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The Standard

Greens pony up for a second cable

Written By: - Date published: 6:52 am, December 18th, 2012 - 43 comments
Categories: internet, telecommunications - Tags:

Market failure is one of the marks of our time. From unaffordable, low-quality housing to child poverty to the over-valued dollar killing jobs to over-priced broadband and failed government IT procurements, the market keeps getting it wrong. The Greens and Labour know the answer is for the Government to step in; National just turns a blind eye. Russel Norman did it again yesterday.

The Greens’ ICT package has been widely welcomed by the ICT community and everyone who wants cheaper, faster broadband. They’ve done something quite simple and smart – looked at this important, sustainable industry, looked at the aspects of market failure that are holding it back and said ‘we’ll fix that’.

Taking a $100m 25% cornerstone investment in the second undersea cable is smart. As you know, the problem isn’t that the current cable is out of capacity – it’s got lots. The problem is, it’s a foreign-based monopoly that’s taking us all for a ride, charging too much for too little and too slow. The second cable will add to the physical security of our international internet connections but it’s bigger effect will be to take away the monopoly power and monopoly rents enjoyed by the Southern Cross bale at present.

Reforming government ICT procurement to give locals a look-in is also smart. Currently, the over-valued dollar means our producers get undercut by foreign companies, who often underbid and under-deliver. Novopay is the latest outrage, and the IRD’s new computer system is shaping to be the next. Taking into account the economic benefits of buying local is only sensible. You and I do it all the time, why shouldn’t the government?

Meanwhile, National’s pouring all its effort (not that there’s a lot of it) into mining – a polluting industry that employs only 20% of the people employed in ICT, and which sends the lion’s share of its profits overseas.

National is prepared to let the big problems fester while it engages in crony capitalism (mining favours, SkyCity, asset sales, irrigation subsidies) to favour its mates. Both the Greens and Labour are showing they are willing to get their hands dirty and fix what’s really wrong with our economy.

43 comments on “Greens pony up for a second cable”

  1. tc 1

    ‘Market failure is one of the marks of our time’ spot on eddie and telco is enjoying a second coming of monopoly power under Joyce and the feckless commerce commission (aka the monopoly makers)

    We should be unleashing the potential of Fibre to make it as fast and cheap as it can be and remove the con that is data caps.

    Good on the Greens again, another common sense vote winner. How many business’s could a truly low cost/fast web enable and better.

    The cable crashed during chch earthquake due to the overseas traffic, world class eh.

  2. lanthanide 2

    Story about this on national radio just now. Amy Adams said that National had already committed $91m to the cable.

  3. felixviper 3

    National will already be rubbing their dirty little hands together thinking of ways to sell off the government share in this second cable next time they’re in power, probably to whoever owns the other one.

    We need a way to entrench public ownership in these sorts of assets.

    • karol 3.1

      Agreed, felix.  And such entrenchment needs to be TPP Proof.

    • One Tāne Viper 3.2

      We need a way to entrench public ownership in these sorts of assets.
       
      +1
       
      Just a suggestion: issue one non-transferable, non-saleable “share” to each and every citizen. The government cannot sell what it does not own.
       

      • Rich 3.2.1

        That would be the best plan, make the cable operator a co-operative with everyone holding a share. Pricing would also become moot, as any surplus profits would be refunded at the end of each year.

    • Draco T Bastard 3.3

      Make such sales require a referendum and if the government tries to remove that requirement they immediately, without appeal, get jailed for treason. I think that would stop these asset sales that National like handing out to their mates.

      • The Gormless Fool formerly known as Oleolebiscuitbarrell 3.3.1

        While we are at it, let’s make it a requirement that no government can increase taxes without a referendum and, if the governemnt tries to remove the requirement, they get cut up and fed to pigs.

        • higherstandard 3.3.1.1

          Can we just have a referendum that governments and city councils are cut up and fed to pigs if they annoy me.

          • The Gormless Fool formerly known as Oleolebiscuitbarrell 3.3.1.1.1

            Well, the principle is sound.  No government, no matter how handsomely they won the election at which they campaigned to take a particular course of action, should be prevented from undertaking that  course of action without a referendum on penalty of death.  I am negotiable on the method of killing them.

        • Draco T Bastard 3.3.1.2

          Not all of Auckland boted for a National government but the National government still removed Aucklands right to a referendum of local matters and rammed through the SuperCity that they wanted.
          As fore the government being voted into office on policies – 48% isn’t a mandate especially when it’s only 48% of 73% of the vote. Requiring a referendum prevents a minority from dictating to the majority.

          • The Gormless Fool formerly known as Oleolebiscuitbarrell 3.3.1.2.1

            I didn’t vote for Labour in any of the elections from 1999 – 2005 yet they passed much legislation with which I disagree.  I was not asked about that legislation.  An outrage that can only be fixed by feeding Michael Cullen to pigs.

  4. The Gormless Fool formerly known as Oleolebiscuitbarrell 4

    Greens pony up for a second cable

    Fark. That’s generous of them.

