Business lobby groups have slammed the Telecom unbundling decision as a backwards step for the economy.
The move was a "gross intrusion of property rights", said Business Roundtable executive director Roger Kerr.
"This is the unfortunate development of re-regulation."
Forcing Telecom to unbundle would do nothing to boost growth and the economy would suffer, he said.
Federated Farmers telecommunications spokesman Hugh Ritchie said the move was worrying on two fronts.
First, it appeared to be an attack on property rights. But it also appeared to leave rural consumers outside the investment loop.
"There is very little detail there about what's going to happen with regards to rural coverage," he said.
Federated Farmers had requested a meeting with the minister to discuss his plans for rural consumers.
Business NZ chief executive Phil O'Reilly was unavailable for comment.
On the political front, Act slammed the move and the Green Party welcomed it.
"This sends a chilling message to any company wishing to invest in infrastructure - the Government will regulate and control you, unless you do what politicians say," said Act leader Rodney Hide.
"Instead of creating an alternative network, a group of companies have pressured ministers to let them leech off Telecom's lines."
The Greens called it a progressive move.