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Telecom In The Gun Again - It's Time For Reynolds To Go!

Chris Ford
Chris Ford
Paul Reynolds

Telecom's woes just keep piling up and ordinary customers continue to pay the price.

This week the XT network had another meltdown. And then the 111 emergency call system malfunctioned in Auckland. On top of all this, the company's share price plummeted due to all this bad news.

Where to now for Telecom? When the corporation was privatised by the Fourth Labour Government 20 years ago this year, there were promises made that there would better, less costly and more efficient service to customers. Instead, we have malfunctioning service, higher line rental and internet charges and executive managers who are paid excessive salaries.

In an earlier blog, I called for the re-nationalisation of Telecom. I still stand by that call. We need a publicly accountable and democratically controlled telecommunications and information technology provider who can provide efficient, effective service at a reasonable cost to all New Zealanders. While all was not hunky dory in the days of the old Post Office telecommunications monopoly (which I spent the first 17 years of my life under), at least I cannot recall a major landline phone fault occurring on the national network. While I acknowledge that mobile phone and internet technology has changed the dynamics of the telecommunications industry, I don't recall any other global telco recently experiencing problems just like Telecom has in the past month.

The National Government's non-interventionist stance can't last forever. With continual failures within the crucial XT mobile phone network, Paul Reynolds, the chief executive, can't sustain the holding of any more press conferences to announce that he's sorry for the latest stuff up. He should either offer his resignation or the Telecom board should move to sack him. While the government can't demand Reynolds resignation, they could place subtle pressure on the company. They could do this not just through the cutting of government subsidies to the company (and with that I answer why not go the full hog and nationalise it) but also via threats to regulate the sector.

Regulation might not be National's preferred policy tool but perhaps Communications Minister Steven Joyce should listen to some of the more rational arguments for a second. If Telecom were required by law to, for example, openly tender out contracts for future infrastructure development and maintenance, the company might have escaped the lure of Alcatel, the French multinational responsible for building XT. If the Government wanted to see toll call, internet and fixed line costs reduced for both business and household customers, then regulation might be the best way of achieving that. After all, full scale competition is not achieving any of those desired gains (except in the mobile phone market) due to Telecom exercising a near full scale monopoly over the telecommunications sector despite the existence of competitors like TelstraClear, Vodafone or 2 Degrees. 

Therefore Telecom wouldn't like the threat of regulation and nor that of nationalisation. At least if the government even hinted that it might revisit the matter of regulation, then Dr Reynolds would be forced to re-think his position and resign. He should resign as the buck stops with the CEO and indeed he stated this himself at a news conference this week. Reynolds was the one who endorsed the XT network build which represents the biggest telecommunications failure in our country's history. Due to the essential nature of mobile phones in our modern age, any network slip up, whatever its duration, cannot be tolerated.

It's my hope that when Paul Reynolds appears on TV One's Q +A programme tomorrow morning that he will do the right thing and publicly announce he's going. If that's the case, there will be many thousands of frustrated New Zealanders who will be eager to help him pack his bags for the return trip to the UK. And one more thing Telecom - don't give him a golden handshake! He doesn't deserve it! More likely he deserves the reverse finger and/or a raised fist. 

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