Labour attacks Telecom UFB win

TOM PULLAR-STRECKER
Last updated 05:00 26/07/2011

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A secret letter Telecom chief executive Paul Reynolds sent to Communications Minister Steven Joyce two years ago shows Telecom's ultrafast broadband win was part of a "pre-ordained plan", Labour communications spokeswoman Clare Curran believes.

In the August 6, 2009, letter, Reynolds told Joyce he understood officials had suggested the Government had a preference for Telecom to voluntarily offer to structurally separate, and that followed a meeting in which Joyce said that was "not on the agenda".

"This is an extremely significant issue for us ... and therefore I would suggest a discussion between us in order to better understand your views on this matter," Reynolds wrote.

The letter could be sensitive because if the Government was secretly urging the breakup of Telecom in 2009, that might show it favoured Telecom as its UFB partner before it went to tender.

Joyce's public position at the time was that it was up to Telecom to decide whether it wanted to separate to compete for the UFB contract and that he was "agnostic". The Government awarded Telecom the contract to build the bulk of the network on May 24.

Joyce said in a covering letter to The Dominion Post, "the supposition regarding voluntary separation referred to by Dr Paul Reynolds in his letter was incorrect".

Joyce said officials advised Reynolds of that at the time.

But Curran was not convinced Reynolds got the wrong end of the stick and called on Joyce to also release that advice. "I don't think Paul Reynolds would have written that to the minister if that wasn't his clear understanding."

Joyce said he had released the correspondence "given the passage of time". That was after withholding it for 1 1/2years.

The letter also reveals officials and Telecom were holding detailed discussions in 2009 about how Telecom could partner with the Government on the UFB scheme.

Reynolds said in the letter that Telecom had been having "very constructive" discussions with officials about the merits of the Government investing alongside Telecom in ultrafast broadband, saying that would avoid duplication and provide "synergy benefits" of up to $500 million.

"What it indicates is there were direct discussions going on between Telecom and the Government ... " Curran said. "It shows the sham of the contracting process that the industry and the country underwent for 2 1/2 years."

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- BusinessDay.co.nz

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