Wednesday, May 18, 2011

More Contortions Than Houdini

The New Zealand Government has backed down on its initial stance on its pet broadband fibre companies being subject to Commerce Commission (which is sort of a NZ equivalent of the US SEC and FTC combined) scrutiny for monopolistic practices. So, let's untangle the story so far...

The Government is getting back into the telecommunications business supposedly because the market won't deliver what New Zealanders want at the price they need it, so they subsidize companies to provide broadband, then exempt those companies from monopolistic price scrutiny from the regulatory agency, then decide to allow scrutiny after all by agreeing to subsidize the companies even more if the regulator makes them lower prices.

Wow, that's more contortions than Houdini!

I think it is another example of the Law of Unintended Consequences.

Perhaps the Government should stay the hell out of the telecommunications market.

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