Telecom gets a hammering - no you don't own it, unless you have shares

This is my Friday rant.

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$4.72 for Telecom, it was $5.70 a few weeks ago.

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All the slobbering foaming at the mouth "it is ours anyway" mob will be downing their bottles of cask wine in excitement, stroking their moustaches and beer bellies, or their scrunched up envy ridden faces going on about how good it is that those foreign bastards are getting it at last. Ringing up talkback I bet to have a good old moan about the good old days and that bastard Douglas who sold Telecom (actually Clark and Cullen had the same amount of say at the time - Douglas had long been ousted as Finance Minister).

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Simple message - you don't fucking own Telecom. The "you" you talk about, sold it - sold it because "you" owed a mountain of debt and needed the money to pay some back - "you" spent it on welfare and subsidies and the like. "You" didn't spent a cent on upgrading Telecom after that. If "you" didn't like it, then maybe "you" should have asked government to spend less in the 70s and 80s - but I doubt if "you" did.

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Your bullshit argument that "we paid for it so it's ours" is complete nonsense - it is so mind numbingly stupid that it defies comprehension that people who know how to put clothes on can make the argument. This is about as relevant as going to the owner of a car or house you ONCE owned and claiming it is yours again -having sold it previously. You might have built the house, but you sold it and lost all rights to it - fair and square. "Oh but I opposed the sale" - well tough shit. In a liberal democracy your argument lost. The sale proceeded and no party has ever been elected to buy it back.

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So frankly when it comes to Telecom, unless you own shares you can simply fuck off, buy some and then have your say at the AGM, vote on the directors etc.

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Pay attention to something you own, and any contracts you have with Telecom - all your imaginary public good socialistic bullshit is just that - because when it comes down to it, I can't hold you or any of you lot accountable when your socialist bullshit does not deliver - such as with health care.

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It is times like this that I wish that Theresa Gattung just announced that Telecom was pulling out, and I mean pulling out - it was giving notice of the termination of all service contracts, and would be dismantling its network and selling the wire and fibre optics for scrap. Now I know this makes no business sense - but Telecom is entitled to do this - just like you're entitled to destroy your own property (unless it is a special tree or a historic place). Imagine if it did that - then where would you be? No producer has an obligation to supply you with any good or service as of right - remember that. You get goods and services by contract. Just as you can decide to buy no more, so can the producer decide to sell no more.

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Apologies for those who have shares - you do own it, and I'm sure you're feeling less than happy about how much the government has destroyed some of your wealth with cheerleaders across (most) of the political spectrum.

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Sometimes I simply think it is time that consumers realised how lucky they are that producers even exist.

English local elections give Labour a fair beating

England (not the UK) had its local council elections yesterday and while I tend to avoid getting too excited about one side vs. the other (all being different version of Nanny State) I tend to feel the Conservatives are slightly less likely to tax and regulate than Labour or the LibDems.
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Voting is done by ballot box, not postal as in New Zealand and was on a Thursday – so turnout is a derisory 36%. I remember when NZ had voting by ballot box for council elections and turnout average around 25-30% unsurprisingly.
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Unlike New Zealand where, with the exception of perhaps Auckland and Christchurch, party politics are not strong (and even where they are, they have stupid deceptive names with words like now, future, citizens etc to hide them being left or rightwing blocs), in the UK local councils are strongly partisan – effectively being mini-versions of the House of Commons. All the parties see it as a test of overall popular support – and this time round, that would be a fair assumption.
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It seems odd to punish local councillors for what central government politicians get up to. John Bank and the pro-Nat/ACT Citizens and Ratepayers Now bloc won in 2001 in Auckland City, a year before the Nats had their worst election result ever in the general election. A good council (whatever that is) should not suffer because its party is bad in central government and vice versa - but that is what happens in England.

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Labour has suffered an enormous defeat – not helped by the scandals of John “how the hell did he get laid” Prescott, Charles “lets not deport the rapists” Clarke and the media pack anxious for Blair to step down. Labour is looking more and more like a lame duck, probably unfairly so – whereas the Tories, although with some cynicism, are operating in a united, cohesive fashion and David Cameron has injected some life (if not principle) into the party. The LibDems have been rescued from oblivion by Sir Menzies Campbell putting them on life support, so are holding their own.
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Labour lost control of 18 councils and lost 254 councillors, the Tories gained 12 councils and 250 councillors, the LibDems gained 1 council and 18 councillors and 5 councils shifted to “no overall control”, with no single party winning a majority.
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More disturbingly the “we’re not racist we just have lots of yobbos in our party who hate dark skinned people” BNP won 11 seats in the London borough of Barking and Dagenham – pity anyone not white living there. The BNP does well tapping into latent racism and fear of crime among working class white people, you know the sort you don’t want to be sharing a beach in Spain with. The BNP is an odd bunch, the core neo-Nazis who hate Jews (the word Zionist is used in the manifesto) and anyone not Aryan, a neo-conservative Christian core who are not that different from US protestant KKK groups and old fashioned socialists who believe the state should own and do a lot more than it does – national socialists you see? Although if you look at its manifesto, the BNP wants to look at the NZ experience in abolishing agricultural subsidies! I wont be moving to Barking and Dagenham (like I would anyway!).
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I’m just thrilled my own council, Camden, for the first time in its history is no longer a Labour council. Might be nice to see some accountability in a council that is responsible for the monstrosities pictured above, although if the LibDems and Labour co-operate it will be a tax and spend council once more.
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David Cameron should be pleased, Blair will be despondent, and the LibDems relieved. John Prescott will reportedly take the "blame" for the result - the real blame is that England is tired of New Labour spin, and has swung to the right. The poor have gone to the racist right and the middle and upper classes have gone to the Tories.

