Telecom ordered to open up lines

After years of controversial debate a bill regulating New Zealand's largest company -- Telecom -- passed its final stages in Parliament in just a few hours today.

Telecommunications Minister David Cunliffe said history had been made and the passage of the Telecommunications Amendment Bill would bring faster and better broadband service.

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The bill forces Telecom to undergo a three-way operational split, with retail, wholesale and network arms.

The Minister and Commerce Commission will have wide-ranging powers to monitor and enforce access to the local telephone lines -- commonly referred to as "unbundling the local loop" and regulate other aspects of the telecommunications network.

When the bill went into select committee it proposed just separate accounts for Telecom's business arms, but after six months of consideration came out with a much tougher regime.

MPs today completed the three remaining stages of the legislation in just over two hours, a process which can sometimes take days.

The lightning fast passage was in stark contrast to the glacial movement of telecommunication regulation in the past.

Telecom's competitors have long complained of its anti-competitive practices and endless litigation, but successive governments have been persuaded to a relatively light-handed regulatory approach.

A previous Labour Telecommunications Minister Paul Swain fought to unbundle the local loop, but was overruled by Cabinet.

Under National, Telecom persuaded then telecommunications minister Maurice Williamson regulation was not necessary, but Mr Williamson in recent years has made it clear that Telecom did not deliver on its promises to him.

At the beginning of this year, Prime Minister Helen Clark said one of her Government's goals this year would be to lift access rates to broadband and reduce the cost to consumers.

The Prime Minister said she was concerned New Zealand lagged well behind other developed countries on broadband access and wanted this to improve to lift productivity.

In an attempt to stave off regulation Telecom tried to lift broadband uptake rates, the speed it worked at and lower the price, but did not do enough to persuade the Government not to act.

Telecom shareholders were stunned when on May 3 Mr Cunliffe hurriedly brought forward a planned budget day announcement when it was discovered a Telecom executive had been given a copy of the Cabinet paper approving regulation.

The decision struck billions off the value of the company. It was later discovered a Department of Prime Minister and Cabinet messenger leaked the paper directly to the Telecom executive as he was a friend.

No evidence of insider trading was ever found.

Despite the bill's tumultuous past it barely raised an eyebrow as it passed in Parliament today under the traditional Christmas time urgency.

Only the Act Party opposed the bill as it past by 119 to 2.

Act leader Rodney Hide said the bill unfairly legislated away Telecom's property rights.

He argued that international investors would be put off New Zealand because of the potential it could happen to them.

Other MPs pointed out that New Zealand was one of the last countries in the western world to take regulatory action against incumbent virtual monopoly telecom companies.

Other MPs expressed concerns that the bill did not do enough to ensure the more remote parts of New Zealand received high speed internet access.

The Maori Party was unhappy that the bill did not ensure Maori gained part of the telecommunications sector which it was entitled to under the Treaty of Waitangi.

Mr Cunliffe said the Government had a firm mandate to take action.

"Kiwis are demanding fast, 'all you can eat' broadband, which this legislation is designed to deliver," Mr Cunliffe said.

"I welcome the fact that the telecommunications industry has already responded to the reforms in this legislation and is working collectively towards a digital future where Kiwis can realise their economic, social and cultural aspirations."

- NZPA

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