N James wrote:
In my view the Government have continued to duck the real issue - structural separation in telecoms. I am disappointed, that with all the evidence available (eg. British Telecom structural separation [voluntary]) , the Government have just fiddled at the edges of the problem, hoping that would make it all OK. If I was in Telecom NZ I would be celebrating tonight -- Telecom NZ still have control over vertical markets. Accounting separation will not suffice -- many recent examples have shown that accounting practices cannot save us!
------------------- "We are continuing to look at whether additional measures are warranted, such as the structural separation of Telecom's retail and lines operations," Mr Cunliffe said. " ------------------ They haven't ruled it out. This is a huge step on from the previous position. If I was in Telecom, I wouldn't be celebrating - I'd be wondering when the other shoe will drop. In the Cabinet paper,(http://www.beehive.govt.nz/Documents/Files/Copy%20of%20Cabinet%20Paper%20and... - beware 3MB PDF of scanned pages [sigh]), Option 3 is _Separation_of_Telecom_: "There are a variety of possible forms of separation ranging from accounting separation through to ownership and operational separation, which essentially involve the splitting of an organisation's assets and service delivery functions into separate wholesale and retail operations. Structural separation of an incumbent telecommunications company is one of the more interventionist measures that a government can take to address discriminatory behaviour. The advantages of structural separation are likely to be a reduction or removal of the incentives for a vertically integrated company to discriminate and a reduction of anti-competitive behaviour. The key disadvantage of this approach are one-off restructuring costs, potential loss of economies of scale and scope, and a long implementation time frame. In the short term, this option may lead to increased prices for end-users. Further detailed analysis, commencing this year, is recommended in conjunction with increased monitoring of sector behaviour, in light of other measures proposed in this paper, before deciding whether this option is warranted." In other words, it's a step too far for this government to undertake _at_this_time_ but it's on the table and they're not saying they won't consider it in the future, and are going to be actively monitoring the changes to determine if it's warranted. While I personally agree that separation of Telecom is vital in the long run, the package announced will go some way to address the problems within the sector. I suspect that time will show that actual separation is required, given previously observed behaviour by Telecom. You'd hope they'd learn from BT's experience, but no, same old FUD on the news tonight. cheers Mark Harris (speaking in a personal capacity)