Minister rejects broadband proposal

TOM PULLAR-STRECKER
Last updated 05:00 27/04/2011

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Communications Minister Steven Joyce has rejected a "compromise" put up by the Telecommunications Users' Association over its broadband policy, saying a proposal by Tuanz would unnecessarily delay building its ultrafast broadband network.

Tuanz, consumer groups and several telecommunications firms have criticised a proposed law change that would prevent the Commerce Commission regulating the access price of the UFB network until 2019.

Prices will be set by contract between the Government and firms that win bids to build and run the network.

Mr Joyce has said the approach would reduce the regulatory risks for UFB network operators, which would allow them to put forward cheaper bids.

Tuanz chief executive Paul Brislen suggested that the prices be set in advance, but by the Commerce Commission rather than the Government. The commission could approve UFB terms, conditions and prices through a "special access undertaking".

That would provide certainty over prices while maintaining regulatory oversight, he said. Tuanz, Consumer New Zealand, InternetNZ and telcos had proposed the idea in a joint letter to finance and expenditure select committee chairman Craig Foss. The committee is considering amendments to the Telecommunications Act that will pave the way for the UFB scheme.

Labour communications spokeswoman Clare Curran gave "qualified support", saying she supported any added protection for consumers and fair pricing.

But Mr Joyce said two obvious problems existed. Assuming the commission did not have the ability to review the undertaking once set, it would have the same effect as the "regulatory forbearance period" that the group had criticised.

If the commission could override the undertaking, it would not provide the required price certainty during the "crucial build period of the network". It would also significantly delay the UFB scheme for no particular benefit, he said.

"My understanding is that it would involve a minimum period of a year from start to finish, including submissions and cross-submissions. This would all need to happen before contracts could be confirmed."

Mr Joyce said he was happy to consider different ways of achieving the same outcome as the regulatory forbearance period. "But it is important to note that however it's done, infrastructure builders will need to have certainty as to the maximum prices they are able to charge in the early years of a new fibre access network."

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- BusinessDay.co.nz

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