Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

Telecom - bastard offspring of the market

Telecom - bastard offspring of the market

The story of Telecom is the story of New Zealand.

I’m not just talking about events of the past month but the tale of the company and the country since Telecom was privatised in 1990. Telecom is struggling for the same reason our national economy is struggling. Market values have replaced the values of service and citizenship.

It might seem strange to people under 35 that the government ever ran a telecommunications network. But it did, and it did so competently. The service wasn’t flashy but it was brilliant compared to what Telecom has offered. Accountability came through elected ministers who knew service breakdown meant their heads were on the block.

20 years ago the failures of the past month would have seen politicians grilled mercilessly on radio and TV. Not now. Who knows the name of the minister responsible for telecommunications? The government has been all but invisible and we are left with the bereft figure of an unelected Scotsman apologising repeatedly to the public for the multiple failures of a major communications network and the collapse of the 111 emergency call system.

Democratic accountability through the rights of citizenship has been replaced by the rights of consumers in the marketplace. If we don’t like the service we can change providers. Except for 111...

Telecom’s present troubles go back to its inception and the running of the company for shareholders rather than phone users.

Writing in 2004 economist Bill Rosenberg summed up the main issues:

Telecom’s overseas owners have failed to live up to the promise of making new technology available to New Zealanders... They have sacked thousands of employees and have extracted billions from New Zealand in profits and capital, while over-charging for services (such as broadband networking to the home) ...using every possible means to keep out the competitors who would not have been necessary had it been providing a decent service. From 1995 to 2004 it paid out more than its net earnings in dividends (reported earnings of NZ$6,464 million and dividends paid out of NZ$6,698 million), for most of that time, its capital expenditure barely covering reported depreciation. It was running down its assets.

The same problem continues today.

The company has worked hard to keep out competition and New Zealanders were slow to get new technological developments and when they arrived they were expensive. Former Board member Rod Deane explained in a biography how the company employed over 90 lawyers. Don’t think these bods were there to keep the phones running. They were there to fight any attempts at government regulation and to thereby maintain what until recently has been a private monopoly.

It’s also worth remembering the revealing words of former Telecom CEO Theresa Gattung who admitted deliberately deceiving Telecom customers while speaking to a meeting of financial analysts in early 2006:

"Think about pricing. What has every telco in the world done in the past? It's used confusion as its chief marketing tool. And that's fine," she said. "You could argue that that's how all of us keep calling prices up and get those revenues, high-margin businesses, keep them going for a lot longer than would have been the case.

But at some level, whether they consciously articulate it or not, customers know that's what the game has been. They know we're not being straight up."

Knowing you’ve been screwed by Telecom is a familiar feeling for New Zealanders.

Just last year the company forced its maintenance employees to become dependent contractors. These workers now pay for their own tools and vans and must rely totally on calls from Telecom to attend maintenance callouts. The workers are now on much lower incomes while the company is absolved from the provisions of the Employment Relations Act such as providing sick leave and annual leave. Meanwhile the Telecom CEO is the highest paid person in the country - $7 million last year.

The national economy has suffered the same hollowing out as Telecom. The private sector has cannibalised the profitable parts of the economy and left us heavily in debt. Workers are on low wages, facing higher taxes and lower levels of government-provided services while the country searches for capital for investment.

If Telecom was still publicly owned we’d have politicians baying for blood and the likes of Rodney Hide squealing like a stuck pig and demanding accountability.

The disgruntled workers at the Philippines call centre who texted “f**k you” to New Zealand Telecom customers a couple of weeks back missed their target. They should have been communicating with the hapless Scotsman and our free market cheerleaders in Wellington.

ENDS

© Scoop Media

 
 
 
Top Scoops Headlines

 

Globetrotter: The Geopolitics Behind Spiraling Gas And Electricity Prices In Europe
The current crisis of spiraling gas prices in Europe, coupled with a cold snap in the region, highlights the fact that the transition to green energy in any part of the world is not going to be easy. The high gas prices in Europe also bring to the forefront the complexity involved in transitioning to clean energy sources... More>>

Julian Assange: A Thousand Days In Belmarsh
Julian Assange has now been in the maximum-security facilities of Belmarsh prison for over 1,000 days. On the occasion of his 1,000th day of imprisonment, campaigners, supporters and kindred spirits gathered to show their support, indignation and solidarity at this political detention most foul... More>>

Binoy Kampmark: The Mauling Of Novak Djokovic
Rarely can the treatment of a grand sporting figure by officialdom have caused such consternation. Novak Djokovic, the tennis World Number One, has always had a tendency to get under skin and constitution, creating a large following of admirers and detractors. But his current treatment by Australian authorities, and his subsequent detention as an unlawful arrival despite being granted a visa to participate in the Australian Open, had the hallmarks of oppression and incompetent vulgarity... More>>


Off To The Supreme Court: Assange’s Appeal Continues

With December’s High Court decision to overturn the lower court ruling against the extradition of Julian Assange to the United States, lawyers of the WikiLeaks founder immediately got busy... More>>


Forbidden Parties: Boris Johnson’s Law On Illegal Covid Gatherings

It was meant to be time to reflect. The eager arms of a new pandemic were enfolding a society with asphyxiating, lethal effect. Public health authorities advocated various measures: social distancing, limited contact between family and friends, limited mobility. No grand booze-ups. No large parties. No bonking, except within dispensations of intimacy and various “bubble” arrangements. Certainly, no orgies... More>>

Dunne Speaks: Question Time Is Anything But
The focus placed on the first couple of Question Time exchanges between the new leader of the National Party and the Prime Minister will have seemed excessive to many but the most seasoned Parliamentary observers. Most people, especially those outside the Wellington beltway, imagine Question Time is exactly what it sounds... More>>