13 December 2005

Boycott Telstra Clear - hypocritical supporters of fascism

Yes, I am calling a private company, that claims to compete with a large, formerly government owned company, hypocritical supporters of fascism. I also believe in free market economics.

TelstraClear is a company I hold in the lowest regard for several reasons but more on that later.
It has accused Telecom of lobbying the government to not introduce local loop unbundling. In short, Telecom, on behalf of its shareholders, was pleading with the government to not interfere with its property rights.
Remember, Telecom owns its network, the most ubiquitous local phone network in the country, not the government, not “the people”. The “people” (represented by the government) sold it – and the proceeds were used to pay off debt held by “the people” and pay for some current expenditure. Telstra Clear doesn’t own Telecom’s network either. Telecom’s owners on privatisation agreed to allow interconnection so that competitors could connect with Telecom customers, and this allowed competition in long distance, international and mobile calls quite early on. Local call competition emerged when what was then Clear Communications, Telstra and Saturn (which have all since merged into one) established their own local networks. Since then, the government has forced Telecom to resale its network to competitors for local access as well. During that time, of course, another operator provides what could be seen as local phone service- Vodafone, and nothing is stopping anyone else legally from building competing fixed or mobile phone networks. However - it's a lot easier to not bother isn't it Telstra Clear?

Now having the ability to do long distance, international and local calls using its own network, and reselling Telecom's, Telstra Clear wasn’t happy. It wanted full access to Telecom’s property – akin to Woolworths telling New World that it must be allowed to open a store inside New World’s premises, where it didn’t have premises of its own. How about if Air New Zealand was forced to wholesale part of the seats on its planes to Origin Pacific to promote “competition”?
Now one of the reasons I hate Telstra Clear and its predecessor Clear, is because they mistakenly milked New Zealand public sympathy for years, by claiming to be the telecommunications underdog, even though Clear did next to nothing to provide real competition. When Clear entered the NZ market, the prices for international and national calls did NOT change for retail customers. $5 capped national calls were introduced by Telecom in response to competition from smaller operators, Clear copied this. Clear was hardly ever the innovator - Saturn Communications (which was bought by Telstra and then absorbed into Telstra Clear) was. It was looking to expand its local network across Auckland and into Hamilton, Dunedin and Tauranga, before cost and the moans of local authorities who didn't overhead cabling to be installed put paid to that idea.

When prices dropped, it was either because Telecom led it, or responded to reductions in prices from companies like Worldxchange and Compass Communications, Clear copied this. It has almost never been a price leader, the price leaders have either been Telecom or smaller operators.

I know this because I advised the government on telecommunications policy at the time! At no stage did Clear make a dent in the market based on price.

My other beef with Telstra Clear is the drop in standards of service. I was a Saturn customer when it laid its own network in Wellington (note to Telstra Clear – your OWN network, spend your money, build your own network then compete) and it provided an excellent phone, internet and cable tv service at a very reasonable price. The takeover by Telstra and the subsequent merge with Clear saw standards drop. On one occasion the weather damaged my phone line, and the company came out and changed the wires around so my second line (for the internet) had switched numbers with the first line. So people phoning me would get my computer and vice versa, and it took three weeks for them to fix it, after umpteen calls and the impudent bitch at the other end arguing that I had never called. On top of that, I found their switch to Voice of IP saw call quality drop so that I couldn’t always hear conversations to friends overseas. In short, the service became shockingly bad – even when I was leaving NZ, the company claimed to have sent me a pack to post my cable TV box in, but never did, even though I rang 3 times over 2 weeks asking where it was- the company said it was “my fault” because I apparently hadn’t checked my mail box (I had!).

Telstra Clear is not a typical private company trying to provide services with its own resources and compete in the market – it is a leech forever whinging about how it can’t compete because it doesn’t have access to its competitor’s network.

It accused Telecom of threatening the government that if forced to open up its own network to competitors, its share price would drop and it would have a negative effect on the economy.
Now it has come out that Telstra Clear has threatened that if the government does NOT do this, it is in breach of the Agreement on Basic Telecommunications negotiated with other countries under the aegis of the WTO. So why is it ok for Telstra Clear to lobby the government but not Telecom?

Besides which, Telstra Clear’s argument is utter bollocks. Why? Well for one, I was involved in the negotiations of that agreement at the WTO – the text was very carefully agreed and it does NOT require local loop unbundling. It does not prohibit countries from doing it, but it only requires interconnection.

On top of that, Telstra Clear talked utter bullshit claiming that the Australia-US free trade agreement requires local loop unbundling. It doesn’t.

Telstra Clear should butt out, and start doing what it is meant to do – compete. The service compared to Telecom is shocking – and I nearly switched to Telecom twice, and Telecom was only too willing to help me. Telstra Clear should provide good service, at good prices and win people over through their products and services. It has access to Telecom’s network at a wholesale level and for interconnection, it also has its own local network in the Auckland CBD, and through suburban Wellington and Christchurch.

However, here is my biggest complaint - Telstra Clear wont open up its network. If you are a Telstra Clear local customer, you cannot use any of its competitors, like IHUG or Worldxchange for toll calls – because Telstra Clear wont let its smaller competitors use its network. I tried, as an IHUG net customers to use IHUG for phone service, but Telstra Clear doesn't let it happen - Telecom does.

Fascists? Yes. It wants the state to effectively control private property rights of its biggest competitor, so that Telecom holds its property, but Telstra Clear can do what it wishes with its property.

That is why I am calling for libertarians and believers in free enterprise to boycott Telstra Clear – tell the company you don’t want to do business with anyone who does not believe in private property rights for anyone else other than themselves.
and Labour got this one right in refusing to listen to Telstra Clear's moans.


Unknown said...

"However, here is my biggest complaint - Telstra Clear wont open up its network. If you are a Telstra Clear local customer, you cannot use any of its competitors, like IHUG or Worldxchange for toll calls – because Telstra Clear wont let its smaller competitors use its network. I tried, as an IHUG net customers to use IHUG for phone service, but Telstra Clear doesn't let it happen - Telecom does."

Surely if TC have to respect the property rights of Telecom, should Telstra not then be free to deny access to anyone else on it's own network property? If you feel TC is wrong for not opening its network to other operators then the same standard should apply for TNZs local loop.

Libertyscott said...

I totally agree - it is about consistency. Telstra Clear wants Telecom's property rights to be overriden, which is wrong - but Telstra Clear does not let its property rights be overriden, it wants two different sets of rules.

Bob W said...

Many people in NZ regard the "sale " of the network as being a shortsighted ideological blunder. The partner ship touted by Telecom was to be a means of private sector "efficiencies " improving the service and allowing some competition which would be a new and favourable outcome. They bought one of the most developed networks and NEC still worked with the Post Office developing bew innovations after the sale.
Since we have dropped behind other countries, pay more and listen to the continuing legal wranglers and high profit reports.
No training of technicians is done by the private sector. The Post Office Training College equipped NZ industry with expertise. Private companies have a narrow profit driven goal and the customer is only a food source husbanded by PRO