Ross Patterson

Media finally catch on to Hooton’s tricks

Matthew Hooton will be crying into his cornflakes this morning, which will take the edge off the hangover somewhat. The media are finally starting to see through his highly misleading campaign.

In an editorial in The Press yesterday, the paper gets to the heart of the issue – the campaign is just designed to line the pockets of groups like Vodafone, Slingshot, Orcon and CallPlus.

A well-organised campaign is being orchestrated on the matter, it is true, suggesting a Government proposal would amount to an extra “tax” on broadband users of some $600 million over the next five years.

This glides over the fact that the shareholders of Vodafone, one of the largest international telecommunications companies in the world, and hundreds of times bigger than Chorus, stand to benefit if the other side of the argument prevails.

Labour’s prime objection is to the Government’s intervention into something it believes should have been left to the Commerce Commission. There would normally be some validity to that argument. Since Chorus’s monopoly of the copper network is deemed to make it unsafe to leave pricing to the free market, the next best option is an independent regulator.  Read more »

Hooton’s plan to trick journalists

Matthew Hooton is telling anyone that will listen that he’s going to get the press gallery and IT journalists to fall for his latest campaign.

He reckons he’s so clever that he will have journalists eating out of his hands.

In fact, he has been openly saying that the journalists are always falling for his PR lines, and it’s now no longer a challenge for him.

The tip line is running hot with reports that Hooton is launching a campaign on behalf of Vodafone and Internet NZ tomorrow against the Government.

I understand the campaign is about a review the Government has underway about the relationship between pricing for the legacy copper network and pricing for the new fibre network.

One of the main policy planks of National in 2008 and 2011 was the big step-change in ultrafast broadband through fibre-optic cable rollouts.

National proposed a hefty $1.5 billion taxpayer contribution to help accelerate the rollout. It was, and is a bold plan to make New Zealand a more advanced, productive and connected nation. The use of fibre to improve peoples’ lives through better connectivity will be profound.  Read more »

More risks for the Mixed Ownership Model

by Winslow Taggart

It seems that anything that can go wrong, will go wrong for the government’s push on mixed ownership for state assets.

First, the broker community rebelled against excessive Commerce Commission interference for publicly listed companies, after ComCom draft decisions wiped hundreds of millions of dollars of NZ investment away. Senior brokers and funds managers warned that the partial floats will be at risk from investors spooked by the uncertain regulatory environment. The replacement of the tired and emotional Ross Patterson with Stephen Gale is a useful first step, but nowhere near the big shakeup the ComCom needs.

Then, the Maori Council have greedily and opportunistically raised water rights as a blatant grab on future earnings by the power companies that will be part floated. While it seems that the Maori Party have accepted assurances from PM Key, the question is, whether “Mr Market” will do likewise.

Now, the capability of the lead broker for the SOE floats is being called into question. Craigs Investment Partners has just been fined by the NZX Disciplinary Tribunal for bodgy trades by clients. Unknown software errors then compounded the error with faulty filters. This will hardly inspire the government, who is relying hugely on Craigs to lead the process successfully. If their trading system is riddled with faulty filters easily distorted by clients entering rubbish bids, then the government should demand Craig either guarantee their system or spread the load amongst other brokers like First NZ, Forsyth Barr and Hamilton Hindin Greene.

As we are reminded by the wise writings of Warren Buffett, markets are determined by fear and greed. Ominously for the government, their vaunted SOE sales programme may well be defined by a troika of fear; fear of regulation, fear of Iwi interference, and fear of broker failure.

NBR rips into ComCom extremity

by Winslow Taggart

We’ve blogged a bit about the “mad dog” issues at the Commerce Commission. Today it’s the NBR’s turn to highlight the extreme decisions of the ComCom, with commentary from the financial sector confirming the issues highlighted on this blog around a month ago.

In a submission to telecommunications commissioner Ross Patterson, Mr Bascand says the commission’s approach puts the success of the government’s ultra-fast broadband initiative at risk.

And could be a turn-off for foreign investors considering buying shares in partially privatised state-owned energy companies.

His comments follow what he describes as last month’s “policy shock” of draft regulations for the unbundled copper local loop – the traditional mainstay infrastructure of the national telephone system, which fibre-optic cable will replace as ultra-fast broadband rolls out nationwide.

The government’s $1.5 billion subsidy plan is intended to accelerate uptake of UFB, but the Commerce Commission’s approach suggests it “has a mandate to tilt the playing field back to copper” while using a flawed benchmarking approach to regulation, Mr Bascand said.

Don’t mention Sky TV, who received supposedly happy news from the ComCom only to have it all turn to dust when the Mad Dogs tacked on a paragraph about investigating Sky TV’s broadband relationships.

It also seems that Harbour Asset Management aren’t the only ones. In addition to Milford Asset Management, First NZ and  Forsyth Barr, Global firm Goldman Sachs also points out how government is about to get shafted by the ComCom.

However, last month’s draft decision had led Goldman Sachs to cut its forecast of UFB uptake by 10%, suggesting outcomes that “run entirely counter to government policy”, tilting the playing field in favour of copper and forcing Chorus to accept uneconomic returns on its copper network.

However the issue was handled, the government should be aware international investors now look askance at New Zealand regulators, making them wary of investing in partially privatised assets where regulatory risk remains high, such as the electricity sector.

The question this blog asks is this – who needs Labour and the Greens running interference on an asset sales programme when the Commerce Commission can do it just as easily for them?

Commerce Commission: Watchdog or Mad Dog, Ctd

The third installment in the series about the Commerce Commission:

So then, who are some of the Mad Dogs at the Commerce Commission I’ve been writing about over the last few days?

Extra focus needs to be put on Dr Ross Patterson.

Patterson was appointed by the former Clark-led Labour Government as the Telecommunications Commissioner at the Commerce Commission.

However, there is a feeling within the Wellington beltway that Patterson has done his dash.

Curiously, there have been a series of advertisements in some newspapers for Dr Patterson’s job as Telecommunications Commissioner, which appears to be a bad omen for the incumbent since the ads don’t mention the incumbent wants the role again.

Patterson has been in the job for five years now, with some scrutiny over his abilities involving his standing down for ten months in 2008 due to alcohol related health issues. It is surprising that Patterson did not leave the role completely, but it may be that he had some strong support in high places from the former Labour Government.

Cactus Kate rightly pointed out in 2009 the following:

“It’s not a matter of whether Dr Patterson is now fit to go back to work, but that the world and government’s have moved on since he departed. The new administration seems to not want him. Ta ta. Dr Patterson is fit to work again but he’s not fit to work in this job if he is unwanted. Go find another.”

Now, Dr Patterson is a highly intelligent man, and as it is stated in the article, a professional.

But the government’s fibre policy is too important to be put at risk by someone who has other distractions, demons even.

The government is delivering a fresh start for New Zealand’s IT infrastructure. It should likewise ensure a fresh start at the Commerce Commission for it’s next Telecommunications Commissioner, and send a message to the other commissioners that while they are there to uphold competition, they are not there to be activist or interventionist against key Government initiatives or take decisions that massively ruin national wealth.