  5. bad12 5

    Sharp from the Greens Russell Norman, this far out from 2014 it would seem to be an idea floated to gauge the level of interest and engage the intellect of the voting public,

    Cleverly Russell has carefully costed the ‘spend’ and how the Greens would find the 100 million investment necessary by not building 300 meters of National’s ‘Roads of NO significance’ a sure fire means of catching the interest of the media while reminding the voting public just how over-blown the costs of these road-works have become,

    Couple that with Julie-Ann Genter showing Gerry Brownlee up as more the school room dunce than the teacher in the House this year torturing an admission from Him that National’s ‘Roads of NO significance’ fail the Governments own cost/benefit ratio test and the Greens have had a good year and show no signs of flagging in opposition next year…

    • Draco T Bastard 5.1

      Especially now that the government has announced that it’s raising petrol taxes making those RoNs even less usefull.

    • Dr Terry 5.2

      Engage the intellect of the voting public? I only wish! The Greens do that best, but “intelligent solutions” are not particularly popular with the general public; voting is based on a weird assemblage of fanciful ideas. I have heard people say that they vote for Key because he is good looking!
      The rumour still floats around that the Greens have no aptitude for managing matters financial and economic. That notion needs to be squashed right now! Russell Norman is without compare at present (if only because of the humiliating dismissal of David Cunliffe). 
      I truly hope that those who do bother to reason intelligently, will soon pay homage to Green politics. 

  6. Peter 6

    It’s a good policy, and a good example of how the Greens have the flexibility and systems (not to mention the spokespeople) to come up with these ideas.

    I’d gladly see most of that roading budget ploughed into other projects.

  7. MrSmith 7

    Go the Greens, showing some leadership and putting there hands up again, while the rest just pick over the bones of what’s been done before.

  8. Draco T Bastard 8

    As you know, the problem isn’t that the current cable is out of capacity – it’s got lots. The problem is, it’s a foreign-based monopoly that’s taking us all for a ride, charging too much for too little and too slow.

    That’s not the problem either, that’s the result of the problem. The problem is that competition reduces profit and that the present cable has a huge amount of bandwidth available which means that if a second cable was put in place in competition with the first the owners of the first would probably be able to price the owners of the second cable into financial collapse and then probably buy up the second cable at which point they just put the prices back up. In other words, no private investor is going to invest in such a scheme. It’s the same reason why we don’t have multiple national telecommunications networks after 20+ years of deregulation.

    We won’t get a second cable by relying on the market even with the government having a 25% stake. It’ll have to be 100% ownership and have enough bandwidth to price the owners of the Southern Cross cable out of the market at which point the government buys that one as well.

  9. BM 9

    Who’s that person standing next to Norman, is it his wife?

  10. erentz 10

    Government investment only makes sense if the new cable is sufficiently diverse from the existing Southern Cross Cable. This means landing it in Waikato or further south and must be a condition of any government investment, otherwise any talk about doing this for security reasons is bollocks. A major event today in Auckland has the potential to cut both segments of the SCC and take the whole country offline for months while cable ships are tasked to repair it. After Christchurch, we need to be honest that we can’t anticipate now what kind of events may take place in Auckland. The risk of being offline for months after a major event is too great not to stump up a little bit of extra cash when building this thing to land it elsewhere.

  11. Lefty 11

    The answer isn’t for the state to compete with the private sector over the provision of services that are a natural monopoly, especially in a small country.

    The answer is for the natural monopoly to be in public ownership and run on a not for profit basis.

    I’m afraid Norman’s proposal would just end up being a hand out to another private company run on private sector principles. Like our SOEs it wouldn’t actually be that useful to consumers because the profit motive would be too important, the CEO would expect to be paid a zillion dollars a year , the government would demand huge dividends etc.

    It would probably end up being flogged off to its competitor at a bargain basement price and the monopoly would be restored.

    The Greens actually aren’t up to much when it comes to alternative economic thinking – its just that National and Labour are bloody awful.

  12. infused 12

    Yes, because a cable magically connects us at the other end. Once again, missing the point.

    The cable isn’t the cost. It’s the interconnects at the other end. They don’t get cheaper.

  13. ‘sustainable industry’
    Yeah right
    Each computer requires several barrels of oil for there manufacture, and we replace them every 3-5 years.
    How is that ‘sustainable’ ?

    The Greeds are business as usual planet fuckers.

    • Draco T Bastard 13.1

      Each computer requires several barrels of oil for there manufacture, and we replace them every 3-5 years.

      Actually, no they don’t. Oil is used because it’s the easy answer not because it needs to be.

      • Napkins 13.1.1

        Possibly true, but the other parameter is that oil is the only answer currently in existance, with no meaningful alternatives on the horizon other than those which would massively drop computing performance.

        • Draco T Bastard 13.1.1.1

          Oil use for computers is pretty much limited to production (electricity supply) and the pretty plastic casings. Electricity can easily be produced by renewable means and the casings could be metal, ceramic or wood.
           
          Producing computers without oil is, from what I can make out, rather simple.

          • Mike 13.1.1.1.1

            “Producing computers without oil is, from what I can make out, rather simple.”
             
            If you disregard the fact that oil is used in every single component. For example the silver and gold on components of the motherboard need to be mined. Locating, extracting and transporting these metals uses alot of oil.
            Future computers will be different by necessity of course. Now that we have reached peak oil (IMO) I think we will start to see more and more non oil using technologies, products, etc start to come on line as we move down the other side of the oil supply bell curve. The trouble is that currently they cost a hell of alot or are sorta dumb (oil from corn) or are kept hidden from public view.

    • infused 13.2

      Cloud computing, dummy terminals. 

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