Fisking the NZ Herald Editorial

The NZ Herald Editorial makes a number of assertions regarding the operational separation of Telecom which are to be blunt quite wrong. Taking them in order:

If the Government is determined upon a three-way split it might have to buy back the wire network.

The Government has no choice about a three way split. It is the law of the land as set down in the Telecommunications Act, passed 199-2 by Parliament.

It might get that opportunity if Telecom went ahead with its preferred two-way separation, keeping wholesale and retail sales together and setting up a separate network company.

The law does not allow a two-way separation. Telecom proposed one last year and it was rejected in favour of a three-way one – a decision Telecom said at the time it accepts.

It is hard to see why the Government is hell-bent on a three-way split when the state’s experience with electricity suggests it is impractical.

Again the Government is not hell-bent. It’s original bill was for LLU, UBS and NDSL only. It was the Select Committee that near unamiously decided to include a three way operational separtion split.

And the op sep model has no relation to the way the electricty sector is structured.

Lessons can surely be taken from one line network for the other. There would seem no harm in Telecom retaining wholesale and retail interests if its network is open to all competitors and managed as a distinct business.

This statement ignores what is in the op sep plan. Telecom are allowed to retain both wholesale and retail interests under op sep. It just has to treat its retail arm the same as other retail customers. At present you have nonsense situations where Telecom retail prices are cheaper than the wholesale prices offered to other retailers. It’s about whether Telecom Retail can connect via Ethernet which is very cheap while other players have to buy very expensive ATM boxes.

If Telecom has underinvested in the wire network, it is probably farsighted. Rapid developments in wireless technology suggest the telephone lines could soon be the railway of telecommunications – carrying bulk cargo but not much human traffic.

Now this is just incredible – praising Telecom for underinvesting in the network. What planet was the leader writer on? Have they actually talked to anyone in industry about this?

First of all while wireless and mobile is going to be doing some amazing stuff, it is generally complementary to fixed line networks not a substitute for it. Plus ever with wireless and mobile, it still needs the fibre backhaul network to be robust enough to carry the traffic. Praising Telecom for its underinvestment is just madness.

Next I suppose the NZ Herald will praise the lack of roads in Auckland.