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Govt does not go far enough with "unbundling"

Thursday 4 May, 2006

Government does not go far enough with "unbundling" Telecom

The Government has not gone far enough with its "unbundling" proposal to deal with Telecom’s monopoly ownership of the telephone lines, says Alliance Co-leader Len Richards.

Mr Richards says the Alliance agrees with the separation of the telephone lines from Telecom’s broadband business, but says the "local loop" lines should then be brought back under public ownership.

"Monopoly ownership has allowed Telecom to gouge monopoly profits since it was privatised in 1990 by the infamous Rogernomics Labour Government of the day," he says.

When Telecom won the 2005 CAFCA Roger award for the worst multi- national, financial analyst Sue Newberry showed Telecom was making over 25 per cent annual returns on its New Zealand assets year after year.

"This is why telephone line and mobile call charges are so high in this country – to keep Telecom’s shareholders rubbing their hands when the $800 million profit is paid out each year," says Mr Richards.

He says the way to stop this is to put this essential infrastructure asset under public ownership and control so it delivers an efficient, modern service at the cheapest possible cost to its customers.

"The National Party is defending Telecom’s monopoly position, saying that the 'market' should be left to decide if, how and when broadband technology should be delivered."

"This is like saying the weather should be left to decide which homes are washed away by floods, or the fox should be left in charge of the chickens. National believes this will deliver the best outcomes for New Zealand," he says. “As the ads say – yeah right!”

Telecom’s success in preventing any real competition, along with its deliberate strategy of paying out maximum dividends rather than investing in the development of modern broadband infrastructure gives lie to that argument.

Mr Richards says that since 1986 when privatisation of state-owned assets began, New Zealand has been gold-rush territory for big capitalist concerns.

"The strategy of these largely foreign investors is one of 'pump and dump' – pump the profits out and dump the asset after the vampire urges of these asset strippers is satiated. Then the next lot moves in to take their share – and precious little of the promised private capital investment that we were promised by the promoters of privatisation has ever occurred. Instead New Zealand’s vital transport, energy, communications and other economic infrastructure has been degraded to crisis point in many cases."

The Alliance (www.alliance.org.nz) policy is to return all this vital infrastructure to public ownership, Mr Richards stressed.

ENDS

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