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Fibre Watch: Holiday from hell

24 Mar 2011

Last week’s Select Committee proceedings, accurately labelled a farce by TelstraClear boss Allen Freeth, are now

behind us.

With support from the minor parties, the Government appears to have the numbers to ensure the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill is passed into law later in the year.

Communications Minister Steven Joyce has rejected calls for further Select Committee hearing time to be devoted to the Bill, despite the chorus of complaints from disgruntled submitters discussed in last week’s Fibre Watch column

It’s now up to the telco sector to come to grips with the impact of the new legislation, which will usher in sweeping changes to the industry ahead of the Government’s planned roll-out of its Ultra-fast Broadband initiative.

Top of the industry’s list of complaints about the pending legislation is its provision for a decade-long "regulatory holiday” for successful UFB contractors.

Tuanz says the proposed 10-year grace period, during which time the Commerce Commission will not be able to police UFB pricing, doesn’t make sense and goes against the principles of good governance.

"Nowhere else in the world have I seen anyone get granted a ten-year regulatory holiday,” Tuanz CEO Paul Brislen told Radio New Zealand this week.

But Joyce says the regulatory respite will provide certainty to the industry and help attract the private investment the UFB initiative requires.

Also speaking on Radio New Zealand this week, he rejected industry claims the holiday provision amounts to the Commerce Commission being "locked out” of regulating the broadband market.

"It’s eight and a half years – not ten years – and it’s not being locked out, except in relation to the contractual prices set between Crown Fibre Holdings and the companies that are working with them,” he said.

Joyce argues the regulatory holiday will ensure that the prices set between CFH and broadband providers won’t be overridden by the Commission two or three years down the track.

"It gives confidence to the operators that once they’ve done a deal with the Crown they’ll be allowed to continue that deal through that eight-and-a-half-year period until the network is up and running, and that seems entirely reasonable to me.”

Joyce said he wants to establish an environment that encourages consumers to use the UFB network and having competitive prices set by contract will assist end-user uptake. The concerns being raised by the industry were "just a couple of people jumping at shadows,” he said.

"Frankly I’m not that concerned about the industry, I’m more concerned about the consumers, and I think that the most important thing that we have to keep front of mind here is the consumers and how they are looked after.”

There are valid concerns in the industry, however, that Joyce’s real motivation for pushing ahead with flawed legislation is a desire to be seen to have achieved progress on the UFB before November’s election.

As Brislen says: "I really do worry about election pledges that have to be met by a certain deadline. I’d rather we get this right than get it here in a hurry, and then discover in two or three year’s time that this is in fact damaging to the industry.”

Unfortunately Joyce’s actions make it clear that meeting an election-based deadline is the government’s top concern. We can only hope this political motivation doesn’t result in the industry damage Brislen is predicting.