Wednesday, November 29, 2006

Operational separation for Kiwiblog

The logic of argument has forced Parliament’s Commerce Select Committee to recommend a Bill for the forced breakup of David Farrar's Kiwiblog. "This is due," said the report, "to its monopoly position in the blogosphere."

The Committee was almost unanimous in endorsing, and improving the breakup. MPs from Labour, National, NZ First, Maori, United Future and the Green Party all agreed on the report, and are expected to vote 119-2 in favour of the bill.

"This is a no-brain," said one.

Said Labour's David Cunliffe in announcing the breakup, "There are many precedents for this type of regulatory action when a company with market power is required to provide competitors with access to its network or faces controls over the prices it can charge."

Effecting an early dismembering of the Kiwiblog empire, David Farrar was nonetheless ebullient. "This is quite right to my mind. A vertically integrated monopoly is that rare beast which should be regulated if competition is stymied. And the problem is that for over four years Kiwiblog has stymied effective competition. I got too cute at blocking effective competition, so the power of regulation became the only option. Kudos to the Minister (David Cunliffe) and the Select Committee Chair (Shane Jones) for getting the Bill to this point, and also to all the members of the select committee. These fine gentlemen (and woman) clearly have their eye on the bigger picture in a way I cannot."

At the time of writing, Kiwiblog Blogshares had gone through the floor. More details of this shock move at G-Man Inc.

David Farrar is 67.

LINK: Government to separate Kiwiblog - G-Man Inc.
Operational separation for Telecom - Kiwiblog (David Farrar)

RELATED: Humour, Telecom, Property_Rights, Politics-NZ

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14 Comments:

Anonymous Gerrit said...

Wonder if the shareholders in Telecom will get their shares split between the two companies or will they have to choose between one or the other.

Why bother owning shares in New Zealand companies when not only the CEO and board can stuff up the share price and dividends but now also the government.

NZX is strangely quiet about this governmental interference in the sharemarket.

As a Ihug customer though I welcome the seperation if it improves my acces to the internet and delivers emails at least the same day.

11/29/2006 06:58:00 am  
Anonymous Hamish said...

As a Ihug customer though I welcome the seperation if it improves my acces to the internet and delivers emails at least the same day.

EXACTLY.

I'm only willing to sympathise with the shareholders to a point - anyone with a finger on the mood of the government and an eye on the business pages new that Telecom was on shaky ground. It was risky to keep investing in Telecoms (clearly) anti-competitive tactics... profitable, but risky, such is the nature of investing.

I'd make the point though that PC will argue tooth and nail that breaking up telecom will NOT improve your email and internet service because *insert highly theoretical arguement based on axioms that have little regard for the reality*.

:P

11/29/2006 08:48:00 am  
Blogger Duncan Bayne said...

I am heartily sick of people claiming that those investing in Telecom should accept the massive devaluation through nationalization as a risk of investment / doing business.

That's like saying if I get mugged on the way home, I shouldn't bitch about it because I recognized it was a possibility.

11/29/2006 10:43:00 am  
Anonymous Richard McGrath said...

"As a (sic) Ihug customer though I welcome the seperation (sic) if it improves my acces (sic) to the internet and delivers emails at least (sic) the same day."

So not concerned at all about the violation of any rights Telecom shareholders had, as long as the mail gets through. Fine then, when it happens to Ihug, then I don't suppose we'll hear you complaining either.

"I'd make the point though that PC will argue tooth and nail that breaking up telecom will NOT improve your email and internet service because *insert highly theoretical arguement (sic) based on axioms that have little regard for the reality*."

Breaking up Telecom will make other players less likely to enter the market in case they become too successful and get broken up as well. E-mail and internet service may improve in the short term following government interference, but probably not in the long run.

By the way I think you will find any axioms that PC uses are in fact deeply grounded in reality.

11/29/2006 11:03:00 am  
Anonymous Willie said...

"Id make the point though that PC will argue tooth and nail that breaking up telecom will NOT improve your email and internet service because *insert highly theoretical arguement based on axioms that have little regard for the reality*."


Hmmm... I never new that it was "theoretical" that coercion is wrong and that rejecting coercion has "little regard for reality".

If you don't understand something don't hide your confusion by blanking it out as irrelevant.

If you do understand something but don't agree with it. Fine. Have the courage to stand up and state what you do believe in.

Go ahead - state to yourself:

"If I want someone's property, and enough other people want it too[, and insert other qualifiers here] then I believe it to be right to use force against human beings to obtain that property".

Why be gutless? State what you believe.

PC does the argument justice by stating what he believes.

11/29/2006 11:37:00 am  
Blogger Berend de Boer said...

Brilliant. And spot on.

11/29/2006 12:11:00 pm  
Blogger Berend de Boer said...

gerrit, you're not responsible for choosing and relying on ihug. You choose the right provider and others should pay that provider to make sure you get your services.

11/29/2006 12:12:00 pm  
Blogger Kane Bunce said...

What is next? A four way split of Trade Me? It has a bigger monopoly than Telecom.

11/29/2006 12:14:00 pm  
Anonymous Gerrit said...

Let me state from the start I'm against the government interferingin the private business of companies. Hence I find the silence from the NZX so baffling.

Changing supplier is a short term option because as soon as say slingshot gets to big and a sizeable opposition to extra, there is no reason to believe that Telecom wont target them as well.

This unbundling is easily solved by the government (the people) buying the copper wire network from telecom (like we bought the railway network from Toll) and renting out the lines capacity to all and sundry.

which may well be the long term strategy as first they have to divorce the lines from Telecom

11/29/2006 12:34:00 pm  
Anonymous Gerrit said...

Another reason Telecom has the pipper with Ihug. They are offering (with their Vodafone parentage) a phone deal that includes a mobile, home, internet access and web hosting package that complete takes Telecom out of the picture.

All at a reasonable price.

11/29/2006 12:42:00 pm  
Anonymous Falafulu Fisi said...

Gerrit said...
[This unbundling is easily solved by the government (the people) buying the copper wire network from telecom (like we bought the railway network from Toll) and renting out the lines capacity to all and sundry.]

I like this option. I think that this is the best. The government can only persuade Telecom to give up the lines network and not force them to do so. They (government) have to give Telecom an attractive package though so Telecom can never say no. The government must rely on the power of persuation and not coercion.

11/29/2006 04:52:00 pm  
Anonymous Craig Milmine said...

... Except the coercion you are offering here is coercion of the taxpayer to fund a business. If you want to unbundle Telecom, then use your own damn money and go and buy some shares in it.

11/29/2006 10:00:00 pm  
Blogger libertyscott said...

Telecom's response is to bend over and say "no need to force us, here's some lube, please gentle sir"

11/29/2006 11:07:00 pm  
Anonymous Gerrit said...

Wonder if the managers of the Cullen Fund sold Telecom shares before the first and now this announcement.

If they did drop large bundles of shares the question then is were they tipped off and if so by whom.

Could be insider trader charges coming if they were notified of the unbundling announcements.

If the Cullen fund did not have an exposure to Telecom shares, were the fund managers told not to invest in Telecom because long term the government was going to shaft the shareholders?

Oh for some leaked e-mails!

11/30/2006 07:07:00 am  

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