Has Telecom been screwed for a change?

August 22, 2011 Chilling_Silence Personal Rantings

I was having a bit of a discussion with some people online eariler today and it got me thinking:

Has Telecom been screwed out of all this?

By “all this” I mean the broadband rollout across NZ.

Back in 2006, Labour Minister David Cunliffe approved a whole lotta jazz that basically meant that any Tom, Dick or Harry business could use Telecoms gear:

http://www.beehive.govt.nz/?q=node/28055

In theory, reading that announcement, everything all sounds good. However looking at it from the flip-side (Because lets be honest, so many close-minded NZ’ers like Chris Barton suffer from Tall Poppy Syndrome and want to cut down the likes of Telecom any chance they get), if you were in Telecoms shoes, you’ve basically just been royally screwed!

Yeah there’s a monopoly, there’s good reason for that. We’re only 4.5 million Kiwis, and we’re spread across a *ton* of land, not like Japan or Korea where they’re all packed in like sardines into their highrise buildings.

I found this article as well, thought it was a good (brief) one which takes a similar stance on things: http://www.libertarianz.org.nz/telecom-regulation-unjust-and-misguided/

Lets be honest, if there was a legitimate business case for ultra-fast broadband, and it was cost-effective, and there was money to be made, then somebody else would have done it. The TelstraClear Cable service would be available outside the likes of Christchurch and Wellington, IF it was cost-effective to roll out the access at decent speeds. If it was, why haven’t they done it to the likes of Auckland?

I’ll tell you why: Because it’s not cost-effective!

It’s literally cheaper to pay a wholesale termination charge to the likes of Telecom and just pump your own data down the line.

What about the likes of all 3500-odd roadside Whisper Cabinets that Telecom will have finished rolling out by the end of this year (2011)? They’ve dedicated half of the “equipment” section JUST to other 3rd parties aside from themselves (Half of the Cabinet is just the wiring terminating, so 1/4 is for Telecom Chorus gear, the other 1/4 is empty for 3rd party access seekers). However, for some crazy reason, 3rd parties aren’t capitalizing on this and putting their own gear in there.

Why not?

Because it’s not cost-effective to do-so.

Yet people bitch and moan about a monopoly existing. That’s because it HAS to exist if you want low-cost broadband.

Yes, other countries may be able to get more, for less. Good for them. If you want the same sort of broadband as Korea, then go live in Korea. Kiss your back yard goodbye while you’re at it because you won’t have one when you live over there, you’ll be in a high-rise apartment if you want access to that kind of broadband you lust after so badly!

In fact, to quote David Cunliffe (In the previous Libertarianz article): “Kiwis are demanding fast, ‘all you can eat’ broadband”.

Great, it CAN be provided, but it’ll cost a lot for the data. Not only that, for it to be FAST, you have to be closer to the termination point (For *DSL services). That, or you can roll out Fibre, and then it’ll cost a lot to dig up the road.

I can get Fibre at my home right now, up to 100mbps. It’ll cost me around $2,500 to get installed though, and it’ll cost around $1200 for 10mbps flat-rate. Good on “Kiwis” for demanding it, it’s there right now if they want it, but they don’t want to pay so much for it.

So you get something slower, for less. In fact, the UK has only just mandated that all of the UK gets 2mbps. By the end of 2012. On the other hand, 85% of NZ by contrast will have 10 -> 20mbps by the end of THIS year. Yet, we supposedly “lag behind the rest of the world”.

If “Kiwis” really wanted the higher speeds and flat rates so badly, they’d vote with their wallets and start getting the Fibre which is already available. But they don’t want it that badly. So the Govt is subsidizing it.

I dunno, call me crazy, but all this “Tall Poppy Syndrome” is really getting me down.

Imagine having a BBQ with some neighbours. It goes well. Other neighbours see it’s going so well for you and suddenly start demanding that you feed them also. But it’s not your fault that you’ve gone and got yourself a group of mates together and had a nice BBQ and split the cost of some steak 5 ways. Hell, your neighbours COULD go and start their own BBQ… That’s what it’s like to be in Telecoms shoes.

Sure, they’re the big guy, they’re the monopoly, but there’s a reason they’re the monopoly, because without it things would be insanely more expensive if 5 different Internet service providers had to recover 10’s of thousands of dollars in setup costs just to feed 20-30 homes each. Instead, one provider has to recover the cost of 10s of thousands of dollars worth of setup costs in networking equipment, and that’s split between a few hundred homes. So it costs you less each month.

Deal with it.

EDIT 30 /8 / 2011: It seems people are now questioning SkyTV in New Zealand. They’re a monopoly, but as mentioned in this article, they’re a monopoly because it hasn’t been commercially viable to enter the marketspace as an alternative competitor: http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10747678

ADSL, Broadband, Fibre, FTTH, Telecom,