Wednesday, 2 April 2008

Vultures circling over "fibre future"

State worshipper David Skilling of the NZ Institute proposes the government establish and partially fund a coercive monopoly called FibreCo to "roll out" national broadband and deliver dividends to rent-seeking crony capitalists who participate. "For now, this country's fibre future remained reliant on investment decisions taken by Telecom," says the Institute, which faces "weak incentives" to invest significantly in a fibre access network. The whole panegyric to rent-seeking cronyism is here.

Those "weak incentives" by the way include the continued support for local loop nationalisation from the likes of Skilling and David Farrar and of course Obergruppenfuehrer Cunliffe himself -- not to mention all those competitors of Telecom who wish to take advantage of its networks without any investment themselves -- and of course the dismemberment of Telecom forced upon it by Cunliffe in an effort to boost his ministerial ranking. 

In other words, the faces of those "weak incentives" are themselves and others like them who support the ministerial jackboot being applied to Telecom's private property, and the sort of coercive resnt-seeking proposed by Skilling.

People like Russell Brown, who while continuing to celebrate the ongoing nationalisation of Telecom's existing networks,  regularly celebrates how the faster broadband he's now getting in Pt Chev is already allowing him to steal even more films and TV from the internet.

Good to know why he's so keen on faster broadband, anyway.

Perhaps these luminaries could read and reflect on the comments of Telstra's Sol Trujillo last year when a similar public-private partnership was proposed by Kevin Rudd -- Trujillo called this a "kumbaya, holding hands" theory he wanted no part of;  said Trujillo: "We are only going to participate in the things that we own and control."  And how else could you justify the sizeable investment involved? What incentives are there?

Perhaps too they could reflect on Morgan Tsvangirai's argument for the importance of reinstituting property rights in Zimbabwe and think about the importance of drawing up such a programme for New Zealand, instead of continuing to bang the drum for their destruction.

UPDATE: Paul Walker comments at his blog: "Its not clear to me how a state guaranteed monopoly would speed up anything... Competition gives the best incentives, especially in rapidly changing, innovative markets."  Perfectly correct.  Doesn't stop Rod Drury and, lamentably, Bernard Hickey (who should know better) joining the chorus in praise of the corporatising/nationalising state. "It goes against the grain for me to recommend that a government effectively nationalise a private asset," says Hickey, who doesn't let the splinters slow his slide into the nationalisation chorus.


  1. Telecom was built with money expropriated from taxpayers. Were they reimbursed when it was flaoted, or did the government take off with that money? Not worth getting upset that a receiver of stolen loot is itself about to be looted!

  2. Um since when is bidding for a company in an open contest and paying for it - and that money used to pay back or avoid further borrowing (and the interest that entails). Hardly "taking off" with the money - but if you think government's shouldn't pay who they borrow from then that's another point.

    More to the point, it is notable that competing telecommunications networks aren't being built anymore. They much prefer to compete using Telecom's infrastructure.

    Meanwhile the internet subsidy lobby bemoans that "we" will need fibre to the curb and how it will be achieved - I don't remember anyone wondering how almost all other telecoms technology advances would be delivered, until recently.
    Of course in Wellington and Christchurch it already exists, because Telstra Clear rolled it out before there were any sniffs of Telecom being pillaged - then it stopped.

  3. LibertyScott

    Bruce takes a man's money. Next Bruce goes and buys a house. Bruce lives beyond his means and ends up owning money to lenders. He does not want to keep that house any more (he has others). He sells the house. Bruce gets money from the sale of the house. Now he spends the money. Well done Bruce, you have avoided further borrowings.

    As far as the man is concerned, Bruce has taken off with his money.

  4. Yes, but Bruce sold the house (Telecom) to someone else. You're not wrong, I'm not disagreeing with you. However, the person who paid Bruce for the house doesn't deserve to be fleeced because Bruce did wrong in the first place.

    In fact the sale price of Telecom NZ was well above expectations by Treasury. Unlike taxpayers, Telecom's original shareholders chose to pay the government. They are hardly thieves. I rarely see people arguing that welfare beneficiaries should be robbed to pay back the taxpayers' they fleece (by voting for governments who do the fleecing), who get nothing in return.

  5. Anonymuppet,

    The first telecommunications networks in NZ were privately built and owned. After the govt nationalised them, it built (slowly!) Telecom up over generations, using money from generations of taxpayers. It's simply not feasible to reimburse taxpayers by refund in proportion to the taxes they contributed to its establishment. It is fair to say that all taxpayers are forced to pay the principal and interest relating to government borrowing and that using the proceeds of Telecom's sale to repay the debt benefits all those taxpayers.

    Nevertheless, TCNZ was sold in an open bidding regime (and went for far more than Treasury expected, as Scott points out) and that its shares have been traded a number of times over by people who had no expectation of having their investment nationalised or quasi-nationalised. The current owners of TCNZ have no moral debt to atone for.

  6. Andre

    If you receive stolen property, even if you pay for it, then you have no right to it. You should have checked the source of the goods prior to purchasing.

    Bruce was aided and abetted in a laundering scheme by the purchaser of the house. It's called conversion.

    What is happening lately. Bruce returns and demands some of his buddies are allowed to take up residence in the spare bedroom of the house. They also want to have access to the potty and the bath and the kitchen and the shower. Also they want access to use the TV room and the library and the dining room and the patio and the living room from time to time. Bruce tells the householder that he has to allow it all. The householder says that it is his houlse as he paid for it and so he does not want these mates of Bruce moving in. Bruce says tough but his mates will pay some rent. He also tells the householder that he is not allowed to refuse the new flatmates.


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