Tuesday, August 11, 2009

2 degrees wants more government help

Remember I posted that 2 degrees started with an advantage over Telecom and Vodafone? Well it’s becoming more clear that 2 degrees isn’t interested in competing on a level playing field. No. It wants the government to make life easier for it by forcing its competitors to charge less than they are willing to access their networks. According to NZPA it has a "Drop the Rate, Mate" campaign, which isn't as friendly as it sounds - it wants the government to use force to help its business out.

It wants mobile termination rates (which Vodafone never had regulated in the 17 years it has competed with Telecom) to be regulated because it thinks the cost is too high. Not that it would know since it isn’t interested in building much of a parallel network to the two major players, it never has been. 2 degrees, like Vodafone (when it was owned by BellSouth in the beginning) has few customers, so as a result it pays other mobile phone operators more than it receives in kind.

In fact I recall not long after BellSouth entered the New Zealand market, the CEO of Bellsouth (USA) visited New Zealand, and demanded from the then Minister of Communications (Maurice Williamson) that he regulate Telecom so BellSouth could get a fair share of the market. Williamson told him politely that New Zealand is not the United States, you can’t get politicians to do your bidding in New Zealand as easily as he thought, that BellSouth knew the regulatory environment when it invested and so should actually get out there and compete on its merits. Within a couple of years BellSouth, having underinvested in the network, and done little to attract new customers sold the business to Vodafone, which has been a roaring success.

However, after nearly 9 years of Labour intervening and regulating in the telecommunications sector, 2 degrees isn’t interested in competing on merit, but using the state to give it a hand up – again.

It has former blogger and centre-left (well he is now) journalist Matthew Hooton to do its PR. Moreso it has an interesting ragtag mob of supporters. Consumer New Zealand has always supported regulating producers, so no surprise there. TUANZ is pretty much the same, always using never producing. NZUSA has long been a platform for socialism and the Federation of Maori Authorities has a corporate interest, as it owns the frequencies (thanks to the last Labour government) that 2 degrees uses. However, Federated Farmers is an odd one. I am sure in the interests of fairness, Federated Farmers might agree to the prices of all of its commodities to be reduced so that consumers can pay less for food and woollen items.

Steven Joyce should tell them the same as Maurice Williamson. Go away and compete. 2 degrees already has an advantage in that it didn’t pay a market price for its frequencies, it already doesn’t need to build the infrastructure of Vodafone and Telecom because it is reselling their capacity (by voluntary agreement). Grow up and move on. The last Labour government agreed, it should be a swift dismissal by Joyce.

"Mr Hooton said the new minister would face "ferocious corporate lobbying".
" with apparently a large campaign, which wont be cheap, spent on lobbying - money presumably that could be used to build more of a network so less termination charges could be paid.

So, it is pretty clear 2 degrees is NOT a normal private enterprise, but one that seeks to make money through government favours. It would rather waste money engaging in currying favour with government than to build a network so it would need to pay less to its competitors (or indeed to negotiate with its competitors for better rates).

It's a company that believes in using force to get its own way, a company that I don't believe is moral to support.

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