Wednesday, May 03, 2006

Theft of property rights to benefit overseas multinational

Well I'm back in the UK, and the NZ Herald and Stuff reports Clark, Cullen and Cunliffe have decided to effectively nationalise Telecom's local loop in order to benefit, primarily, the balance sheet for the majority Australian Federal Government owned Telstra Clear.
Of course it isn't nationalisation per se, more fascism - when you retain the semblance of private property, but the state dictates what you do with it to the extent that you don't have effective control over what you ostensibly earn. All those who wanted a cut of the pie and who didn't want to put their own money into Telecom will have won - assuming that the Greens (who despise private property unless it is the petty personal belongings North Korean type property) and either Winston First or Peter Dunne support the proposed legislation.
What is ridiculously bizarre is that the package claims to "encourage the development of alternative infrastructure". Why bother, when the government has forced Telecom to make it let you use its network? Well, Telstra Clear has an answer to that - NOBODY but Telstra Clear can use its network, and if you are a Telstra Clear local line phone customer, then woe betide you trying to get a better deal on national, international or landline to mobile calls with another company - Telstra Clear guards its property rights fiercely - even though it has around 30% of the Wellington market and over 50% of the Kapiti Coast market. Vodafone, no doubt, will be concerned - having spent many hundreds of millions on developing its competing network - it has become too successful to be beyond the beady eyes of a regulator.
Of course David Farrar is pleased - like any lobby group is pleased when the government rolls out the trough taken from someone else so they can dip their snouts in the booty of state interference - like farmers on SMPs or manufacturers under tariff protection - the internet community thinks:
1. It will do better from this deal than if companies were left to invest off their own back; and
2. It is moral to confiscate property rights when you are unwilling to pay for them.
I am particularly disappointed David never responded to my reply to the Internet NZ submission. On the one hand he promotes tax cuts , time and time again and a smaller state, on the other he is like other lobbyists, out to get what they can from the government. More tax money to force people to pay for broadband infrastructure is perhaps the most nauseating example. Why should non-users of broadband pay for infrastructure that, frankly, is mostly used by businesses and middle to higher income households? Ohh its the sacred internet - silly me, it's an exception.
Like I said, those who wanted to provide local high speed internet access had several options open to them:
1. Build their own networks (Telstra Clear, Walker Wireless, Vodafone all have done this to a greater and lesser extent);
2. Negotiate and pay Telecom (or another local access provider) to provide services on a resale basis;
3. Buy some shareholding in Telecom to share the "windfall profits" it apparently has been reaping from providing service that critics call inadequate and overpriced (wonder why people bothered using it);
4. Offer to buy the local loop from Telecom or enter into a deal to own it in partnership (yes it would cost money, but what's money when it is for the so called "good of the country").
David is getting some fisking from some on his blog about this and some of his responses don't stack up, such as:
"LLU is not exactly a socialist invention of the far left. It is near universal in the OECD and in fact the OECD itself (which is usally seen as quite right wing) backs unbundling and has been very critical of our telco environment."
You see, if rightwing governments implement socialist policies (and have no bones about it, forcing a private company to provide physical access to its network at a price determined by the state is socialist - there is nothing "free market" about it), then they are not socialist!! Maybe a bit like Rob Muldoon and Think Big or price freezes? Just because it is near universal in the OECD does not mean it is right - it is near universal in the OECD to fund roads on a purely political basis, but that isn't right either.
So, we wait and see how Telecom's share price responds - of course the Greens, Labour and David Farrar wont give a damn if 10% of the NZ sharemarket value is wiped out overnight - just those evil money grabbing Telecom shareholders with their fangs and horns, sucking the blood out of children (read broadband users) to pay for their lavish lifestyle (read retirement savings of elderly couples).
This is simple a government enforced transfer of wealth from Telecom shareholders to Telstra Clear shareholders (51% Australian government - yay!), IHUG, Slingshot and other wealthy competing telco shareholders. That is it.
Slingshot is owned by Annette Presley - an entrepreneurial second hander as I once described her in my post on her record in the telecommunications industry. The consumer's friend - the producer's enemy. Not PC has described her as the face of theft - he isn't wrong.
Rodney Hide has to his credit damned this move and Trevor Loudon agrees. I Hate Socialism likes socialism on this one, confusing invasive regulation with deregulation - he needs to do a bit of research. I bet the National Party is now debating about whether to criticise Labour's policy, because National policy when it was in government was to oppose regulation - or to support it, and look like it is the friend of the consumer. I am sure David Farrar is in the midst of all that too!
One thing to remember - Helen Clark, Michael Cullen and David Cunliffe create nothing - if you relied on them for telecommunications - you'd get nothing. They are politicians - they don't produce, they only regulate, take and redistribute.
So watch and see - maybe you'll get cheaper faster broadband, maybe you wont. Certainly Telecom will be worth less, as will the sharemarket overall - certainly hundreds of thousands of New Zealanders will lose asset value from this step, and a handful of investors in other companies will gain some, along with the Australian Federal Government.
This government helped another Australian company boost its asset value as well - Qantas - by not granting Singapore Airlines the right to buy 49% of Qantas's biggest competitor (the then privately owned Air NZ/Ansett) which meant Ansett went under and Air NZ was severely cauterised, and ready to collaborate rather than compete. So is the Clark/Cullen government a great friend of Australian shareholders?


CD said...


Thinking of the direction this country is going just makes you depressed.

Something interesting I have found: Ask any Labour supporter "So when is the government going to be big enough? We have endless new laws, regulations and taxes. When is the government going to stop and go 'yeah, that's enough'?"

I've never got a good answer.

Rick said...

Of course it isn't nationalisation per se, more fascism

Right. You reading this MikeE? That's what I was trying to say the other day.

MikeE said...

Potato po ta to... its still government intervention where it shouldn't be...

I'm not the only one whose called it Nationalisation either.. just look at NotPC.

Oh well, at least they didn't choose May day to unleash this on NZ.

Berend de Boer said...

What I found is that it is impossible to discuss this rationally with anyone. Everyone things it's a good move. For the supposed benefits.

It doesn't help that Telecom is universally hated of course.

MikeE said...

Yeah - thats the answer I get, its a good thing because telecom is the evil empire.

Noones answers are based on rationality, its all "lets stick it to telecom".

Its sad really

libertyscott said...

That's why I've tried to point out how Telstra Clear embarks on behaviour similar or even more pro-profit that Telecom - not that it shouldn't, but that its claim that state intervention to benefit it is all about consumers is nonsense.

Telecom's competitors are big and strong enough to negotiate, build or purchase access to infrastructure as they need it - the rest of the world introduced LLU for local call competition NOT broadband, but it has applied to broadband as well. The US already had broadband competition with cable TV lines running parallel to phone lines in most cities and towns.