Criticism of the government's decision to include the Kiwi Share in its regulatory review programme seems to me to be premature at the very least. Labour's Clare Curran has blogged savagely about it, while according to the DomPost Mark Weldon of NZX has been equally damning.

Guys - this isn't a decision or even a general statement of direction, Its just an intention to conduct a review. To quote the relevant extract from the Cabinet paper:
 
("The) Review is likely to focus on the Telecommunications Service
Obligations (TSO) regulatory framework, the Kiwi Share
requirements for the ownership and corporate governance of
Telecom, and the regulated services framework for recognising the
application of government policy to the way prices are set."

The idiocy of the TSO in 2009 is a no brainer. TUANZ has been highly vocal about this over the years. Its a 1990s sop to the opponents of privatisation. While it may have been a political necessity at the time, it has demonstrably held back competition and slowed the uptake of new technologies. It's had a raft of perverse side effects including the requirement that new entrants like Vodafone pay Telecom tens of thousands of dollars every day to subsidise services that Vodafone could provide subsidy-free or at a profit.

And while there is sentimental value attached to "free" local calling by some, this comes at a price. Surely in 2009 legislating that one phone company (but not others) must by law offer "all you can eat" plans, makes no more sense than a regulation defining the kinds of combo that McDonalds can market. And should a quiet man-of-few-words like me, who makes few calls and short ones, be required to subsidise the verbal excesses of your teenage daughters?

So reform of the TSO is essential, way overdue, and the failure to do so is a black mark on both the National government of the nineties and the more recent Labour administration.

The second element of the review is the ownership and corporate governance of Telecom. The Kiwi Share currently puts constraints on New Zealand ownership and the domicile of the directors. TUANZ has no stated view on this. But surely twenty years on, with an entirely different landscape, its time to take a look? Better to take a position now than wait until there's an offer on the table a la the Auckland Airport experience?

And I'm surprised that Mark Weldon has been so negative. Surely the Review should not be stopped in its tracks on the grounds that offshore ownership of Telecom might cost jobs for Kiwi lawyers and brokers? If there is an argument that for reasons of maintaining a viable stock market and ancillary services a certain range of companies should be required to have New Zealand ownership, why single out Telecom? Why should the price of every phone rental subsidise the NZX?

This line reminds me somewhat of countries like India where governments have retained control of their incumbent phone companies for no reason other than to gather tax and preserve the infrastructure around them, to their nations' considerable cost.

 

This is only a review. TUANZ will watch it with great interest. But it's far too early to dismiss it out of hand. Lets all keep an open mind.