I may be wrong but . . . .

I may be wrong but . . . . I think I have the answer to the problems caused by Telecom’s XT mobile network failures. Telecom should be privatised by the government and run by business people rather than public servants. After all, private enterprise always does a better job than governments, right?

Woops, sorry, forgot, this was already done, back two decades ago. Phew, problem solved!

Weak attempt at satire over!

I know there are lots of very funny jokes out there about XT. Telecom is clearly suffering as a result. (Which means that many of us who aren’t even customers will suffer because our savings may be directly or indirectly invested in Telecom, whose share price is bound to suffer.) But that’s the free market at work, right?

(For readers not familiar with New Zealand’s telecommunications industry, the main player Telecom has been having dire problems with its new (< 1 year old) mobile platform, infuriating its customers who have been losing service for up to days sometimes.)

I’m not a user of the XT network. In fact, I rarely use my cellphone, and try not to rely on it any more than I did on smoke signals back before mobiles were invented. But I am aware that many people, particularly businesses, are so dependent on their mobile phones to operate daily and to make their living, that these outages can be quite damaging. A few tens or hundreds of dollars of compensation means nothing for some people if they lost a million-dollar business deal because they missed a vital call. The stakes can be extremely high.

So I find myself reflecting on how we react to such failures of basic, vital infrastructures. And some of these reflections come back to the wisdom of placing our lives in the hands of private businesses, and the old arguments about private vs public ownership and management of infrastructure.

It is ironic that many of the people who are (a) badly affected and (b) staunch supporters of government keeping out of business, are the loudest in now calling for the government to call Telecom to account, and even to legislate or regulate to ensure that Telecom’s networks remain effective. Today’s news talked about demands for new laws to be enacted to ensure the 111 emergency service works even when the networks are down. As if punishing Telecom will make the problems go away any faster.

Time for a reality check!

1. Government laws and regulations don’t make phone networks work. People like technicians and engineers do. Whether employed by the public service or a private business, they do the same work.

2. Advocating privatisation of all goods and services until they go wrong and affect us, and then demanding government to fix the problems, is just childish. I have never been impressed by the argument that private businesses will always do a better job of running a commercial operation than public services can. I’m close to 100% confident that this has been shown by the electricity sector “reforms” in New Zealand since the mid-90s, and I’m leaning this way on the telecoms industry as well.

3. If you believe that market forces alone should be used to provide your needs efficiently and reliably, then take the consequences on the chin when things go wrong.

4. If a privately supplied commodity (like cheese) goes wrong, then market forces usually do work to get redress and then to punish the supplier. But this XT episode shows us that if vital infrastructure supplied by private companies goes wrong, market forces are pretty ineffective. You can’t just go changing providers every time something goes wrong. It ain’t that simple.

I may be wrong but . . . . key infrastructures on which civilised society relies should, in my opinion, be controlled by democratic governments, and leave less important goods and services to the private sector.

But I know it’s too late for things like power and telecommunications. Those horses have well bolted by now.

So all I can say is – if the free market structure is the way you wanted it, don’t grizzle when those market forces you believed in so passionately turn out to be rather less effective than expected.