to stop offshore investors getting the money then maybe look @ nationalising but the point of this exercise is to improve broaband not change who makes a profit from it.

There is absolutely no need to have a single nationwide network for the fibre. Just like Telecom's structural seperation there should be three tiers of service providers:

- Lines
- Wholesale
- Retail

The lines can be owned by different companies e.g. Vector in Auckland or a local power company in Wellington etc. As long as they all build to a certain standard and within a certain price range it shouldn't really matter. Wholesalers should be competitive (not the BS we have with Telecom wholesale monopoly ATM) however they should be barred from retail. And then the retail can offer what they want.

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