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The end of Kiwishare

Written By: - Date published: 9:06 am, June 20th, 2011 - 18 comments
Categories: telecommunications - Tags: , ,

The “cast in stone” permanent obligations of majority New Zealand ownership and free local calls will be removed from law after the government dropped a last minute Special Order Paper[SOP] on the Telecommunications Amendment Bill last week:

In the explanatory notes in SOP No 247, which was introduced on Tuesday, it reads: “Makes changes to provisions relating to deemed TSO instruments and removes references to the KSO (Kiwi share obligation) (new clauses 6B, 7A, 7B, and 23HFA). These amendments are to reflect that the KSO will not be operative following the structural separation of Telecom.”

National are pushing a line that although it won’t be law it doesn’t matter – there’ll be a “deed” with the 2 new companies (Telecom Retail and Chorus) to protect some of the Kiwishare obligations.  But this doesn’t wash.

A deed can be much more easily removed than a law.  The minister responsible would have no need to comment, let alone do anything, if the new (privately owned) company wants it removed.  It could be gone by lunchtime if a majority of shareholders approve – and those shareholders would have a monetary incentive for that to be so.

Telecom Retail will have no remaining obligation on its foreign ownership at any rate.  Previously, as a strategic asset, no company could own more than 10% without government approval and a majority of ownership had to be in New Zealand hands.  Now the government is happy for more of New Zealand to be foreign owned, and more of our profits to head overseas.

Chorus retains the foreign ownership restrictions, and Telecom Retail the free local calling obligations.  But only by deed, so after a suitable period of time Telecom shareholders could easily change the rules and start charging more for rural areas than urban ones, or cancel free local calling entirely.

Perhaps most concerning was the manner in which this change was dropped on the public, not in the original bill, not when there was any chance of public comment or submission, but as a fait accompli, rushed through in the hope that there would be no chance of noticing.

This is similar to National’s penchant for urgency, to railroad through the dark bits of their agenda without comment.  The New Zealand public deserves its chance to have its say on National removing their rights.

18 comments on “The end of Kiwishare ”

  1. Lanthanide 1

    “or cancel free local calling entirely.”
    As someone who rarely uses a phone, this would suit me more as the currently ridiculous fixed line rental would drop in accordance with this. It would become user-pays.

    • millsy 1.1

      There is nothing to stop telcos from offering such a plan to consumers.

      The KiwiShare/TSO is to ensure a minimum of service, without which thanks to profits and dividends being sucked out of the business:

      1) Would leave large parts of rural areas without a landline phone service, and having to make do with and expensive and unreliable cellphone – cellphone coverage in rural areas

      2) Would price a phone services out of the reach of a lot of people. As of now you need a decent credit rating to be able to have the phone connected. I know of people who were refused a phone connection thanks to failing a credit check.

      • Draco T Bastard 1.1.1

        There is nothing to stop telcos from offering such a plan to consumers.

        Telecom used to. I’m assuming they dropped it when they realised that they weren’t getting as much income. What’s more likely to happen is that they’ll keep the “line charge” the same as it is now and put call charges on top.

        1.) Yep, rural would have lots fixed phone lines a long time ago
        2.) Doesn’t matter how much it costs, a failed credit check will still leave you without a phone.

        • Draco T Bastard

          Gah, is supposed to read:

          1.) Yep, rural would have lost fixed phone lines a long time ago

    • bbfloyd 1.2

      that didn’t happen in australia.(cheaper line rental), so i wouldn’t assume it will happen here.

      what has happened in oz since opening up to competition is discounts on call rates rather than reductions of monthly line rental.

      it’s about profits remember. with the small market here, competition isn’t strong enough to give consumers enough bargaining power to force price changes. that requires govt involvement in nz.

  2. queenstfarmer 2

    Free calling was already removed from the Kiwi Share obligations, by the previous Labour Govt.

    But in any case, how does Telecom just “cast off” its obligations under a deed (“It could be gone by lunchtime if a majority of shareholders approve”)?

    • ghostwhowalksnz 2.1

      Au contraire mon frere.
      The local free calling is still there.

      Principle 1 – A local free-calling option for local residential telephone
      service will be maintained for all Telecom residential customers.
      Telecom may, however, offer other optional packages (including on a
      geographical or customer segment basis and which include call and
      other charges) to those who wish to take them as an alternative.


      So hobby farmer is a hobby telecoms expert as well

      • queenstfarmer 2.1.1

        Yes, but not in the Kiwi Share Obligation. Your link is the TSO Deed, which replaced the KSO to that effect. Computerworld explained this last week:

        The Kiwishare historically included the obligation by Telecom to provide a free local calling service to every resident at a standard monthly fee, regardless of whether they live in rural or urban areas… However, the provisions relating to free local calling and rural services were taken out of the Kiwishare obligation and transferred to the Telecommunication Service Obligation when the Telecommunications Act was passed in 2001.


        • bbfloyd

          bullshit semantics will only get you past the dodos that would swallow any old shit from the nats. this isn’t one of those sites.

          • queenstfarmer

            It’s not “semantics”. It’s a key mistake in the premise of the article. It’s the same mistake as was made in a guest post last week. Now, apparently it’s a hanging offence here to “suggest” that an obvious factual error be corrected, which is duly noted. But this does perhaps show how incorrect information gets perpetuated.

            • The Voice of Reason

              Big whoops. You win the prize for pedant of the week, farmer. Well done. Now, do you have anything of substance to contribute?

      • Colonial Viper 2.1.2

        So hobby farmer is a hobby telecoms expert as well

        This guy is whatever he is told to be, depending on the briefings he receives from his handlers on a given day.

    • Jum 2.2



  3. Bunji 3

    Clare Curran’s got pretty frustrated at Steven Joyce’s ways and has written this indictment of them.

    The abuse of process by this government is shocking.

  4. ghostwhowalksnz 4

    I guess we will see Telecoms annual report having a big rise in ‘donations’ like last election year when they went from about $50k to $1M.
    Naturally telecom doesnt show up in any party donation list as there are ways around that

  5. mikesh 5

    “A deed can be much more easily removed than a law. The minister responsible would have no need to comment, let alone do anything, if the new (privately owned) company wants it removed. It could be gone by lunchtime if a majority of shareholders approve – and those shareholders would have a monetary incentive for that to be so.”

    I would think that a company or its shareholders would have no say in the matter. Only the government could waive the provisions of a deed.

  6. hellonearthis 6

    Didn’t we have this last week, what’s changed since then?

    [lprent: This is a multi-author site. It is not uncommon for different authors to have different opinions and each put up posts.

    Authors also wind up thinking about it more and get to write several posts as they do think about it.

    New facts and opinions emerge and authors write posts on those.

    But most important of all – you should read this and this. ]

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