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What should the government do about ailing financial institutions?

Nothing, except to back off and get out—as any Objectivist knows, intervention is treating the disease with the disease

83%

Intervene judiciously—enough to avert a catastrophe that is otherwise imminent

Intervene massively—as it's doing

Nationalize the whole economy and be done with it. Bring on the USSA!

Something else (specify)

11%

Total votes: 80

Basic Economics by Thomas Sowell

Economics In One Lesson by Henry Hazlitt

Submitted by gone on Thu, 2006-05-04 08:06.

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None of this is news

Submitted by Scott Wilson on Mon, 2006-05-08 11:21.

Welcome Dinther.

Local loop unbundling was introduced in the UK and USA in the late 90s primarily to allow competition for local call services, as broadband was in its infancy at the time. The European Union - competition obsessed as it is - mandated it for all member states, and the US then pushed for it elsewhere, largely so its carriers could easily enter competing markets.

In New Zealand, the bureaucracy opposed it until the creation of the Telecommunications Commissioner (a bureaucracy opposed by official advice) who himself has opposed it, as has Treasury. Quite simply, in New Zealand parallel infrastructure was appearing in the form of wireless, and in Wellington/Christchurch a parallel local copper network (and broadband/TV via HFC cable). This investment started drying up under Labour, as lobbying became the way forward. Telecom was forced to resale its local lines for local phone service (which now happens), now it is forced to let other companies attach their equipment at the exchange. This all is predicated on ADSL being the technology of the future, hmmmm.

By contrast, the largest so-called competitor - Telstra Clear - has been increasingly lazy (coinciding with it being fully taken over by Telstra Australia). It has been able to provide very high speed broadband over its own cable network at low prices for years, but refused to do so - it doesn't need Telecom for this, but doesn't do it. This may indicate that the economics don't actually stack up as much as the consumer and competitor lobbies claim.

It is claimed that NZ's appallingly low broadband rates are due to price/service quality. What is ignored is that dialup is dirt cheap, cheaper than almost everywhere else - so most people are happy to put up with dialup access. The problem is that Telecom has not been under infrastructure pressure for years now.

Next to come will be mobile networks - two competing networks wont be good enough, they'll get "unbundled" too.

There you go

Submitted by Rick Giles on Sat, 2006-05-06 11:24.

Ho-hum

Submitted by Rick Giles on Sat, 2006-05-06 10:13.

Just trying to encourage the new guy.

I'm not apathetic, I even drew a cartoon just for you which I'll publish shortly.

I think the main problem

Submitted by Duncan Bayne on Fri, 2006-05-05 23:40.

I think the main problem with local loop unbundling it is that it's nationalisation - the Government has said "we want to control that privately owned resource" and simply written legislation to take it over. Regardless of the effect on broadband provision & pricing, that's a *scary* precedent.

I happen to agree that the privatisation of Telecom was handled disastruously - there should have been no KiwiShare agreement, and the local loop should have been sold separately to the other assets (although one company could later have purchased them from the original buyer).

But, the fact that the Government dropped the ball 20 years ago doesn't give the current Government the right to sieze control of property that is now in private hands.

This private company operates with the backing of some smaller investors and they are hanging in there trying to do their thing.

They are *totally* doomed. There is now no economic value whatsoever in investing in alternatives to the local loop.

I think I will lose my Wifi broadband service within the next two years. I think it is the death nail in the Woosh coffin and any plans to invest in fibre optic networks will be put in the fridge or a long time to come.

Precisely. And not only has it had a chilling effect on telecomms investment in the country, it will scare off overseas investors *in general*, and ensure that companies already operating in New Zealand will step up their lobbying efforts to prevent similar nationalisation happening to them.

I would not even be surprised if all this is a Telecom plot to deflate advanced plans to build alternative networks. It would explain their early knowledge of the unbundling decision. I mean it is better to give in a litte on the ADSL in order to remain seated on the telephone business rather than having a top notch VoIP capable network taking all your business right?

Possibly. It's certainly hurt their company valuation to the tune of over a billion dollars.

I am pretty sure that in 6 years time we look at the situation and find that we are hopelessly behind the game with aging waterlogged copper running ADSL at very low speeds because of demand while the rest of the world is whizzing by with guaranteed Gigibit links to the home running a wide range of services.

Of course. And do you know who will be blamed? Telecom. And you know who will be called upon to fix it? The Government ......

The free market is predicated upon consumer demand and pricing determining the provision of goods and services. *Any* intervention in this *will* cause undesirable effects down the line - but all the Government is concerned about is re-election in two years time.

Put the same one in the

Submitted by gone on Fri, 2006-05-05 02:42.

Put the same one in the NZherald today. Is that ok?

Be careful what you wish for

Submitted by Capitalist on Thu, 2006-05-04 21:00.

I don't believe it was a conspiracy on Telecom's part. All these rats and mice telcos with pathetic market share were so keen to get their snouts in the trough -- they have signed their own death warrants in the process.

Good riddance to them - serves them right.