Wired self interest

The three biggest telecommunications companies—Telecom New Zealand, Vodafone and TelstraClear—have banded together to try and stop the National-led Government from fulfilling a campaign promise to dramatically expand New Zealand’s broadband connections and speeds. The companies, who together provide most of the broadband connections in the country, claim to be concerned about the Government spending money in a bad economic times.

I’ve never seen a better example of corporations promoting their self-interest and trying to deceive people about it. This is, in fact, one of the baldest examples of corporate greed.

The three telcos hired consultancy company Castalia to write their propaganda paper. The author, Alex Sundakov, dismissed the need for any government investment (except in some limited areas), declaring “in five years time there are no applications that we currently know or are forthcoming that would not be able to be used given existing technology” [emphasis added]. Got that? Sundakov is the greatest technology genius the world has ever seen! He knows that absolutely nothing will be introduced in the world in the next five years that would require better infrastructure. Whew! I was worried that things might change, but thanks to Sundakov we now know that all technological progress will be halted for at least five years.

The self-serving pseudo-justifications in the propaganda are blatantly obvious. Yet Sundakov himself actually stated why the Government should toss this propaganda into the rubbish:

"When you ask what a government should be doing you are really asking 'what is it that the private sector isn't providing?' The reason why the Government should be spending money or doing anything is because the market outcomes are not what we want."

Exactly! The previous Labour-led Government had to force Telecom NZ into structural separation in order to get competition into both phone and broadband service. Why? Because the “market outcomes” were not what we wanted. Telecom New Zealand spent years deliberately delaying action and avoiding cooperation because cooperating would affect their profits.

The same thing is true now. The three Telcos all concentrate their efforts in cities because that’s where the people are, leaving the rural areas underserved (as even the propaganda piece acknowledged). But they also invest very, very slowly because, like all business, they need a return on investment. But keeping broadband availability limited also makes it more expensive and so, more profitable—simple supply and demand.

The Telcos don’t want the government to roll out fibre optic connections to 75 percent of New Zealanders because with better infrastructure they’d no longer be able to justify relatively slow speeds and very high prices. They would, in other words, have to offer value for money for the first time, and that would lower their high profits.

Speaking of which, what do they say is the barrier to faster broadband? It’s the customers, of course! Those pesky customers don’t want to pay obscenely high prices for their broadband, their wiring is old and so are their computers. They’re too cheap! Oh yeah, international bandwidth is expensive, too (they want us to ignore their piece of that business). Besides, the propaganda piece sniffs, the only reason people want the high speeds is to download high-definition movies.

The propaganda piece says “our point is you've got to think really long and hard to decide what the problem is and the problem right now seems to be not that there is not enough fibre being strung to the homes.” Of course they’d say that—they don’t want that level of high-speed connectivity. The real problem is with Telcos keeping connections limited, speeds slow and prices high all of which are holding New Zealand back.

Even accepting the telcos’ propaganda at face value, it’s a boneheaded mindset: “What we have is just fine, we don’t need any more”. It sounds like the builders of the Auckland Harbour Bridge who said, “We’ll never need more than four lanes!” The bridge soon reached capacity and four “clip-on” lanes were added. Now another harbour crossing is needed. It also sounds like the Auckland politicians who passed on building a light rail commuter network because “we’ll never need that”. Daily traffic congestion shows how stupid and foolish those politicians were.

I hope that the Government has the good sense to thoroughly reject the telcos’ propaganda and go ahead with its plans. If they listen to the self-serving nonsense in the telcos’ propaganda they’ll be as short-sighted and ignorant as those bridge builders and the politicians who rejected light rail. All those people are now seen as stupid: Surely National doesn’t want to follow that example.