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FULL ENGLAND COUNCIL ELECTION RESULTS on the BBC

Welcome everyone doing school projects on Transmission Gully

You've managed to sustain my hit rate over the three weeks I've said nothing on anything else. There must be around half a dozen classrooms doing this! (I have an invisible counter)

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Just search Transmission Gully on my blog, you'll find tons that isn't pro-Gully, that isn't pro-rail, but is pro-efficiency.

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Remember, it is a long way towards being built. The Transit NZ Board has to decide whether to support it as the long-term option, and then funding has to be found, and the project needs about two years of detailed investigation (easily worth $3-$5 million) first. Transmission Gully wont be a problem for this government, it will be a problem for the next one - it wont be affordable then either.

Bolivia adopts Alliance policy on energy

You don’t hear anything from the so-called “peace movement” about a government sending its military in to steal the assets of private companies – this being what is now happening in Bolivia, as President Evo Morales (pictured) – pinup boy of the left because he is indigenous (though they don’t regard Margaret Thatcher as a pinup because she is a woman, because she didn’t espouse their ideology) – confiscates what he calls “our natural resources”. This is the step beyond unbundling that the Alliance (they still around?) would approve of. Trevor Loudon warned us of Morales when he was elected and Morales links to Hugo Chavez and Fidel Castro say it all.
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The BBC reports that the Bolivian army has now taken over the Palmasola refinery, and Morales has demanded that gas companies “renegotiate” the terms of their contracts with the government, and they must “sell” 51% of their assets to the state – no doubt at a price the state demands. He demands that the Bolivian state take 60% of production from all gas fields except the two largest, which will have to give up 82%.
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Soldiers have been sent to 56 locations, and Morales has said this is just the start. According to the BBC “Mr Morales said the gas fields were "just the beginning, because tomorrow it will be the mines, the forest resources and the land".
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Fool.
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Ironically, the left wing (but decidedly pragmatic) President of Brazil Lula da Silva and left wing Spanish government are both concerned – because two of the biggest investors in the Bolivian energy sector are Brazilian (Petrobras) and Spanish (Ripsol) companies respectively. On top of that, Brazil imports half of its gas from Bolivia. Gas isn’t a good commodity to transport in large quantities other than by pipeline, so substitute suppliers wont be easy to find.

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Petrobras of Brazil has cancelled all plans to invest more in Brazil and Bloomberg reports that these moves are likely to increase prices in Brazil and Argentina.
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The appropriate response by the companies is to demand that property be returned, otherwise they should use force in self defence. An alternative would be to exit and demolish the refinery, pipes and the rest, take their skills and run. Of course neither will happen – they will face the prospect of having half of their property stolen and negotiate to keep the rest. Ideally the Brazilian and Spanish government should threaten military action to protect their nationals – much as was threatened against Iran in the 1950s when it did the same to British and American oil companies.
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I expect the left will be cheering this on – claiming that the gas “belongs to the people”. Well good on “the people” – let all the companies remove their expertise and see how well the average Bolivian peasant does in figuring out how to get the gas out of the ground, refine it and sell it. If it weren’t for foreign companies using THEIR knowledge and training people to access the gas, then the gas would be useless to Bolivians – much as radio spectrum was useless to Maori (and in fact everyone on the planet) in the 18th century, as nobody even knew it existed, let alone knew how to use it. Bolivian gas, like Venezuelan and Saudi oil only exists because of the application of the mind by scientists and entrepreneurs to the resource, which previously wasn’t even known to exist. The Brazilian, Spanish and other foreign companies accessing, refining and selling it paid substantial royalties to the government to do something the government could not do – now the companies should walk and take everything left of their’s with them.
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The confiscation of property in Bolivia is utterly repulsive, and if Morales does the same to other property, then the people of Bolivia will get what they voted for – a wasteful socialist autocracy, whereby success gets confiscated by the state. I am sure Morales is hoping to make a fortune from high energy prices and redistribute the income – but he will have successfully killed off foreign investment from Bolivia. South America's poorest country will remain so.

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By the way, there is parliamentary support for Evo Morales. Hone Harawira praised him in his inaugural speech, and Tariana Turia and Pita Sharples by press release. I guess because he is indigenous, it's ok to confiscate property and chase off tau iwi investment is it?

