National Party deputy leader Bill English has ruled out supporting widespread government investment in national broadband infrastructure because it would "crowd out" existing operators.
His comments come as the Government examines submissions on its operational separation plan for Telecom, a plan that a wary Telecom has countered with an alternative proposal that could include its fixed-line network being spun off into a separate Netco group.
That group, says Telecom, could be sold, though the estimated $3 billion-$4 billion price tag of the network would likely require a consortium of private investors or even a contribution from the Government.
Some observers see Telecom's suggestion as a good opportunity to build an open access network for telecoms operators and National leader John Key last week suggested his party supported government investment in broadband to "unlock that supply side" of the under-performing industry.
But English said National's support of taxpayer-funded broadband investment went only as far as schemes such as Project Probe, which sought to push broadband into rural areas where commercial operators were not willing to go.
"[John Key] is not hinting of National going into some sort of buy-out [of Telecom's network]. It's an acknowledgment that it may take some government subsidy to ensure there is no digital divide," said English.
Across the Tasman, the Australian Labor Party has proposed a A$4.7 billion ($5.3 billion) investment in such an open-access broadband network, in concert with private operators, should it win election.
"We'll have a good look at the ALP's proposition but we're a bit concerned to see local bodies or central Government investing in these networks," said English.
"They need to be very careful that they're not crowding out private investment."
Such investment is already under way with local authorities around the country putting money into schemes to develop broadband infrastructure.
"We wouldn't favour investing as anything other than a last-ditch thing," said English, who doubted the ability of local or central government to manage broadband investment.
"We don't believe Government has the ability to make what are very complex commercial decisions," he said.
After years of low-key activity in telecoms policy, National, which originally opposed the unbundling of Telecom's local loop network, is drawing up new policies looking at telecoms and IT issues.
However, it is yet to hint at anything that differentiates it from Labour, something that led Communications Minister David Cunliffe to claim last week that Key was attempting to "mimic Labour in areas of the Government's strengths".
English defended National's hands-off approach to telecommunications regulation through the 1990s.
"It would be a mistake to base criticism of the past on assumptions about the benefits of unbundling," said English.
"The fact is that it has been a line call in any country. We're going to benefit from the fact that other people have discovered the pitfalls in it."
English said that with Telecom, National wanted to avoid a repeat of the expensive government re-investment that had been necessary in the air and rail industries.
"Expectation about the deregulation of those networks was very high as well. Both ended up busting. We don't want to see that happening again," said English, who stressed the importance of a decision being made on Telecom's future swiftly.
"On the market time is money, in government it's the principal tool to manage difficult issues, let it drag out, take the heat out of it."
Meanwhile, Cunliffe took the opportunity at the Convergence conference held in Wellington to talk up wireless broadband technology as a partial answer to the country's broadband woes.
A Government proposal calls for a "managed park" to be created through the allocation of a 16MHz (megahertz) block of 2.3GHz (gigahertz) radio spectrum that could be used for regional broadband operators to offer services.