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By comparison, people regularly sing TelstraClear's praises, pointing out that in areas where they provide local-loop service, Telecom is forced to slash its prices and play fair.

But is Telstra(Clear) really such a nice guy and fair-player on its home turf?

If the news stories coming out of Aussie are anything to go by, it might appear not.

Just as Telecom has been slammed here in NZ for offering ISPs nothing but an insulting measure of margin on the new 256/128Kbps DSL offerings due to come online next month, it seems that Telstra has also engaged in similar dirty-tricks across the ditch.

According to this story [Australian IT], Telstra has been engaging in practices even *worse* than Telecom's by selling its DSL services at a lower price to the public than they do to wholesale customers.

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But wait, there's more!

Telecom's mailservers have found themselves on anti-spam blacklists more frequently than many users would like -- but look, it appears that Telstra is blacklisted too [The Age].

So what does this prove?

TelstraClear is exactly the same beast as Telecom -- or indeed, any commercial entity.

Every company has an obligation to maximise the return on shareholders' funds and if they have a monopoly (such as Telecom's local loop and DSL service) then exploiting that monopoly to the maximum degree is expected.

So, is it Telecom's fault that they seek to retain their monopoly or to use it as a way of squeezing every last dollar out of a captive market?

No, not really. If you want someone to blame, then direct your anger at all those Telecom shareholders who demand the highest possible dividend and shareprice.

But is it unreasonable for Telstra to be crying in their cornflakes over the fact that Telecom has a local-loop monopoly here in NZ?

No, that's quite fair too. They can cry all they like -- just as I'm sure Telecom would be a sobbing mess if a similar situation existed in Australia and they were trying to secure extra market-share.

All we're seeing here is capitalism at work and, for all its faults, it's a better system that most of the alternatives and one that "usually" offers the best outcome for all concerned.

Now I say "usually" because monopolies are the one thing that really screws up the capitalist system.

At the heart of capitalism is the need for competition in the marketplace. Remove that competition (by way of a monopoly) and suddenly things start going very wrong -- at least from a consumer's perspective.

This is the only time we really need intervention, and in the case of Telecom's local-loop monopoly, the government bears a double burden of responsibility.

Firstly, the government has a responsibility to protect the best interests of NZers and the rest of the nation's economy. Secondly, it was the government of NZ that effectively gave away the local-loop monopoly for a song in the first place.

The fire-sale price-tag associated with Telecom's acquisition of the local loop has made it uneconomic for Telecom's competitors to duplicate that critical component -- and thus compete under normal commercial rules.

Yes, the local-loop *must* be unbundled, not because TelstraClear says so (after all, if *it* had the monopoly it would he arguing as hard as Telecom *against* unbundling), but because the government has a responsibility to correct the error it made when it gave the damned thing away in the first place.

Since it's almost certainly a requirement under law to disclose such things, I wonder when someone will do a little research and come up with a list of all those involved in the unbundling decision who have any level of shareholding in Telecom NZ or its subsidiaries -- just a thought.

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