- Evo Morales profile on Wikipedia

National and ACT show some principle

Omigod! I'm astounded. Following Rodney Hide's excellent condemnation of the announcement to let anyone and everyone have access to Telecom's local line network, I listened online to Maurice Williamson doing the very same on Morning Report. Well done Maurice, making some of the points I have already made. PC has done a good summary of Telecom's share drop, 10% of value in a day and his updated post of much of the commentary.

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Other responses are:

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NZ First naturally supports it, as Winston has been one of the biggest Telecom-bashers in recent years, courting the "we paid for it" populist vote. Again Winston thinks "The Government must also ensure that this does not only deliver benefits to big city New Zealand, but that those same services reach all the way down to the country roads" so he wants you to subsidise farmer access to broadband - that isn't cheap, since the Kiwishare has forced Telecom to subsidise farmer access to local lines for ages from the line rentals of city businesses and residents.

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Greens support it - as any chance to bash Telecom is welcome, although Nandor even said "Current prices aren’t bad" great chance to regulate then. Nandor reckons it will allow virtually free international calling. Well that hasn't happened anywhere, and in many countries it is due to loony protectionist governments maintained statutory telecommunications monopolies - you know, the sort that the left defended until Telecom was privatised.

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Local Government New Zealand, representing 86 organisations specialising in thieving from the public (local government) supports the move. It thinks rural communities will benefit, which is astounding.

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The Alliance retards foaming at the mouth are clamouring "it's not enough", wanting the government to renationalise Telecom and then service will be cheap and high quality - hmm like it was for decades under the Post Office. Keep taking the medicine guys.

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TelstraClear's CEO is sitting thrilled that lobbying government has increased his company's value far more effectively than investing in infrastructure or winning customers over with better service and lower prices (which anyone who has been a user of Telstra Clear's local Wellington service in recent years will note has been declining significantly). Remember before LLU was seriously on the agenda, Telstra Clear was going to build a brand new local access network for all of residential metropolitan Auckland, Hamilton, Tauranga and Dunedin, and expand the Wellington network to Porirua. Cheaper to lobby to use other people's infrastructure than to build your own of course.

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Russell Brown is thrilled because he believes Telecom is ripping him off, and believes attaching equipment to Telecom's exchanges under LLU is high quality "investment" in telecommunications - but then we always knew he was a leftie :)

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IHUG, like other competitors says the handbrake is off - although it has provided a competitive satellite based and wireless based broadband service for some years. Again, no need to invest further in your own infrastructure.

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Business New Zealand is wary, and is taking a wait and see approach.

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Business Roundtable is damning of LLU, and makes the cogent point that the argument that "everyone else does it" is the same argument that other lobbies, like farming, once said about subsidies and protectionism. A great quote from the press release is:

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“Measures like forced unbundling have been described as infrastructure socialism (“what’s yours is mine”, by government decree). By allowing competitors access to incumbents’ networks on non-commercial terms, the short-term competition they create is parasitical, not the dynamic competition we need from incentives to invest in new and enhanced infrastructure."

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You see, those supporting LLU seem to be doing so for three differing reasons:

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1. It is expected to deliver faster, cheaper broadband services because Telecom is refusing to provide those services, or resale the ability to provide those services to competitors (this I believe is the David Farrar reason);

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2. Everyone else does it, so we should too (the sheeple reason);

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3. Telecom are bastards who have been "ripping us off for years", capitalist scum, "we paid for it", put the boot in, rah rah rah keep the red flag flying (the Greens and I suspect the reason at least a good third of the public will support it).

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The second argument is fatuous, if we took that approach, telecommunications in New Zealand would have been a regulated monopoly or duopoly until the late 1990s. Australia opened up its market in 1997, most of western Europe between 1998 and 2000, New Zealand in 1989. NZ has a completely open postal market, almost every other country (Sweden, Finland, Argentina and the UK excepted) grants a statutory monopoly to its state owned (and relatively inefficient) postal operator.

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The third argument is facile - Telecom was sold by the elected government of the day (Helen Clark and Michael Cullen were Cabinet Ministers at the time), and the proceeds were used to pay off debt "that you borrowed" or to avoid borrowing more for services "that you wanted". You don't own Telecom unless you buy shares in it - get over it.

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So what about the first? Is Telecom not providing faster broadband because there is insufficient demand? Is it not providing cheaper broadband because it is unprofitable? Are competitors not investing in infrastructure because the clear message from government is that Telecom's will be there to use instead? Has Telecom been acting anti-competitively and if so, why have no competitors taken it to court under the strengthened heavy handed Commerce Act?

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When I was in telecommunications policy, one of the clearest messages was that setting up a regulator (which did not exist until 2000/2001) would change incentives in the industry from focusing energy on investment, innovation and commercial negotiation to lobbying and counterlobbying, with the regulator NEVER ever pleasing everyone. Lobbying is cheaper than investing in infrastructure - you just need to have half a dozen well paid suits willing to bang on at politicians, bureaucrats and the media about how hard done by your company is, and how mean old Telecom is ripping everyone off - but your company is the paragon of altruism and will save the day.

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That has simply been proven right.